Print 46 comment(s) - last by Lord Evermore.. on Jan 3 at 7:57 PM

The hip computer maker battles with another headache

Shortly following news of Apple’s stock options backdating scandal, the Associated Press is reporting that the company is now facing several lawsuits, including one alleging that Apple is monopolizing the digital music market.

The lawsuit is over Apple’s proprietary iPod and iTunes software, which is generally incompatible with non-Apple products. Media purchased on iTunes is supposed to be playable only on iPod hardware, and songs purchased on other DRM systems are not easily playable on iPods.

Apple motioned for the courts to dismiss the case, originally filed July 21, but the courts denied the motion on Dec. 20. The plaintiff seeks unspecified compensation.

Apple is also facing a lawsuit, filed on Nov. 7, over the supposed high failure rate of the logic board in the iBook G4. Another lawsuit filed by PhatRat Technology accuses Apple of patent infringement for its iPod-Nike product.

While the iPod reigns supreme in the music player market, Apple’s success has not come without a price. Last year, Creative Labs sued Apple over patent infringement of the iPod interface, which eventually lead to a countersuit. The companies eventually settled on having Apple pay Creative $100 million for use of the patented technology.

The popularity of the iPod has drawn attention from hackers discontent with the proprietary nature of the device. Jon Lech Johansen, who cracked DVD encryption, has undone Apple’s protection scheme and plans to license his work to companies interested in opening up interoperability between iPod/iTunes and non-Apple devices.

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By dagamer34 on 1/2/2007 12:04:58 PM , Rating: 1
I wasn't aware that if you had an extremely popular product, it could be considered a monopoly...

Otherwise, Apple should sue Microsoft for having a Windows monopoly, Microsoft & Nintendo should sue Sony for having a console monopoly, Sony should sue Nintendo for having a handheld gaming monopoly..

The list goes on and on.

RE: Monopoly?
By Vinin on 1/2/2007 12:10:43 PM , Rating: 2
It has been attempted to sue Microsoft before. Well, it was an anti-trust suit, and it may or may not still be going on.

RE: Monopoly?
By Brainonska511 on 1/2/2007 12:12:29 PM , Rating: 1
IIRC, the anti-trust lawsuit against Microsoft was settled or has ended in some other way. They were not broken up because the Bush Administration decided against pushing for harsher penalties.

RE: Monopoly?
By FITCamaro on 1/2/2007 1:40:48 PM , Rating: 2
Last time I checked Microsoft doesn't prevent certain companies from writing software for Windows. That is the issue with the iPod and iTunes. You're paying for something and then being told that you can't use it with anything else. Now software written for a Mac doesn't work with Windows and vice versa, but that is because they don't work the same and its up to the software developer to overcome that hurdle.

Apple engineered the iPod and iTunes to prevent any open compatibility. And if people didn't break the law to circumvent it, you couldn't play any music purchased on iTunes on other devices or outside of iTunes. Microsoft shouldn't be broken up for a majority of people choosing to use its OS. Apple should be forced (and maybe punished) to make its media playable on other devices and software.

RE: Monopoly?
By therealnickdanger on 1/2/2007 4:06:09 PM , Rating: 2
Apple should be forced (and maybe punished) to make its media playable on other devices and software.

I disagree with that one. I don't want own an iPod and probably never will, but I'm certainly not going to punish them or force them to do anything to prevent them further success. If millions of people are buying and using the iPod and iTunes, I can't see the negative. It's Apple's player, Apple's content, and Apple's software and consumers go into it willingly. As an FYI, the iPod has been hacked to death, so there really aren't any limitations on consumers...

RE: Monopoly?
By FITCamaro on 1/2/2007 5:03:07 PM , Rating: 2
Yes it has been hacked but legal consumers shouldn't have to commit illegal hacks to do what they want with the content they have purchased.

And just because millions of people are stupid enough to agree to it, doesn't make it right.

RE: Monopoly?
By TheLiberal on 1/3/2007 6:10:22 AM , Rating: 2
I'm not sure about the grounds of the lawsuit, but I do agree that having millions of stupid followers does not make you right. Just look at the 2004 election.

