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Apple Antitrust Case Gets Green Light
SuperAlgae writes "The recent antitrust suit against Apple regarding iTunes and iPod has been approved to go forward. This is only the beginning of the process, but it does bring up some interesting questions about what defines a monopoly." From the article: "Slattery claimed that Apple's system freezes out competitors, and while one antitrust expert called it a long shot, another antitrust law professor said that the key to such a lawsuit would be convincing a court that a single product brand like iTunes is a market in itself separate from the rest of the online music market."
I can see the two types of posts that will ensue from this article.
Type A: This is another shill lawsuit brought against a corporation for playing the capitalism game. It's not their fault that they are so successful at raking in cash, leave them alone.
Type B: It's about time we realized how horrible a monopoly this company has going for them. If we hope to have a healthy market in this area, we need to split them up and make them compete for the customer's benefit.
In reality, there's a happy medium that we should be striving for. Where the Apple lawsuit falls, I'm not sure. Hopefully the judge can decide that and do the system some justice.
The American justice system has developed a set of laws that seem to be in the middle and have satisfied both sides. Unfortunately for Apple, it's hard to interpret what is and isn't a monopoly. Fortunately for Apple, companies like Microsoft that have violated anti-trust laws seemingly escaped unscathed through great legal action and repeals. So it's a matter of how much resource can you throw at it. Don't ignore it like Mama Bell did way back when or there may be baby Apples (Applets? lol) competing against each other with Mac users completely confused as to which flavor of Apple they want.
My work here is dung.
How does that even make sense?
If the lawyers somehow succeed in this, every company will be a monopoly!
Ford will have a monopoly on Ford trucks!
Dell will have a monopoly on Dell computers!
Whirlpool will have a monopoly on Whirlpool refrigerators!
...and so on, ad even more nauseam.
In all seriousness, can anyone with some kind of legal background give us *some* idea of how a judge could even consider this? (Cpt. Kangarooski, maybe?)
Dan Aris
Fun. Free. Online. RPG. BattleMaster.
IANAL but if I recall, it's not illegal to be a monopoly. However it IS illegal to use your monopoly to extend unfairly into other areas. Hence, if MS earned a monopoly in the OS market that is ok but if they use it to create a monopoly for browsers or office software then *that* is illegal.
I'm just outright amazed at the gall of some people. A lawsuit claiming anti-trust violations? What antitrust violations? Vertical integration alone is not sufficient to claim anti-trust. You actually have to show that Apple is actively locking competitors out of the market, something they simply aren't doing. Apple's player plays the standard industry formats including MP3 and AAC. The fact that they don't support a competitor's format (Microsoft Windows Media) is not unfair to the market.
In addition (correct me if I'm wrong here), Apple has made absolutely no move against those who have cracked the FairPlay DRM, such as the move that RealNetworks made a short while back. Apple has protected against non-iTunes programs accessing their online store, but usually with minimal fuss and argument.
So in short, what exactly is the case?
Javascript + Nintendo DSi = DSiCade
Um, I think a sizeable portion of the population has to actually be buying your products before you can be considered a monopoly.
Apple has been a monopoly far longer than Microsoft or IBM ever were.
1. Apple has NOT been a monopoly for anywhere near as long as IBM. IBM was producing the majority of business computers before Steve Jobs was even out of diapers.
2. Having a monopoly on your own products is not an actionable offense. Having a monopoly on the market is what places you at risk of being charged with abusing your position.
3. Note that having a monopoly on the market is not illegal as long as you can show that you're not actively discouraging competitors. (In Intel's case, the DOJ was happy with them providing all the specs to their chips so that compatible versions could be created and anyone could program them. That's why I can ask Intel for FREE developers manuals, and have them arrive in the mail within a few weeks.)
Javascript + Nintendo DSi = DSiCade
How come no one has sued Microsoft for making xbox games unplayable on a playstation? Or Nintendo for not allowing gamecube games to work on a pc? It seems the concept is the same: I have a hardware platform (game console, ipod) and I have content that works on said content platform (games, itunes tracks). There's nothing illegal about the fact that I'd have to buy 2 versions of Madden if I wanted to play it on my xbox and on my playstation... This just seems silly to me.
iTMS and the iPod are two separate products that work exclusively with each other.
