Apple is on trial for unfair competition, accused of harming consumers by imposing the iPod as the only way to listen to music, at an increased price.
The trial that begins on December 2 in a federal court in the United States will bring back to our memory the difficult path that the record industry followed before reaching today's music distribution services with streaming technology.
Specifically, the trial, which begins in Oakland, USA, concerns a mass lawsuit filed on behalf of 14 million consumers in 2005 in connection with a dispute between RealNetworks and Apple. The plaintiffs allege that Apple used unfair competitive practices in the market for distributing music over the Internet. This is because Apple excluded Harmony, RealNetworks' application that allowed the playback of music from its own record store on the iPod, from its iTunes.
The first iPod was released in 2001. The iTunes Store launched in 2003. At the time, record labels were ruthlessly pursuing peer-to-peer file-sharing services like Napster and Kazaa, when Steve Jobs managed to convince them to partner with his own online store by placing their rich repertoire under the protection of its own digital rights management software. Called FairPlay, it would also control music playback on the iPod.
At the same time, RealNetworks operated the competing RealPlayer Music Store, music from which could not be played on Apple's device. Similarly, music from the iTunes Store could not be played on devices other than the iPod, such as the Microsoft Zune or Diamond Multimedia's popular Rio.
RealNetworks responded by releasing Harmony software, which solved the problem. However, Apple soon blocked Harmony from running again and again with an update to iTunes (in September 2006, a new iTunes update blocked an updated version of Harmony).
According to the lawsuit, Apple charged 7.5% more for the iPod to the end consumer and 2.5% more to resellers, causing a cost of $352 million. If Apple loses the lawsuit, the damages could triple to more than $1 billion, according to a report in BusinessWeek.com.
The Associated Press estimates that during the period covered by the lawsuit, Apple sold 150 million iPods over two and a half years at a cost ranging from $79 to $349.
Apple discontinued FairPlay in 2009, but the plaintiffs argue that consumers are entitled to compensation for the harm they suffered from the artificially inflated prices on iPods sold between September 12, 2006, and March 31, 2009.
The plaintiffs will attempt to argue that Apple, and specifically its chief executive, Steven Jobs, became furious when he learned of the availability of the Harmony software, and to prove this, they will show a videotaped testimony of Jobs before the jury. Steve Jobs died in October 2011 from pancreatic cancer.
Although the jury selection was done very carefully, the presiding judge Yvonne Gonzalez Rogers in the Oakland District Court warned both sides that invoking the name Steve Jobs by one side or the other could have unintended consequences. The plaintiffs may portray him as a “ruthless CEO who went berserk when he learned about Harmony.” On the other hand, Apple’s lawyers will try to present him as a “visionary” who had no reason to engage in unfair practices under the trivial threat of RealNetworks and will even invoke his terminal illness to stir up emotion in the jurors. However, the judge suggested a truce.
Source: tech.in.gr
