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

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.)

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

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?