Judge allows antitrust suit against Apple for iPod+iTunes illegal ‘tying’ to proceed

“Apple Computer Inc. must face several federal and state antitrust claims arising from the operation of its iTunes online music store and the sale of its iPod digital music players, a federal judge in California has ruled. Plaintiff Thomas Slattery’s lawsuit claims Apple configured the iPod so that it will play only iTunes files and not digital music files from competing vendors of online music. Apple has also encoded its iTunes files so they will only play on the iPod and not any other digital music player, the complaint says,” Donna Higgins reports for Andrews Publications.

“The suit, filed in the U.S. District Court for the Northern District of California, seeks certification as a class action. Apple moved to dismiss all the claims, but U.S. District Judge James Ware rejected the bulk of the motion,” Higgins reports. “The plaintiff has met all the requirements for asserting a tying claim, the judge said, noting that the complaint alleges Apple has an 80 percent share of the market for legal digital music files and more than 90 percent of the market for portable hard-drive digital music players. Judge Ware rejected Apple’s argument that the tying allegations must fail because people can buy the iPod and iTunes files separately. As for the rest of the suit, the judge allowed Slattery to proceed with his monopolization claim under the federal Sherman Antitrust Act and his claims for violation of California’s antitrust and unfair-competition laws.”

More info in the full article here.

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Related article:
Antitrust suit filed against Apple, alleges iPod and iTunes Music Store illegally ‘tied’ together – January 05, 2005

57 Comments

  1. Hey, Jack Miller! Where are you? It seems like it’s about time for As The Apple Turns to make a comeback, what with all the juicy courtroom drama in Apple’s future. Are you there? We miss you much!

  2. Apple has also encoded its iTunes files so they will only play on the iPod and not any other digital music player

    No, iTunes encoded songs will play on Motorola ROKR and SLVR cell phones. Apple hasn’t widely licensed FairPlay, but they have licensed.

    Not to say that the iTunes software will play on any operating system.

  3. Oh, brother. I can see it now: iTunes will have to be opened to all competitors and Apple will get smacked around for such terrible monopolist tendencies (the fact that they don’t _abuse_ this monopoly doesn’t seem to matter); meantime, M$, which clearly raked consumers over the coals with their practices, is still chugging along abusing its monopoly powers every day.

    Just too pathetic….

  4. I wouldn’t be surprised if this ends up with Apple having to split into the music division into two seperate companies, one for hardware, the other for selling music.

    And of course both will be forced by the courts to license WMA.

    Follow the money trail.

  5. The original iPod played mp3’s and gave you the ability to create mp3’s from your CD’s, the new one’s still do. The other services were added later to support the iPod.

    Unlike Windows programs, I can burn my AAC music to CD’s (Apple make’s that part soooo easy, it’s ridiculous) and play them ANYWHERE!

  6. Well, we all knew this would happen eventually, as long as Apple remained so dominant in the digital music industry. The good news for Apple is that these types of suits move so slowly that by the time its resolved, most of iTunes’ competitors will have gone under.

    Heck, Apple is likely to twist the outcome of this suit to its advantage! If Apple is “forced” to open up either the iPod platform or the iTunes music store, that will finally establish either one as a standard, for once and for all. Competitors will be allowed their piece of the pie, but Apple will remain in control.

  7. This is ridiculous!

    Apple is in no way obligated to have the iPod play files from competing vendors. When the iPod was launched, I don’t think there were any competing vendors. What if there were 1000 vendors with different file formats, should Apple do all that work to make sure the iPod works with all those vendors? Apple works on its own technology. It hasn’t got the time or interest to accomodate other technology. There is no reason for it. Besides the iPod does work with competing vendor music files like allofmp3.com.

    Apple hasn’t encoded iTunes files so that they only play on the iPod. iTunes files have DRM (Fairplay). Software that can decode Fairplay, can play the iTunes files. That is why iTunes files play with Quicktime, which is available for Windows too. So iTunes files can play on Windows PCs, which can be considered a digital music player.

    Plus of course iTunes files can be burnt on CD and ripped to any other format.

  8. Ok then…

    I’m going to sue Microsoft then because my Xbox games won’t play on a PS2 and vice versa!

    I’m also going to sue XM because I can’t receive Sirius programming, and also Dish Network because I can’t receive DirecTV signals, etc, etc.

  9. Apple is such a bully. Obviously, this is so unfair for poor, little, beleaguered Microsoft. How is MS expected to compete with such a huge disadvantage? And the Dell DJ vanishes and no one notices? Michael and Bill will need to hold each other and weep softly on each other’s shoulders while Ballmer videotapes. These are tough times indeed.

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