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The Back Page - French Virgin Mega Whines About iPod/iTunes: Let Them Eat Bits

by - August 5th, 2004

The French arm of Virgin Mega's online store has filed a complaint against Apple relating to its online music store dominance. According to Virgin Mega, Apple's refusal to license its DRM scheme, FairPlay, to other online music stores makes it difficult to compete. At issue is the fact that the iPod will only play downloads from Apple's own music store, and Virgin Mega thinks that other companies should be able to be part of that chain, too. From a ZDNet article:

French online music store Virgin Mega has filed a complaint against Apple Computer, claiming that the company's refusal to license the copy protection technology used in its iPod is harming competition.

The action was filed with the French Competition Council in June and disclosed along with several other legal matters on Thursday as part of Apple's quarterly filing with the U.S. Securities and Exchange Commission.

According to the filing, the online store, part of the Virgin family, is seeking various unspecified "interim measures," pending a decision on the merits of the case. A hearing on that request is expected in either October or November, Apple said in the filing.

You can find the full article at ZDNet, including some background information.

Should Apple attain true monopoly status in the music download business -- or even "monopoly power," as Microsoft has in the OS market -- it could find itself forced to open up FairPlay. It's debatable, however, that Apple is even close to having that much power.

If it did, however, there is a huge difference between market dominance in downloads and market dominance in operating systems.

Or is there?

Microsoft can effectively block out competition, and can ruin any company even making software for its own platform. Microsoft once made exclusionary deals that prohibited its licensees from supporting the competition, regularly leverages its power from one market to gain share in new markets, and regularly uses dumping tactics to undermine the profits of companies offering superior technologies.

Can Apple do the same thing? Can Apple say to a label that it will pay more per track than the competition can afford? Could Apple threaten a label with no access to the iTunes Music Store if it licenses its songs out to another download service? Could Apple threaten to cut off access to the iPod if a retailer carries any other MP3 players?

Does Apple's market dominance, and this is the true test, keep consumers from being able to buy other music players, or from being able to buy music at other services?

Let them eat bits

While it is possible that Apple could be stupid enough to try to force some of the former situations, the answer to the last question is a resounding "no."

That is the difference between the music download business and the operating system market, and again, Apple doesn't have nearly the market share, nor the predatory history, in music downloads as Microsoft does in operating systems.

The last thing I would like to see is for Apple, or any other one company, to have a lock on the music download business, but Virgin Mega's complaint, at least on the surface, seems to be little more than whining. It will be interesting to see if that whining brings about any action.

began using Apple computers in 1983 in a high school BASIC programming class. He started using Macs in 1990 when the Kinko's guy taught him how to use Aldus PageMaker, finally buying a Power Computing Power 100 in 1995. Today, Bryan is the Editor of The Mac Observer, and has contributed to the print versions of MacAddict and MacFormat (UK).

You can send your comments directly to him, or you can also post your comments below.

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