RE: Monopoly?
By therealnickdanger on 1/3/2007 10:07:26 AM , Rating: 1
Well... Tough sh*t. Apple is selling a good product that just happens to be the hottest item around. More power to 'em. They aren't doing anything shady and there are plenty of other options available to consumers.

RE: Monopoly?
By Gooberslot on 1/2/2007 5:43:54 PM , Rating: 2
Most people don't choose MS products, they use whatever their computer comes with. If computers still came with Win 3.11 I bet people would still be using that even if XP was also available.

Back to the subject of media players... How many media players out there only work with Windows XP? Should they be forced to open up and work with other OSs? Should MS be forced to make their DRM work with Apple? You can't force Apple to open their system if you're not willing to make MS do the same. Of course this crap would be a non-issue if it wasn't for DRM and stupid laws like the DMCA.

RE: Monopoly?
By glennpratt on 1/3/2007 10:34:46 AM , Rating: 2
Most people also don't understand the concept of MP3 player, they understand iPod.

Microsoft makes a media player for OS X and so do many other companies. The hurdle here is the different operating systems, it is not illegal. You don't have to hack Windows to make it run certain things. There is nothing stopping you from running Windows applications in Wine on Nix platforms.

RE: Monopoly?
By Polynikes on 1/2/2007 8:32:09 PM , Rating: 3
It's the consumers job to research products. If the iPod doesn't provide compatibility with other products, but you want that, then look elsewhere, or put up with the deficiency. Suing them over something like this is like suing Car company X for not having a 600 horsepower engine in their econobox. :P

RE: Monopoly?
By Lord Evermore on 1/2/2007 8:54:40 PM , Rating: 2
Microsoft did prevent OEMs from changing the way the OS looks when it first boots for a user, or installing alternative software. They did make it a contract requirement that the OEM is paying for Windows for every machine sold, whether installed or not, and then a requirement that no machine be sold without some sort of OS installed/included (so now FreeDOS might come with them). This is what made them open to monopoly charges, because they made it nearly impossible for competing OSes to be sold.

A monopoly means that they've made it virtually impossible for anyone to compete through contract terms or government rules which prevent competition. AT&T's monopoly came about because they put up phone lines, wouldn't let anybody else use them, and made it impossible for anybody else to get licenses to put up their own lines. There are many competing media players and media formats, music stores and DRM formats. It's not a monopoly for Apple to simply have the most popular ones, they don't have exclusive control of anything. Anybody else is completely free to build a better one and make it become popular.

RE: Monopoly?
By Brainonska511 on 1/2/2007 12:11:01 PM , Rating: 2
It's not about having a popular product. If you had read the article, Apple is being sued more over the fact that music from iTMS is locked into the iPod and iPods are largely limited to music purchased from the iTMS.

Sure, you can burn/rip CDs to get around the iPod only-ness of music purchased through iTunes, but you get the loss of quality issues.

And there are a few other places to get non-Itunes music that will work with iPods, such as Emusic, but it isn't nearly as wide a selection as you would find in Itunes.

RE: Monopoly?
By archcommus on 1/2/2007 12:42:48 PM , Rating: 2
Loss of quality issues? You're saying music purchased through iTunes is higher quality than ripping your own CD? I'm pretty sure if you rip a CD you can choose any quality you want, and music from iTunes is only 128 or 192 Kbps at most.

RE: Monopoly?
By rtrski on 1/2/2007 12:58:18 PM , Rating: 2
He means, you can take your iTunes download (which is not a lossless format, thus slightly less quality than a store-bought CD), burn it, and then rip the burn to get the music into another format/player outside of iTunes.

But even if the rip itself is to a lossless format, your source data wasn't. If your rip is lossy, then you have 2 lossy conversions which likely means still more fidelity loss to get away from iTunes.

And all this ignores playback sampling rates on PCs which is another huge bugaboo (vs. bit-perfect playback, but that's not an iTunes / non-iTunes issue.

It's all hooey in this overly noisy age, anyway. As if you can hear the difference through those tiny earbuds, in your car with all the wind and road noise, etc etc... At home, on a high end system, maybe.

RE: Monopoly?
By Spivonious on 1/2/2007 1:00:51 PM , Rating: 2
At home on a decent system, yes.