/.ers have iPods that they wish could use Napster or a competing music store to purchase songs with different rights or improved quality?
Exactly. This is no more a monopoly than the XBox 360 + Windows Media Center is a monopoly. If the XBox was the only game console out there, I could understand. But it isn't, there's the PS2 or the GameCube.
The iPod + iTunes is just one of many other combinations, like a Sony player and Sony Connect.
This lawsuit is--no other way to really say it--idiotic.
How many
So go buy a compact disc, or buy from a music store with a product unencumbered by DRM.
--Eoban
Take off every sig. For great justice.
Grow up.
/.ers have friends who bought a non-iPod mp3 player only to find out that none of their Fairplay-encrypted songs will play on it? How many /.ers have iPods that they wish could use Napster or a competing music store to purchase songs with different rights or improved quality?
However, in the iTMS + iPod world, these are two separate products that each have a strongly dominant hold on their respective markets, which also monopolistically exclude all competition from functioning with either product. I say it's about time someone looked at this case. How many
Are you being serious? Anyone who claims to be a Slashdotter cannot seriously claim that they had no idea songs purchased from iTunes will not work on a non-iPod or that songs purchased on Napster will not work on iPod. I call serious BS here.
This sounds like a severe case of sour grapes.
This is not a monopoly. There are competitors out there. A lot of them. They blow chunks when compared to iTunes in my opinion but they are out there.
This lawsuite is without merit. I would be keen to findout who is bank rolling this FUD.
-- What's this '-r *' file doing here? -- Oh well, a simple 'rm' should do the trick.
Note to everyone: Don't become successful, or we will seek to destroy you. Signed: unproductive, greedy, envious socialists.
Lawyers.
Um, I think a sizeable portion of the population has to actually be buying your products
No, I think the salient feature of a monopoly is the economic impracticality of competing. It's not necessary for the majorityof the population to buy your products by any means. Only that the portion of the population that does buy your kind of products is inaccessible to competitors.
It's not illegal in the least to enjoy a monopoly. However your actions are legally constrained in two ways. You can't use your domination of the market segment to prevent the emergence of competitors (although whether this is technically speaking even possible is disputed by right wing economists). You can't use your monopoly in one area to reduce your competitors' access to market segments in another area.
Apple arguably has a monopoly on high end portable music players. If this is the case, there are at least two actions that Apple has taken that may be illegal attempts to leverage that monopoly into a monopoly on on-line music distribution. First is their refusal to license their FairPlay technology, at least under terms other vendors would accept. Second is their undermining of attempts by other vendors (Real) to get their own DRM'd material to play on iPods. Clearly, what Apple is doing is attempting to prevent consumers from buying material from other vendors to play on their iPods. These actions are neither beneficial for the consumer nor were they meant to be. However, that is in itself neither here nor there.
I think what is at question is whether it is possible to create a viable music store without access to iPods. If not, then Apple's would be competitors might have a case.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
... and it plays on my iPod.
I bought CDs, ripped them using iTunes and put them on my iPod.
So how am I forced to use iTMS?
Admittedly I would like to see Fairplay licensed to other music store providers, as Apple has got the vast majority of the portable music market now. However it hasn't got it by foul means, simply by having a better product that people want.
Is 'music for iPods' a distinct market from 'music for portable music players'?
Are consumers getting harmed? Arguably iTMS is the most usable online music store. iTunes is the most usable music application. iPod is the most usable player. Nobody is forcing you to buy an iPod, use iTunes, or shop from iTMS. There are other options and they aren't niche - there's hundreds of WMA capable players on the market that can play DRM-encrusted WMA music from other stores. There's dozens of WMA music stores online.
The iTunes music store is not needed to use your iPod. I have filled my 20gb iPod and have bought MAYBE 10 songs from iTunes. The rest were from CD's that I own or concerts that I downloaded (fan-recordings) or purchased (sound board recordings). Those 10 songs I bought could have just as easily been purchased on CD Albums or Singles. So where does the monopoly come in?
If other online stores want to sell music that works on the iPod, they can sell standard MP3's (like http://livephish.com/), and they'll work just fine.
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Apple first added DRM to the AAC files provided by the iTunes store, because of requirments set about but the RIAA. Without their DRM, Apple would not have been allowed to distribute music. On the other hand if DRM was never mandated by the music industry then we would not be in this mess.
