Another Year, Another Bogus iTunes Antitrust Lawsuit - InformationWeek

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1/3/2008
08:51 PM
Mitch Wagner
Mitch Wagner
Commentary
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Another Year, Another Bogus iTunes Antitrust Lawsuit

Maybe if enough lawyers sue Apple for violating monopoly laws with its iTunes/iPod service, eventually one of them will find a judge bonkers enough to agree. The latest lawsuit brings up variations of the same old arguments: Start with the assertion that Apple dominates the online media market, follow up with a lot of handwaving, conclude by saying that Apple should be required to write a big check. Be sure to

Maybe if enough lawyers sue Apple for violating monopoly laws with its iTunes/iPod service, eventually one of them will find a judge bonkers enough to agree. The latest lawsuit brings up variations of the same old arguments: Start with the assertion that Apple dominates the online media market, follow up with a lot of handwaving, conclude by saying that Apple should be required to write a big check. Be sure to pay the lawyers first.

Plaintiff Stacie Somers filed a lawsuit Dec. 31, charging that Apple dominates the market for online video, online music, and digital music players, violating the Sherman Antitrust Act.

The lawsuit heads off into ridiculousness when it asserts that Apple’s problem is not that it’s supporting DRM, but that it supports the wrong DRM. Namely, that Apple should be supporting Microsoft’s Windows Media Audio format. Apple supports its own DRM technology, called FairPlay.

If you’re claiming that a company is an illegal monopoly, and you’re using Microsoft as the counter-example, then it’s time to break out the tinfoil hat, because you’ve driven your motorcycle into CrazyTown.

Apple simply does not have a monopoly on the digital media market. To be a monopoly, Apple would have to be a gatekeeper controlling consumers’ access to digital music and video, and that’s simply not the case. Somers’s own lawsuit asserts the numerous alternatives that exist for FairPlay and iTunes. The lawsuit claims that Apple is the only mass-market digital music player that doesn’t support WMA. America Online, Wal-Mart, Napster, MusicMatch,Best Buy, Yahoo Music, FYE Download Zone, and Virgin Digital all support WMA.

My colleague Tom Claburn adds that the lawsuit is “based on the proposition that music companies ‘are generally unwilling to license their music for online sale except in protected formats.’” He notes that the claim is “increasingly tenuous” as Amazon, the Warner Music Group, EMI, and the Web site Amie Street are all offering unrestricted MP3s.

Moreover, Yahoo Music — which the lawsuit cites as a supporter of Microsoft WMA — began offering DRM-free music in 2006. “Our position is simple: DRM doesn’t add any value for the artist, label (who are selling DRM-free music every day ” the Compact Disc) or consumer,” said Yahoo’s Ian Rogers. Universal-distributes DRM-free music, at the time.

And Apple itself is offering DRM-free music in its iTunes, in addition to the FairPlay-locked tunes.

How can Apple be a monopoly, and unfairly enforcing its monopoly, when there is plenty of music available in alternative formats? If you don’t like the digital music available, you can buy CDs and rip them to your iPod or other music player. And if you want to get your music off your iPod, you can use iTunes to convert the files to MP3, burn them to CD, and then put them in whatever format you want. It’s a cumbersome process, but it works.

Apple dominates the digital music market because it makes great technology, and it’s the place consumers can go to get the most popular media. Apple’s domination of that market is fragile, and being challenged. As noted in my article on the top Apple stories of 2007, NBC and Universal last year declined to renew their contracts with iTunes.

A reader of the site MacsimumNews notes the ridiculousness of claiming, on the one hand, that Apple has a monopoly and, on the other hand, that it’s the only vendor failing to follow standard industry practice by licensing Microosft WMA. The reader quotes Tom’s article — “Apple's iPod is alone among mass-market Digital Music Players in not supporting the WMA format” — and adds, “Really? So Apple is the one fighting the monopoly, right?”

Reader “oglguy,” commenting on Tom’s story, calls the lawsuit “flatulent.” I think he means “fatuous.” But, on the other hand, I like oglguy’s language.

What do you think? Does Apple have a monopoly of the online music market? Should the government force Apple to break it up?

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