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After 10 Years, Apple Wins iPod Antitrust Suit

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By Mark Wilson, Esq. on December 16, 2014 12:13 PM

After 10 years of litigation, it's finally over. (Except for the appeals. Oy.) Apple prevailed in a jury trial alleging anticompetitive practices in the operation of its original iPod, which didn't even last through this litigation (Apple quietly discontinued the "classic" iPod at its iPhone 6 event in September.)

So what's going on here? Did Apple win a Pyrrhic victory, a regular victory, or a nominal victory?

Much Ado About DRM

Looks like a regular one. The antitrust suit, which has been around for 10 years, alleged that Apple stifled competition by preventing iPods from being able to play music encoded in competitors' proprietary formats.

Initially, iPods were limited to playing standard MP3s (a nonproprietary, unlocked format) or Apple's DRM-locked MP3 format. ("DRM" stands for Digital Rights Management, a way of copy-protecting computer files.) According to the plaintiffs, if an iPod detected music files in a competitors' proprietary format, it would stop working, requiring a user to erase the iPod and reload all the music onto it.

The trial itself has been even more dramatic than the allegations. Earlier this month, jurors watched a videotaped deposition of Apple's founder and CEO Steve Jobs, who died in 2011, talking about the steps he took to secure Apple's monopoly on the MP3 player market. Then, in the middle of the trial, the named plaintiffs had to be substituted with new plaintiffs because, it turned out, the original plaintiffs never bought an iPod during the time period in question, 2006 to 2009.

How Did Apple Win?

So how did Apple beat the rap? All eight jurors apparently didn't believe that Apple updated iTunes solely for the purpose of locking out competitors' music formats as tools became available for cracking Apple's DRM. (Indeed, one of Apple's competitors -- Real Networks, maker of the now-defunct Real Player -- provided a tool for reverse-engineering Apple's DRM.) Apple lawyers also pointed out that no one had actually been harmed by the practices; i.e., no one lost any money or even any music. And that substitution of a plaintiff mid-trial probably didn't help, either.

There's also a fair amount of unclean hands going on. Apple was the natural and logical target for antitrust violations because its MP3 player business has been so successful. But MP3 player also-rans, like Sony, marketed MP3 players in the early 2000s, and those players had far more restrictions on what users could do with them, going so far as to only permit playing files in Sony's locked, proprietary format. (All those MP3s you had on your computer? Yeah, you had to convert them.)

Much of this is moot, anyway. Apple abandoned DRM in music sold through the iTunes Store in 2009. Really, Apple never cared much for DRM, but locking down files was a condition the music companies demanded. (Notably, no one's going after the RIAA.)

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