Apple could have used WMA, but this is a closed specification, to which Microsoft holds the keys. It is also not a format that provides people with a very good quality of audio. AAC is still a lossy format too, but it is still better than WMA, IMHO. At the same time it should be noted that the DRM that Apple is using, known as FairPlay, is actually one of the more liberal DRMs out there.
Apple also has the iPod which whose only supported DRMed file format is the AAC+FairPlay, which is sourced from the iTunes music store. The iPod because of its simplicity of design and usage, has grown to be an extremly popular media player and its popularity doesn't seem to stop. Whether it is the iPod itself or the iPod+iTunes combination, is another discussion. It should also be noted that the iTunes+iPod combination has trounced every other solution, even the 'huge MP3 player selection'+'many WMA based stores' solution. Heck, even Sony tried this with their 'media player'+'sony connect store' solution, which flaked because of a badly designed UI, poor media format and average media players. Something else that should be noted is how few of them actually support the Mac platform and require IE!?
So that is the background of the current situation. In many ways Apple is in the situation it is in now because of what has happened around it. Apple had taken advantage of that situation to be where it its today. Apple could license WMA on the iPod, hence helping other stores sell their music, but why would Apple want to pay money to lose money? On the other hand Apple could license out FairPlay, which is the one I would go with, and would encourage. But then again is anyone else, other than Apple, actually supporting the MP4 audio format, known as AAC?
Something else that should be mentioned is: that any time the DRM in FairPlay gets circumvented Apple can easily make changes without upsetting other media player manufacturers or file publishers.
Just as an added note, Real did provide a hack to allow the iPod to play their format, but Apple was having none of this. Here there is clearly reason to feel that Apple was not being open in allowing Real onboard, since it doesn't sound like Real was going to charge Apple for that privilage.
The truth is, however much I feel Apple should probably open up FairPlay and even let other parties put their codecs on the iPod, I feel that a few other things should also happen:
- companies should make better media Players, in terms of looks and useability (only Creative comes close)
- music distributors should stop mandating the Windows+IE combination
- The RIAA should come up with its own DRM that offers the same advantages as FairPlay, since in the end they are mostly responsible for the situation we are in. Forcing people to use WMA is not an answer.
Jumpstart the tartan drive.
The only question of any real importance is "Did the government create this monopoly?"
There is no way to uniquely define "monopoly prices" or "monopoly behavior" except as a function of interference by someone with more power/authority than the company itself. Monopolies in a free market -- a market without such interference -- only exist in cases where the monopoly is more efficient than competition would be. If they become less efficient, a competitor will eventually arise to capitalize on their "monopoly profits" and choice will be restored. Only in a non-free market can an inefficient monopoly remain prominent.
For a more thorough analysis of this fact, see Chapter 10 of Man, Economy, & State by Murray N. Rothbard.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
"I would love some competition to iPods, bring those prices down. "
iTMS is not the reason iPods are popular. I'm guessing that there is a small subset of people (not well thought out in my opinion) who buy lots of music from iTMS and would never think about lower costs or no-DRM. We can speculate why, but it ultimately doesn't matter.
But the majority of people buy iPods because (a) they are popular (b) there is a huge technological "ecosystem" around iPods (c) they are popular.
If iTMS shut down today, it would have very little impact on iPods. So I differ with you in that even if iTMS was opened up to every player, it would only have a slight impact on iPod sales, and thus no impact on prices.
Now my guess is Apple doesn't want to have a competing music store, because despite their protestations of how iTMS doesn't make much money...I don't believe them.
I think this lawsuit is a shell brought about by RIAA members because they had hoped to control digital distribution and all of the sudden Apple is their distribution network. So they're hiding behind other companies using the "monopoly" lawsuit.
I have no particular like for any of the companies involved, but I don't see that this suit has any merit at all. It won't help the consumer in any way, an I see it ultimately playing into the RIAA member's hands, which is a bad thing.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
This is ridiculous.
In the 'glory' years of the New Economy no part of the music industry was able to build an working online music store, parctically leaving this market to early Napster and Kazaa. Then they bought Napster, sued Kazaa and the likes and still they weren't able to build up an online music store.
Then came Apple and proved them all wrong. And now it's a monopoly?
If iTunes were to use a format like, let's say WMA, there would not be a problem. *puts on body armor*