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RealNetworks raises serious questions about Apple's tactics with iTunes

An order issued earlier this week by a federal magistrate judge will require Apple CEO Steve Jobs to answer questions regarding an iTunes antitrust suit.

ITunes, 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 RealNetworks, 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 released updates 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. 

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Some random thoughts
By akugami on 3/23/2011 3:04:12 PM , Rating: 0
I think nothing will come of this. Apple has a fairly decent defense against this lawsuit. First, they can argue they're not a monopoly even if they're the largest music retailers. There are plenty of other avenues to purchase music from so certain business practices that are restricted for monopolies do not apply. Second, the RIAA as a whole pretty much forced Apple to adopt DRM or they were never going to be allowed a license to sell music online. Third, Apple does not restrict you from using music from another source on your iPod. You can rip CD's and import MP3's. Fourth, it can be argued that what Real Networks (and Palm) did was to exploit weaknesses in the Fairplay DRM scheme and that Apple was patching it up.

Incidentally, all of you people who will double pinky triple swear that they will never ever ever ever ever use an Apple product contribute to Apple's popularity. Part of the reason why the media likes Apple is because of all the hits they know they will get. Because of that, Apple gets higher exposure than they would otherwise. Look at how many posts in this thread (as well as other threads) in DT that are nothing but hate for Apple whenever Apple is even remotely mentioned. I don't really understand why some of you who reportedly will never use an Apple product even if you got one free spend so much time following Apple news. Here's a novel idea, why don't you just ignore anything Apple?

RE: Some random thoughts
By jecs on 3/24/2011 1:34:04 AM , Rating: 2
All this discussion makes me go back one or two years ago on information not accurate about DRM and iTunes and I don't know how well informed are "we" all on this subject. And on my side, because I stooped worrying about it a while ago I forgot manny things and I cannot confirm or deny anything at a 100%.

On the claim that you are restricted to using the music on Apple/iTunes closed system at least I can say there are legal software to remove the DRM rights and play your legal purchased tunes where you decide. What I can't confirm is if it is legal in the US, but I am "almost" sure.

But also, I remember the upgrade to this legal status on iTunes more than a year ago when I personally upgraded and payed more for my purchased music to enable the 256 bit DRM format from 128 bits, and the new legal status with the new bitrate allowed me to own the music and not just license it. So the music is mine to play it where I want it.

On the discussion about the closed Apple system, this is their legal decision to implement it and yours to get into. But, to my not legal expertise this is all the same as the Xbox or Nintendo or Playstation. If you buy a game for a console system you have a closed system with a disc or software that only works on that specific ecosystem and manny times you cant get a specific title. It has its advantages and its disadvantages but, I don't think SONY or MS or Nintendo are money traps or wrong business models. I am speculating here as I prefer to play occasionally a few games on my PC and sometimes on my Mac. But for many people the Apple system works great and is not a trap more than any other commercial system. Start investing a lot of money and you are on your own, but don't blame big business models more than our all global society and yourself for not knowing what you are doing.

In my experience I have a small investment on iTunes and a way bigger collection from my CDs. It has being great because iTunes and Amazon allowed me to buy good quality music right at my desktop and because most of the tracks I purchased I would had a difficult time buying the whole CD. So I picked specific songs I always wanted. Also, I did the same on Amazon, and with property I can say that sometimes you could find the same song with different availability on both systems. I was able to buy some songs on Amazon that couldn't be purchased as separated on iTunes (only the album option was available). So Amazon is actually a great alternative.

In the end I can say there is nothing more frustrating than hating something and losing the opportunity to enjoy its advantages. I have both a Mac Pro and a very recent 2600K/ASUS/DELL Windows machine. And I don't know witch one I love more. But the same to my other brand devices. I research a lot and finally I invest on technology without concerns on "evil" practices anywhere by principle. As long as it delivers a service, I know what I am buying and it is good or best quality it becomes part of my repertoire if I can afford it.

"Well, there may be a reason why they call them 'Mac' trucks! Windows machines will not be trucks." -- Microsoft CEO Steve Ballmer

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