January 4th, 2008
Latest antitrust lawsuit targeting Apple's weak spots
The latest antitrust lawsuit filed against Apple, combined with recent moves by the music labels, could spell bad news for Apple.
The lawsuit, filed on Dec 31st, is interesting because it goes beyond the usual claims of iPod/iTunes monopoly and asks some additional questions which could put Apple on shaky ground.
First off, the lawsuit claims that Apple’s domination of the online music, online video, and digital music players constitutes a violation of the Sherman Antitrust Act.
“Apple has engaged in tying and monopolizing behavior, placing unneeded and unjustifiable technological restrictions on its most popular products in an effort to restrict consumer choice, and to restrain what little remains of its competition in the digital music markets. Apple’s CEO Steve Jobs had himself compared Apple’s digital music dominance to Microsoft’s personal computer operating system dominance, calling Apple’s Music Store ‘the Microsoft of music stores’ in a meeting with financial analysts.”
But it gets worse for Apple. The lawsuit also questions why the iPod doesn’t support WMA files when other players do:
“Apple’s iPod is alone among mass-market Digital Music Players in not supporting the WMA format.”
Apple could have a hard time making this go away because of the claims that the SigmalTel STMP3550 chip used in Apple’s iPod Shuffles supports WMA but that the functionality is crippled by Apple. By not offering support for protected WMA, the lawsuit claims that Apple is locking out the competition.
Another point raised by the lawsuit is price, specifically why the $5.52 price difference between a 1GB and 4GB results in a $100 price difference between the 1GB and 4GB iPod nano.
Additionally, the claims made by Apple (and Apple apologists) that music labels are unwilling to license music in DRM-free form seems a bit weak in light of Amazon being able to offer 2.9 million songs from over 33,000 record labels in DRM-free format. Was it really the music labels dragging their heels over DRM-free music or was it Apple using DRM to protect the monopoly and blaming the music industry? Only the courts are likely to get to the bottom of this issue.
Of all the lawsuits filed against Apple lately, this is the one that’s likely to be the most damaging because it asks some tough questions. Eventually, Apple is going to have to face the music over these claims of exercising illegal monopoly powers.
Thoughts?
Adrian is a technology journalist and author who has devoted over a decade to helping users get the most from technology. He also runs a popular blog called The PC Doctor. See his full profile and disclosure of his industry affiliations
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