Lawsuit: Apple has become a monopoly
updated 09:40 am EST, Fri January 4, 2008
Lawsuit: Apple is monopoly
Apple has become a monopoly, a recent lawsuit against the company alleges. The case was filed by one Stacie Somers, who says that the company's dominance in media players, and online music and video, violates the Sherman Antitrust Act; specifically, the Somers complaint revolves around Windows Media Audio, which is notably unsupported by both the iPod and iTunes, despite the fact that it is one of the most common music formats for sale, and it is said that Apple could easily afford a license from Microsoft. Somers estiamtes the maximum cost of a license at $800,000. Some vendors of WMA tracks include Best Buy, Yahoo, Napster and Virgin Digital.
This creates a problem, Somers says, because record labels are "generally unwilling" to publish their music without DRM restrictions, such as those imposed on most AAC and WMA files. Many people may thus have music collections that are suddenly incompatible if they decide to switch to Apple products.
The suit further alleges that while iPods have the hardware to play WMA files, Apple has installed "crippleware" to prevent every other protected format from working except for Apple's FairPlay. Moreover, Apple is said to be overcharging based on memory capacity -- the wholesale price difference between 1GB and 4GB of flash is estimated to be $5.52, but a Nano with 4GB costs a full $100 more than the now-defunct 1GB size.
Statistics in the suit suggest that Apple controls 75 percent of online video, 83 percent of online music, and over 90 percent of the hard-drive based media player market. Somers' attorneys are working to get the case upgraded to a class action.
Fresh-Faced Recruit
Joined: Sep 2001
is Apple 'monopolistic'
an interesting question. Before you all flame this woman (I had to resist the temptation too), check your fanboy instincts at the door and consider this:
http://www.ftc.gov/bc/compguide/antitrst.htm
"Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not necessarily illegal for a company to have a monopoly or to try to achieve a monopoly position. The law is violated only if the company tries to maintain or acquire a monopoly position through unreasonable methods. For the courts, a key factor in determining what is unreasonable is whether the practice has a legitimate business justification."
http://www.ftc.gov/bc/compguide/maintain.htm
"While it is not illegal to have a monopoly position in a market, the antitrust laws make it unlawful to maintain or attempt to create a monopoly through tactics that either unreasonably exclude firms from the market or significantly impair their ability to compete. A single firm may commit a violation through its unilateral actions, or a violation may result if a group of firms work together to monopolize a market."
Since merely having a monopoly position in a market is not illegal, I think this woman and her lawyers are going to have a hard time proving that Apple has sought to create a monopoly, "through tactics that either unreasonably exclude firms from the market or significantly impair their ability to compete." Compare and contrast how Microsoft has acted WRT Windows and PC manufacturers, vs. Apple. There's not exactly a great hue-and-cry among consumers for MP3 players which play WMA files. Plus, iTunes DOES offer the vast majority of its tracks with DRM, despite what Somers says.
It sure sounds to me like this lawsuit is alleging that Apple is a monopoly simply because the iPod is staggeringly popular. f this lawsuit has any legs at all, then Microsoft could be sued merely because over 90% of PCs run Windows. Case dismissed.