On the road with a decent pair of headphones, yes.

Anything classical even on the crappy earbuds, yes.

Don't base everything off of how your specific music sounds to your ears.

RE: Monopoly?
By dagamer34 on 1/2/2007 12:44:58 PM , Rating: 2
The real problem that I see with lawsuits like this is that they are too selective. They only go after the companies who'd they would make the most money from, and not everyone. Why aren't the suing Microsoft for the same reason with the Zune?

It's bias like this that has me fed up with the court system.

RE: Monopoly?
By JCheng on 1/2/2007 2:31:40 PM , Rating: 2
Because Zune doesn't have a monopoly. Monopolies are held to a different standard of behavior according to US law.

RE: Monopoly?
By Gooberslot on 1/2/2007 5:45:30 PM , Rating: 2
Apple doesn't have a monopoly either.

RE: Monopoly?
By ghost101 on 1/2/2007 5:59:20 PM , Rating: 2
It has monopoly power. It isnt a complete monopoly but very few things in the world are. A monopoly in the UK is defined as a compnay that has 25% of the market share. People need to differentiate between degrees of monopoly power.

This simply means that the firm has to be more careful in what it does so not to hurt consumers.

RE: Monopoly?
By Lord Evermore on 1/2/2007 8:58:14 PM , Rating: 2
Simply having large market share doesn't define a monopoly, at least in the US and probably in the UK as well. Near-exclusive control of the market defines a monopoly.

RE: Monopoly?
By webgrk on 1/3/2007 10:22:02 AM , Rating: 2
When someone buys an IPOD they know that it will work with itunes ONLY.

how is it a Monopoly honestly, wow no business can actually create something successful in this world without other companies getting jealous. no wonder innovation sucks. cause if i make something and people love it, i will get sued because of the love and use of the product, thats freeking insane.

GOOD for apple. THEY dont have a monopoly.
Isn't a MONOPOLY WHEN like a cable company wont ALLOW others to use it's cable lines?

well with the MP3 market, there is a crap load of mp3 players that people can go to.

and IF apple wants its MP3 player to only function with itunes and can't take the music to another mp3 player oh well. to bad so sad.

IF i ever buy an IPOD i know that i can only use it with itunes and many people know that.

Create something something successful and get sued YEY!

RE: Monopoly?
By glennpratt on 1/3/2007 10:41:11 AM , Rating: 2
When someone buys an IPOD they know that it will work with itunes ONLY.

Bullsh!t. When someone buys an iPod they know they blew a wad of cash on a trendy Walkman. Some people know more, but I would bet they are a small minority.

GOOD for apple. THEY dont have a monopoly. Isn't a MONOPOLY WHEN like a cable company wont ALLOW others to use it's cable lines?

Please tell me, what is the difference. iTunes is the way to the iPod (sure other MP3 players are available), your local cable company is the way direct cable to your TV (sure there is DirecTV, IPTV, FiOS, Dish, ATSC, etc, etc). Both monopolies.

RE: Monopoly?
By Lord Evermore on 1/3/2007 7:36:37 PM , Rating: 2
Cable is a monopoly because they worked out deals with local government that makes it impossible for another provider to get a franchise in those cities, so they can't string their own lines to provide you with an alternative. Cable providers are also not required to allow line-sharing so that another ISP can provide service over their lines. Only companies that already have franchise deals with a city can run lines, such as the phone company or power company.

Apple doesn't have any deals that make it so they're the only MP3 player that anybody can purchase. When you buy an iPod, you make a purchase of a product that specifically is tied to iTunes. You made a choice. You weren't forced to make it because only iPods are available in California. You can use iTunes without buying an iPod, and if you chose to use iTunes you've specifically made a decision to use a service that isn't compatible with other players. If Apple won't license Protected AAC to other player makers, that's their choice, and if they will license it but nobody wants to pay a license, then that's not Apple's fault.

Every page about the iPod on Apple's site specifically says iPod and iTunes. iPod also supports other formats so you're free to use MP3 or whatever, and there's no law that says Apple has to support Microsoft DRM, just as MS doesn't have to make a player that supports Apple DRM.

