Apple and anti-competitive practices (1 Viewer)

[Adam Lenhardt]

After reading that the latest version of iTunes blocks other devices from syncing with it, I'm wondering if Apple will start attracting attention from regulators similar to what Microsoft has had to deal with. They've gotten away with a closed system in other aspects of their business model because their market share is not dominant. However, the iTunes Store has roughly 80 percent of the online music market -- placing it roughly at the same market share in online music as the combined top two Windows OSs are in operating systems. At that point, it seems anti-competitive to me to deliberatelSubmity lock all other hardware out, as 8.2.1 seems to do.

 

[Christian Behrens]

Difference being, nobody forces anybody to use iTunes. If you don't have an iPod, feel free to use any music management software you like. Buy your music from Amazon or any other online store, because again, nobody is forced to buy from iTunes. Heck, even
the music you *did buy* from iTunes can be used with any other computer or device that understands AAC.

Concerning the Pre, they used a hack that made their device pretend to be an iPod. If the loophole that allowed this hack to be done is closed, is that illegal?

Being successful does not make you a monopoly.

-Christian

 

[Sam Posten]

Originally Posted by Adam Lenhardt

deliberatelSubmity lock all other hardware ou

WTHeck is this, subliminal messages?

 

[DaveF]

Quote:

Originally Posted by Adam Lenhardt

After reading that the latest version of iTunes blocks other devices from syncing with it, I'm wondering if Apple will start attracting attention from regulators similar to what Microsoft has had to deal with.

They will attract attention. Competitors will also attempt whisper campaigns to attract attention.

Personally, I think Apple acted reasonably. First, had the Pre synching continued, Apple would take service calls from Pre owners when the Pre synch had hiccups, even though it's a hacked and unsupported operation. And iTunes is Apple's tool; if another company wants to synch to a user's iTunes music, I understand they can create their own custom tool to read the iTunes data and do so.

Second, how did Palm not see this coming and why was iTunes synch part of their launch-campaign feature set?

Does Apple have a monopoly in some market segment and worthy of being regulated? They've got 70% of music player market. Is that a monopoly for audio players? They have 70% of download business and are the leading music retailer (no percentages given). Do they have a monopoly of the retail music market? Or even the sub-market of downloads? Do they have a monopoly on the retail-music / playback-hardware / synching software market?

I'm unconvinced Apple is yet a "monopoly" to be regulated.

 

[Adam Lenhardt]

Originally Posted by Christian Behrens

Difference being, nobody forces anybody to use iTunes. If you don't have an iPod, feel free to use any music management software you like. Buy your music from Amazon or any other online store, because again, nobody is forced to buy from iTunes. Heck, even the music you *did buy* from iTunes can be used with any other computer or device that understands AAC.

Nobody forces you to use Windows + Internet Explorer, either, and yet it has been the target of legal action. iTunes is the largest music retailer in the world; Apple's action seeks to restrict access to that market to its own proprietary devices.

Concerning the Pre, they used a hack that made their device pretend to be an iPod. If the loophole that allowed this hack to be done is closed, is that illegal?

Intent matters. If the method that allowed the Pre to sync with iTunes was some quirk that got ironed out as part of organic development, there'd be no problem. But the 8.2.1 update changes the functionality of iTunes to specifically exclude other devices. That seems abusive to me.

Being successful does not make you a monopoly.

-Christian

I believe that was Mr. Rockefeller's argument as well. A federal judge ruled against Microsoft in United States v. Microsoft because Windows and Internet Explorer were deemed two separate products. That being the case, Microsoft's integration of Internet Explorer into Windows was held to be illegal. Nothing stopped people from downloading Netscape Navigator or Opera and using them. Nothing stopped people from choosing a completely different operating system.
Apple similarly wants iPod/iPhone + iTunes to be considered as one cohesive product rather than as two separate products. If they are two separate products, iTunes should be completely device-nuetral, just as Windows was forced to be completely browser-nuetral.

Originally Posted by Sam Posten

WTHeck is this, subliminal messages?

I swear that was not in there when I hit Reply! This new forum software is very quirky.

Originally Posted by DaveF

Personally, I think Apple acted reasonably. First, had the Pre synching continued, Apple would take service calls from Pre owners when the Pre synch had hiccups, even though it's a hacked and unsupported operation. And iTunes is Apple's tool; if another company wants to synch to a user's iTunes music, I understand they can create their own custom tool to read the iTunes data and do so.


