Apple Accused of Restricting Consumer Choice; Jobs Forced to Testify
March 23, 2011 11:02 AM
RealNetworks raises serious questions about Apple's tactics with iTunes
An order issued earlier this week by a federal magistrate judge will require
CEO Steve Jobs to answer questions regarding an
iTunes antitrust suit
, Apple's proprietary digital media player application, was launched in 2003. It became wildly successful, even beating Wal-Mart as the biggest music retailer in April 2008.
But according to
, a Seattle-based provider of Internet media software and services, iTunes allegedly utilized unfair practices in the digital media industry between October 2004 and March 2009. In july 2004, RealNetworks announced that its online store offered music that could be used on iPods through a technology called Harmony. Five days later, Apple
to its iPod FairPlay software, which is a proprietary software used by Apple to encode its digital music files. The iPod FairPlay software allowed iTunes music files to be used only on iPods, and blocked digital music sold by other companies to be played on the iPod. This included RealNetworks' digital files.
In 2005, Thomas Slattery, an iTunes customer, filed a lawsuit on behalf of customers who believe Apple "illegally limited consumer choice" by making iTunes exclusively for iPod and vice versa. He asserted antitrust claims from Apple's use of the FairPlay software.
In 2008, Apple faced the same issues with consumers in Europe who complained about the lack of compatibility with iTunes and the iPod. The European Union Competition Commission started an inquiry in 2005, where regulators from Norway, Denmark and Sweden examined the situation. As a result, Apple lowered the prices of iTunes tracks in the United Kingdom.
In March 2009, iTunes began selling digital music without the proprietary software, and in May 2010, the U.S. Justice Department's antitrust division began looking into Apple's business
practices associated with iTunes
and the iPod.
Now, U.S. Magistrate Judge Howard R. Lloyd in San Jose, California has issued an order that allows lawyers for consumers to question Jobs. The deposition can only consist of questions regarding Apple's software changes made in October 2004, which prevented digital tracks from RealNetworks from being played on the iPod. In addition, the deposition can only be two hours long.
"The court finds that Jobs has unique, non-repetitive, firsthand knowledge about the issues at the center of the dispute over RealNetworks software," said Lloyd.
Lloyd also declined requests from the plaintiff
to question Jobs
regarding Apple's refusal to license FairPlay to other companies as well as the companies use of the software on digital tracks from iTunes and the iPod. Both claims were dismissed from the litigation in December 2009.
"Plaintiffs remaining claims rely on the allegation that Apple attempted to maintain a monopoly in the audio download and portable music player market by issuing updates to FairPlay, Apple's proprietary digital rights management software," said David Kiernan, Apple's attorney.
Also, Kiernan noted that "any deposition of Mr. Jobs would be repetitive, at best."
A deposition has not been scheduled yet, according to San Diego lawyer Bonny E. Sweeney, who is representing the plaintiffs, but a hearing regarding Apple's motion to dismiss the case is scheduled for April 18.
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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