RE: Monopoly?
By Hoser McMoose on 1/2/2007 3:18:14 PM , Rating: 4
Generally speaking a "monopoly" has been defined as controlling more than about 80% of the market. By this definition Apple does indeed have a monopoly in iTunes Music Store. And yes, Microsoft does have a monopoly in their Windows OS, though I'm not sure about the other examples you mentioned (certainly Sony does not have a monopoly on consoles, they definitely don't have 80% of the market).

Now, the trick is that simply having a monopoly is not illegal, but there are restrictions on what you can do with it. In particular there are two things you can't do, predatory pricing to force smaller competitors out and using your monopoly with one product to push a different product. Apple should be safe enough with the first, their pricing in very much in line with the competition. However it's the second one that could cause problems. One could make a very valid argument that Apple's using their monopoly on iTunes to block other competitors in the digital music player business. Only the iPod can work with iTunes and Apple has shown absolutely no interest in licensing the technology to any other hardware vendors.

Long story short, Apple better have their lawyers ready to go, because they are definitely walking on some shaky ground. Of course, Microsoft has done many of the same things and managed to get away with a very light slap on the wrist, so maybe Apple doesn't have too much to worry about.

RE: Monopoly?
By TravisO on 1/3/2007 11:06:58 AM , Rating: 2
I wasn't aware that if you had an extremely popular product, it could be considered a monopoly

Welcome to the American way!

Amazes me
By viperpa on 1/2/2007 12:32:50 PM , Rating: 2
Just another lawyer trying to make easy money. There are plenty of other music players out there to choose from and other music sites besides ITunes. You don't have to buy music from ITunes, just buy a CD and rip it to an IPOD. I own 3 IPODS so I don't know what the issue is.

Maybe have a little cheese with that whine?

RE: Amazes me
By EglsFly on 1/2/2007 2:12:29 PM , Rating: 2
There are a lot of issues right now with music and portable players. iTunes only works with iPod, Microsoft's own "Plays for Sure" doesn't even work with its Zune music player, and so on...

I agree with viperpa, your better off buying your own CD and ripping it in the quality you choose and you don't have to deal with DRM issues.

This is your best choice until all the issues caused by implementing various forms of this DRM fiasco gets worked out.

RE: Amazes me
By encryptkeeper on 1/2/2007 2:46:02 PM , Rating: 2
Apple's DRM isn't even that strong though. You're allowed what, 7 computers to play the same ITune on? And how many players can you put it on? Jesus, the case has no merit just on the idea that you can rip the song again if DRM locks the first one. Just burn your ITunes to CD if it's something you downloaded, and then you'll never have any problems.

RE: Amazes me
By ghost101 on 1/2/2007 5:56:32 PM , Rating: 2
What if ive bought hundreds of albums from itunes. Now i want to buy a new player. Because Itunes is tied with the ipod, if i want to use my music, I will be FORCED to buy an ipod.

RE: Amazes me
By glennpratt on 1/3/2007 2:23:45 PM , Rating: 2
EXACTLY. This is the issue. People spend thousands of dollars on iTunes, so even if the DRM is weak and there is a burn option, most consumers (people not reading this website) are tightly locked to the iPod.

I usually consider myself conservative, so I'm scared to think exactly how a law correcting this would look, but it could be very good for the consumer and the industry to break up these lame DRM fiefdoms.

RE: Amazes me
By Lord Evermore on 1/3/2007 7:41:02 PM , Rating: 2
Guess what! You agreed to the license that said it was that way!

Pretty much every other music service has similar restrictions. You get a subscription to Napster or whatever, you don't OWN a copy of anything you download, you only have permission to listen to it as long as you've kept up your payments. As soon as your account is shut down, DRM kicks in and you have nothing for all your money. You download music from some other store which has Microsoft DRM, and hey, now you aren't allowed to put that music on an iPod, so they must be controlling all your choices because you can't choose the player that you want!

While I'm no fan of apple...
By d33pblue on 1/2/2007 12:42:23 PM , Rating: 2
I think this lawsuit for the Ipod "monopoly" is just laughable.

The only thing I really see that they could be nailed for is being proprietary and having a closed system. Fortunately though, that does NOT put them in the wrong. If it did, half the companies in the computer industry would be sued into bankruptcy for having some sort of closed system product.

