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."

Comments

Brand == market?? Huh?

[danaris]

...convincing a court that a single product brand like iTunes is a market in itself separate from the rest of the online music market.

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

Re:Brand == market?? Huh?

[Golias]

It's worse than that.

Ford may have a "monopoly" on Ford Trucks, but the iTunes "monopoly" would be a monopoly on... what, exactly?

I mean, you can buy the exact same song from any of a number of other on-line sellers, or buy the CD itself from any of thousands of stores across the country, but only from iTunes can you get a copy of the song which was sold by iTunes.

Wilco
Charlie
Foxtrot
?

Re:Brand == market?? Huh?

[binary paladin]

I think the 360 comparison is dead on. iTunes music is specifically created to play on iTunes and iPods. Take a game that's on multiple systems like Prince of Persia. It isn't specifically designed to play on one system, only a particular port is. All the music is still available from buying regular old CDs or through other online music vendors. You might as well say it's okay for a company that only sells tape decks to be able to sue another company that's producing CD players for being monopolistic. Was Sony ever sued over minidisc? Should they have been? No. These are the kinds of lawsuits which waste everyone's time and clog the system up for the legitimate ones that come down the pike. It's so stupid. "Sure you can burn it to CD, and then re-rip to mp3, but I think that's really missing the point. The vast majority of consumers just aren't going to go through all that hassle." I want to put a '85 Chevy 350 in my '83 Toyota 4x4 for offroading. It's not an easy thing to do and I have to go through a lot of hassle and adaptation to get it to work. Can Chevy be sued for a monopoly on their own engines? No. It's stupid.

Re:Brand == market?? Huh?

[danaris]

After reading some posts here, I think the idea is that there's a tight integration of iTunes and the iPod. The only real way to buy music legally online (for the vast majority of music) is through iTunes. IIRC music from iTunes will only play on iPod music players. Sure you can burn it to CD, and then re-rip to mp3, but I think that's really missing the point. The vast majority of consumers just aren't going to go through all that hassle

1. You can buy music online from other music stores--Rhapsody, Napster, etc (I don't know all of them, 'cause I don't listen to mainstream music, but they're there).
2. You can play iTMS music on any Mac or Windows computer (I think they've got iTunes running on Linux under Crossover Office, but I'm not sure), as well as on any iPod.
3. You can also burn it to CD to listen to it on any ordinary CD player.
4. There are also programs available to strip the DRM, but, as you note, most people aren't going to bother.

The only reason that there's seen to be a problem here is that the iPod is the most popular digital music player, by a long way. If it held only, say, 35% of the market, with (for example) the Nomad taking another 30% and the other players splitting the remaining 35%, no one would be complaining about this. The iPod has become most popular purely through marketing and good design, not through any shady underhanded deals, like telling OEMs they won't be getting any more iPods if they sell other music players. Apple has leveraged nothing but its aesthetics (and a certain amount of cool-factor) to gain this spot in the market.

Which is still only a monopoly if you define the "market" to be the iTunes Music Store.

Dan Aris

Re:Brand == market?? Huh?

[sconeu]

It should be "Whiskey Tango Foxtrot". International word for "W" is "Whiskey". WILCO is a military abbreviation standing for "Will Comply".

Monopolies aren't illegal

[viniosity]

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.

Re:This is what Apple zealots fail to recognize...

[AKAImBatman]

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.)

How is this different than a game console?

[trimsyndicate]

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.

I bought music from Magnatune ...

[hattig]

... 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.

iTunes Music Store not needed to use iPod

[Anonymous Custard]

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.

D is another possibility

[Midnight Thunder]

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.

Re:Errr... Its C

[feijai]

Type C: Apple isn't a monopoly but is practicing illegal monopolistic practices

By definition, you can't be practicing "illegal monopolistic practices" unless you're a monopoly.

Or type Z

[DirkK]

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?