Ondrej Holzman After two weeks of a trial in Oakland, California, on whether Apple harmed users with its changes to iTunes and iPods, an eight-member jury is now on its way. She heard the final arguments of both sides and should decide in the following days what actually happened in the music industry about ten years ago. If it decides against Apple, the apple company can pay up to one billion dollars.
The plaintiffs (over 8 million users who purchased an iPod between September 12, 2006 and March 31, 2009, and hundreds of small and large retailers) are seeking $350 million in damages from Apple, but that amount could triple due to antitrust laws. In their closing argument, the plaintiffs stated that iTunes 7.0, released in September 2006, was primarily intended to eliminate competition from the game. iTunes 7.0 came with a security measure that removed all content from the library without the FairPlay protection system.
A year later, this was followed by a software update for iPods, which also introduced the same protection system on them, which had the result that it was not possible to play music with a different DRM on Apple's players, so that competing music sellers had no access to the Apple ecosystem.
According to the plaintiffs, Apple harmed users
The plaintiffs' attorney, Patrick Coughlin, said the new software could wipe out a user's entire library on iPods when it detected any inconsistencies in recorded tracks, such as music downloaded from elsewhere. “I would liken it to blowing up an iPod. It was worse than a paperweight. You could have lost everything," he told the jury.
“They don't believe you own that iPod. They believe they still have the right to choose for you which player will be available on your device that you bought and owned," Couglin explained, adding that Apple believed it had the right to "degrade your experience of a song that one day you might play and the next day not again" when it prevented music purchased from other stores from accessing iTunes.
However, he didn't wait too long for Apple's negative reaction. "It's all made up," countered Apple's Bill Isaacson in his closing speech. "There is no evidence that this ever happened ... no customers, no iPod users, no surveys, no Apple business documents." He said the jury should not punish Apple for innovating and punish it based on nonsense.
Apple: Our actions were not anti-competitive
For the past two weeks, Apple has denied the lawsuit's allegations, saying it made the changes to its protection system primarily for two reasons: first, because of hackers trying to break its DRM to hack, and because of I bargain, which Apple had with record companies. Because of them, he had to guarantee maximum security and fix any security hole immediately, because he couldn't afford to lose any partner.
The plaintiffs disagree with this interpretation of events and claim that Apple was only using its dominant position in a market it did not want to let in any potential competition, thus blocking its access to its own ecosystem. “When they were having success, they locked the iPod or blocked a particular competitor. They could use DRM to do that," Coughlin said.
As an example, the plaintiffs cited Real Networks in particular, but they are not part of the court proceedings and none of their representatives testified. Their Harmony software appeared shortly after the launch of the iTunes Music Store in 2003 and tried to bypass FairPlay DRM by acting as an alternative to iTunes through which iPods could be managed. The plaintiffs in this case demonstrate that Apple wanted to create a monopoly with its FairPlay when Steve Jobs refused to license its protection system. Apple considered Real Networks' attempt to bypass its protection as an attack on its own system and responded accordingly.
Lawyers for the California-based firm called Real Networks just "one small competitor" and previously told the jury that Real Networks downloads accounted for less than one percent of all music purchased from online stores at the time. During the last performance, they reminded the jury that even Real Networks' own expert admitted that their software was so bad that it could damage playlists or delete music.
Now it's the jury's turn
The jury will now be tasked with deciding whether the aforementioned iTunes 7.0 update can be considered a "genuine product improvement" that brought a better experience for users, or whether it was intended to systematically harm competitors and thus users. Apple brags that iTunes 7.0 brought support for movies, higher definition videos, Cover Flow and other news, but according to the plaintiffs it was mostly about security changes, which was a step backwards.
Under the Sherman Antitrust Act, a so-called "genuine product improvement" cannot be considered anticompetitive even if it interferes with competing products. "A company has no general legal duty to assist its competitors, it does not have to create interoperable products, license them to competitors or share information with them," Judge Yvonne Rogers instructed the jury.
The judges will now have to answer mainly the following questions: Did Apple really have a monopoly in the digital music business? Was Apple defending itself against hacker attacks and doing so as part of maintaining cooperation with partners, or was FairPlay using DRM as a weapon against competition? Did iPod prices go up because of this alleged "lock-in" strategy? Even the higher price of iPods was mentioned by the plaintiffs as one of the results of Apple's behavior.
The DRM protection system is no longer used today, and you can play music from iTunes on any players. The current court proceedings thus only concern possible financial compensation, the verdict of the eight-member jury, which is expected in the coming days, will have no effect on the current market situation.
You can find the complete coverage of the case <a href="https://cdn.shopify.com/s/files/1/1932/8043/files/200721_ODSTOUPENI_BEZ_UDANI_DUVODU__EN.pdf?v=1595428404" data-gt-href-en="https://en.notsofunnyany.com/">here</a>.