RE: While I'm no fan of apple...
By palellama on 1/2/2007 1:02:44 PM , Rating: 2
Well, they aren't being sued for being a monopoly. The issue is that the rules of competition change once you become a monopoly. The issue in this suit is the same as the 2000 suit against Microsoft, are they tying sales of two different products?

It is also possible that their closed system itself will be the subject of some future suit because under the right conditions refusal to license your technology when you hold monopoly power can be illegal; though this is a much more stringent standard than a tying claim.

The reason the lawsuit only goes after Apple is because they are the only company with a monopoly in this market. Microsoft can engage in the exact same behavior with Zune if they choose and it will not be illegal.

By Lord Evermore on 1/3/2007 7:49:31 PM , Rating: 2
Apple didn't use anti-competitive practices, backroom deals, egregious license requirements, in order to make iPod the most common MP3 player. They did it by making a product that everybody loved, and which individual consumers were free to purchase or not purchase. They weren't forced to pay for an iPod with every Mac they bought. They aren't forced to get an iTunes account to use an iPod, they aren't forced to get an iPod to use an iTunes account. Apple is under no legal requirement to make iTunes' DRM format one which other players support, and under no legal requirement to make iPod support other DRM formats.

Using a monopoly to tie two products is an issue if you already have the monopoly, THEN start changing the rules. Apple has always tied iPod and iTunes together, consumers have always had to agree to that when they made the purchase. If they'd gained 80% of the market for music players, then modified them so that they only worked with iTunes, or vice versa, it'd be an issue.

Competing products have no barrier to entry created by Apple, in terms of producing a different music store, or a better music player. Apple is not required to make it easy for their product to interact with others.

Microsoft's legal problems came about because they used anti-competitive practices to get control of the OS market for consumer PCs, and continued to use their monopoly to prevent the possibility of a competing product from even being an alternative in the retail market, and then began tying other applications into the operating system.

I'm curious
By Spivonious on 1/2/2007 12:58:52 PM , Rating: 2
I'm curious if Apple has used any anti-competitive measures to keep others out the market. I know that for my fiancee, the only reason she wants an iPod is because it's the only player that has an abundance of accessories. She admits that it's not as good as other players, but having the option of getting a dock, or a car player, or a choice of covers and cases is important to her. Is this a monopoly? I don't know, but it should at least be investigated.

RE: I'm curious
By Goty on 1/2/2007 1:14:18 PM , Rating: 1
The iPod has such a large assortment of accessories because it's popular. Companies are smart enough to realize that you don't make accessories for products that don't sell.

RE: I'm curious
By ghost101 on 1/2/2007 6:05:47 PM , Rating: 2
Nope shouldnt be investigated. This isnt the linking of two different products (music and music players in this case), but accessories for an ipod would be in the same sector.

If people really want an analogy, what apple is doing, is if a music label suddenyl said, all of its CDs/Albums will work with a certain cd player. People would be seriously annoyed because if all their CDs were published by Sony for example, theyd have to buy Sony products.

NB Sony dont do this by the way, and I dont have anything against their products. I simply used it for illustrative purposes.

Other Companies are just Jealous!
By MacUserByDay on 1/2/2007 6:45:04 PM , Rating: 1
The only reason for the stupid lawsuit is because other companies with online download stores and media players are not getting sales because people prefer the iPod/iTunes experience. Buying anything from Apple is a "Choice", it's not a requirement by law. You don't even need an iPod to download music from iTunes and play it. Isn't this the same thing but now the tables are turned, people buy into Windows and ignore the Mac. Many companies make media players and download sights for music and none of them work on a Mac. If it weren't for Apple, Mac users would still be without MP3 players and paid for downloads. Apple does not stop any company from producing MP3 players and software that work on the Mac and yet several companies refuse to do it.
This is not a monopoly, Apple is quite fair on how it handles this whole thing. For example, if I wanted to download music from Rhapsody/Zune Marketplace/Urge or download Videos from Amazon's Unbox I'm out of luck, because I'm using a Mac. These companies have to open to Macs if they expect Apple to be open to everyone else. At least Apple's products work on both Macs and PC's.