Second, how did Palm not see this coming and why was iTunes synch part of their launch-campaign feature set?

I think Palm did see this coming, and used the hack as a means to gain standing for a lawsuit. Yes, it could create a third-party program to read and write to a consumer's iTunes library. But that requires a separate piece of software that iPod customers do not need. Just as having to download a different browser back in the Windows 98 days was considered an onerous burden on the market, I think having to install third-party software to approximate the functionality of iTunes is an onerous burden on this market. And assuming that Palm does create such a tool, who's to say that Apple won't encrypt iTunes libraries or otherwise change how the data is stored and retrieved for 8.2.2?

As a niche player, they could get away with being a completely closed system. As a dominant player, I'm not sure that's still true.

 

[Sam Posten]

Originally Posted by Adam Lenhardt
I swear that was not in there when I hit Reply! This new forum software is very quirky.

LMAO

 

[KeithAP]

As I understand it, the Pre actually identified itself as an iPod to iTunes. Wouldn't that be copyright infringement on Palm's part? To make matters more interesting, a lot of ex-Apple people went to work at Palm.

But in the end, since iTunes has dumped DRM, anyone can use it to buy music and then use something else to sync the music with their Pre. Personally, I see no issue here but I am not a lawyer. Heck, I don't even play one on TV.

-Keith

 

[DaveF]

With Microsoft and Windows, it was apparent to everyone that MS had a monopoly in the computer OS and Office software business and had been abusing it for years. The Internet Explorer fight was a proxy battle over that larger monopoly issue as the industry looked to the possible future of computing.

Quote:

Originally Posted by Adam Lenhardt

As a niche player, they could get away with being a completely closed system. As a dominant player, I'm not sure that's still true.

Dominant, market leader, largest competitor. None of these necessarily mean "monopoly".

The question remains whether Apple has a monopoly (and over what) and are they engaging in anti-competitive actions. I don't think they're yet a monopoly in either the retail music business nor the handheld music player business.

Apple is not blocking anyone from accessing music bought from iTunes. To the contrary, they've worked to open it by pushing to have DRM removed, making iTunes music playable on other devices. And as RIM shows, competitors can make software that lets their device talk to a Mac and synch with the iTunes library.

Defensive behaviors are necessary when you're the smaller competitor and illegal if you're a monopoly.
But it all comes down to whether Apple is a monopolist.

 

[Adam Lenhardt]

Originally Posted by Keith Plucker

But in the end, since iTunes has dumped DRM, anyone can use it to buy music and then use something else to sync the music with their Pre. Personally, I see no issue here but I am not a lawyer. Heck, I don't even play one on TV.

I will grant you that the end of DRM has significantly strengthened Apple's position; when it was completely closed from proprietary DRM in the iTMS, so that iTunes and the iPod were the only things that could read the songs, it formed a sort of vertical integration much like the old studio system.

 

[Christian Behrens]

Of course, the DRM was there because the music industry wanted it, not Apple. Apple still has the industry-mandated problem of market fragmentation, i.e. why should I not be allowed to buy music from the German iTunes store that is not sold in the US? But I can't, thanks to the music companies.

In fact, the EU is now on the tail of the music industry to create a pan-European market, so that at least within Europe those artificial borders are torn down.

None of these restrictions are of Apple's doing. In fact, to their credit, the fairplay DRM allowed the music to be played on 5 computers and unlimited iPods. That was better than anything else out there.

Comparing that to the MS Windows/IE situation is comparing apples and oranges (no pun intended). MS was trying to create a version of the Web that would only work with IE, and thus only with Windows. Considering that IE was bundled and then built into Windows, AND having a quasi monopoly (yes there were other OSes out there, but effectively businesses and therefore people required Windows) they could easily push IE out to everyone to become the de-facto standard, without being compatible with what already existed.

That is definitely not the situation with iTunes. Contrary to my response above, you don't even need iTunes to fill your iPod. There is a plugin for Songbird available, there are apps like Floola (Mac, Windows, Linux) out there, so all you really need iTunes for is buying from the iTunes store.

All your music (store bought or ripped) is neatly organized in folders in your user folder, easily accessible to any program that wants to deal with your media files.

So just because the ecosystem Apple built is the easiest to use and absolutely sufficient for the big majority of users does not make it a monopoly.

In fact, buying an iPod today doesn't even come with the software necessary. Sure, Mac users have iTunes on their machines, but Windows users have to go out and download it. There is no reason why Palm couldn't have done something similar.

-Christian