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September 20, 2007

legal

Microsoft loses its EU appeal, Apple could face trouble

Posted Sep. 20, ’07, 10:00 AM PT by Cyrus Farivar
Category | Legal

eu_Img.jpgWe know we’re a little late to the party on this one, but Microsoft just got nailed by EU regulators earlier this week when the Blue and Gold Stars decided that Redmond needed to pony up over $1 billion in fines for violating the EU’s antitrust laws.
Fortune magazine:

The roots of Microsoft’s troubles in Europe date to 1998, when regulators began looking into the company’s monopoly in operating system software and its practice of bundling new products into Windows, which runs more than 90 percent of the world’s computers.

In 2004 - three years after Microsoft settled an antitrust case with U.S. regulators over the same bundling tactics - the European Commission fined the company a record 497 million euros (about $690 million). The commission found that Microsoft unfairly used Windows to lock out competition in the market for media player software and workgroup servers.

Last year the commission ordered Microsoft to pay another 280.5 million euros (about $390 million) for not complying with its earlier ruling.

So what does that mean for Cupertino? Well, it appears that EU regulators may have their sights set on Jobs & Co. for their rather uncompetitive behavior when it comes to iTunes. As you may recall, the EU is nary too happy with the bundling of iTunes and the iPod.

As ZDNet puts it:

What the [EU] Commission lawyers really want to get tangled up in the the iPod/iTunes ecosystem that Apple has created. Just in the same way that the Commission objected to how Microsoft forced Windows Media Player onto Windows users, Apple has done exact;y the same with iTunes. In much the same way that the bundling of WMP froze out competition, forcing iPod users to go with iTunes does pretty much the same. Just as the Commission forced Microsoft to carve off WMP from Windows (going as far as to make Microsoft offer media player free version of Windows (a product which both consumers and OEMs alike have enthusiastically ignored), it’s very likely that the iPod/iTunes ecosystem will be broken up.

Looks like Apple’s legal department will have a fun winter ahead.


3 Comments

Kris Jones Author Profile Page said:

I'm afraid ZDNet has got it wrong. The current investigation into Apple is concerned solely with the higher prices charged at the UK iTunes Store and the fact that UK residents can't buy from other stores within the EU. Apple's last SEC filing gives a full account of the EU's concerns.

The EU's action against Microsoft was concerned with abuse of dominant position, specifically the effects it was having on other companies such as Real and Sun Microsystems. Apple doesn't have a dominant position in any of the markets it operates in, so it cannot be accused of abusing it.

September 20, 2007 11:31 AM
Dave-O said:

That ZDNet blurb is way off the mark. I have never heard any complaint about tying a device to the application that manages it. That would be stupid. What has been discussed (as Kris points out, this isn't the pending case) is the DRM at the iTunes store. Certain member nations have complained that you can't buy music from other stores to play on the iPod, and music bought from the iTunes Store plays only on the iPod. Apple could probably settle by licensing Fairplay to competing stores and players. Of course, Jobs already explained why Apple doesn't do that (which explanation is somewhat lacking).

September 20, 2007 11:53 AM
Tony DiGiacomo said:

I don't see the similarities. The iPod is basically a portable version of iTunes. iTunes syncs with the iPod, otherwise Apple would have to make it work with god-only-knows how many different versions of music jukebox software or resort to a drag and drop scenario (imagine doing that on the 160 GB version.)
As far as the iTunes Store goes, the iPod and iTunes does not, never did, nor never will (I hope) need it. One can rip their own CDs or import MP3s or other files iTunes is compatible with. What's so hard about understanding that?

September 20, 2007 12:08 PM

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