RE: Other Companies are just Jealous!
By stevel114 on 1/3/2007 7:48:49 PM , Rating: 2
At least Apple's products work on both Macs and PC's
I am assuming you are talking about Itunes and Ipods not all Apple products! Both the iPod and Zune are designed make a profit for the hardware maker and the music provider. Which in both cases are the same companies. The person who produces the music is the one getting a raw deal since thier product is not being sold in all possible outlets. Wouldn't it be great if you went to Target and the only way you could buy anything is with a Target provided credit card. That why they would make a profit loaning you the money and on the sale. This is what the iPod and Zune players want. You buy thier hardware and then can only get the majority of the content from them.

By Lord Evermore on 1/3/2007 7:52:12 PM , Rating: 2
You are in fact free to get your content from other sources and put it on your iPod. Apple isn't required to make sure there are other good online music stores, or to make sure that other stores use DRM that iPod supports.

By Clienthes on 1/3/2007 11:53:10 AM , Rating: 2
If iTunes and iPod are identified as a monopoly, maybe that will force Apple to either license other DRM formats for use on iPods, or let other players use their DRM format; we're one step closer to interoperability. If it isn't a monopoly, nothing changes.

Is there any reason that this lawsuit would be bad for consumers?

RE: Excellent!
By iamright on 1/3/2007 12:12:49 PM , Rating: 2
Is there any reason that this lawsuit would be bad for consumers?

Uh yeah, obviously when parasites attempt to take the wind out of the sails of the leading ship it slows the progress. People buy ipods because they are the best (based on consumers purchases). Apple continues to make good products that sell more than the competition. If Apple didn't have such a overwhelmingly popular product nobody could accuse them of monopolizing. It is VERY bad when the leader is forced to change because of whining special interest group parasites. If it was really so bad people wouldn't buy ipods. You don't need a doctorate degree in economics to know that apple doesn't have a monopoly. Nobody puts a gun to the consumers head and forces them to chose and ipod over an iriver or zen or zune. Consumers can buy CDs and they are not forced to buy drm music. It's the socialistic special interest groups that slow down innovation and stifle the growth of innovative companies like apple.

Missing the point
By stevel114 on 1/3/2007 2:59:54 PM , Rating: 2
I think some of you are missing the point of why Apple keeps the doors shut on other MP3 players. The iTunes song catalog is the largest in the market. So for you to get to the songs you want then you have to buy a iPod. I personally use Napster which is second in the market. I have a Creative Vision M which works great. I do wish that if I wanted I could shop around and find all the music I wanted but I can't because Apple keeps it doors closed to my MP3 player. Recently I bought a Zune, but again the Zune music site will only allow Zune players. I think this is such a rip off to all the music artists because I can only buy from some sites and not others. Try and get any songs from the Beatles. Can't because only Apple has them. Think of the sells that are being missed. That is why I think Apple should open it's doors for any MP3 player.

RE: Missing the point
By Lord Evermore on 1/3/2007 7:57:48 PM , Rating: 2
Apple isn't required to make sure that other people are able to get sales, or that artists are able to get the widest possible exposure. It's up to the copyright holders to license the various stores to be able to sell that music widely. If they don't WANT to let some other outlet sell the music, that's their fault, and "artists" need to complain to the executives they made deals with, not the retail outlet, and consumers should complain to any online store which choses not to make a deal with the content providers, or the providers which choose not to make their content available to other stores. Not complain that Apple ought to support other players just because you can't buy the content elsewhere (which in fact you can, buy a CD).

By iamright on 1/3/2007 10:56:43 AM , Rating: 2
Only in America can you be sued for making a good product that sells more than the crappy competition. This desperate tactic has been used since the beginning of time and is now simply taking a new form. Imagine if a moron tried to sue Chevrolet because she bought some diesel and it wouldn't work in the gas car that she purchased from them. Why would any moron sue because Apple sells music in a format that only works with ipods. People are responsible to do their research and decide what to buy just like a person buying anything knowing its features and limitations. If anyone is really concerned about DRM they can buy cds and rip them in what ever format they choose as they compulsively switch between digital music player brands. I am insulted deeply when ever I hear about these lawsuits where losers attempt to leech onto successes and parasitically deride them.

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain
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