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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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.

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis
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