Apple Wins Antitrust Case Over Ancient iPod Technology
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UPDATED: Jan 20, 2015
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After almost 10 years of litigation, Apple has prevailed in a class-action lawsuit in which it was charged with violating US antitrust laws.
The case, In re Apple iPod iTunes Antitrust Litigation, was filed in 2005. The plaintiffs claimed that Apple violated the law by creating a monopoly in the music downloading business.
The plaintiffs originally alleged that they were injured because Apple made iPods that would only play songs that were either ripped from the user’s DVD collection or bought from the iTunes store.
Plaintiffs argued that by banning music purchased from competing vendors, Apple hurt the market for other MP3 players and thus made iPod prices higher than they should have been in a competitive market.
The iPods at Issue
The devices at issue were sold between September 2006 and March 2009. They included the fifth and sixth generation iPod Classic, the first three generations of iPod Shuffles, the first and second generations of iPod Touches, and some other devices. The full list can be found here.
After the court determined that it wasn’t illegal for the iPod and iTunes to work only with each other, the plaintiffs amended their complaint to focus on Apple security updates that prevented competing online music vendors from syncing with iTunes.
Songs sold via iTunes during its early years included software called FairPlay — a digital rights management program. FairPlay prevented iPods from playing music bought from iTunes competitors, and also prevented consumers from playing music that they bought on iTunes on MP3 players other than iPods.
When other companies tried to make their music files work with iTunes, Apple would come out with a new version of iTunes that would prevent the competing music files from working on iPods. The plaintiffs argued that these updates were unnecessary and designed to “suppress new products that threatened [Apple’s] monopolies in the relevant product markets.”
Apple contended that it blocked other sources of music in order to make sure that iTunes was secure from hacking, and that music companies would not have licensed their songs to iTunes without this security.
Today, music purchased from other sources, such as Amazon, will work on iPods and other Apple devices.
The suit sought $350 million in damages. These damages could have been trebled to over $1 billion if Apple had been found to have violated the law.
The attorney who filed the case claims to represent eight million Apple customers. However, the original named plaintiffs were dropped from the suit before trial. For example, two couldn’t prove that they bought an iPod during the relevant period, and another had her iPod paid for by her law firm.
The trial featured the testimony of the late Apple CEO Steve Jobs. The plaintiffs’ attorneys took his video deposition in 2011, six months before he died.
According to the New York Times, the jury took only three hours to unanimously decide that Apple’s updates to its software genuinely benefited consumers.
A lawyer for the plaintiffs said that they intended to appeal.
If you bought an iPod…
If you bought one of the iPods at issue in the case, no money is available now and will not be unless and until the appeal is successful and leads to a new trial at which damages are awarded.
If you believe that you and other consumers were harmed by business practices that led to overpriced, defective, or dangerous products, you may wish to consult a class action attorney.