Why Apple Should Win Its Latest Court Case

Apple’s latest court battle is in the form of a class-action lawsuit that argues Apple stifled competition by using its FairPlay DRM for the music files in the iTunes Music Store. It also alleges that Apple deleted songs from competing services from the devices of users.

Both of those things are “true.” But Apple still shouldn’t pay a dime.

First, let’s set the record straight on the headline that all anti-Apple sites are using. It’s usually something along the lines of “Apple Will Pay $350m for Deleting Songs From People’s MP3 Players,” and it’s total bullshit. Apple locked down iTunes and the files from the iTunes Music Store at the behest of the record labels, and for the safety of its users and its platform.

The iTunes Music Store in 2001.
iTunes in 2001

The record labels were leery of iTunes. Some had their own services. Some wanted to avoid digital altogether. They didn’t want someone else to make money. But in the end, after many failed services and ridiculous copy protection schemes, they caved to Steve Jobs. Apple didn’t want to restrict the files using Digital Rights Management, but that was a no-go for the labels. So Apple implemented FairPlay, a DRM system that would allow users to purchase a song from the iTunes Music Store, download it to their computer, and then add it up to five devices (at the time, just computers and iPods). Yes, this restricted users to using iPods and iTunes software, and believe it or not, Apple didn’t want that to happen, but it was the only way to make the deal work.

“We thought about licensing the DRM from beginning, it was one of the things we thought was the right move that because we can expand the market and grow faster,” Cue said. “But we couldn’t find a way to do that and have it work reliably.”

That quote is from Eddy Cue, who was in charge of Apple’s iTunes business at the time. Read The Verge’s report on his recent testimony in the case.

So, Apple didn’t want DRM (seriously, read Steve Jobs’ “Thoughts on Music”), and it wanted to license FairPlay. But the labels wanted DRM, and FairPlay was turning out to be next to impossible to license with the number of devices being churned out by competitors, the many software updates, and the level of complexity of the situation. Its competitors didn’t care about any of that — they just wanted a piece of the pie. So, rather than creating their own, superior music store and player, companies like Real Networks started essentially hacking iTunes to make its formats show up in iTunes and be copied to iPods.

RealPlayer vs. iTunes interfacces.
RealPlayer vs. iTunes interfacces.

To be clear, this was Real finding a “back door” to the closed system so that they could sell their proprietary format and have it work on iPods. Think about that for a second. This lawsuit is all about Apple having a proprietary format that stifles competition, yet the reason that Real had to “hack” iTunes was because their files were not DRM-free — they had their own DRM! Apple started patching iTunes to block Real’s back door. Yes, this was to protect their bottom line, but it was also to protect users. If Real could hack iTunes to allow their files, actual hackers could do nefarious things. So Apple fixed that.

The next point is important. People are claiming that Apple reached into their devices and deleting songs from competing services. This is NOT what happened, at least not in the way the headlines are promoting. Apple patched iTunes and that removed the ability to add Real’s files, and if a user tried to sync using those files on their iPod, iTunes would say, “Hey, those files don’t belong, so you can either stop this process, or we will wipe your iPod and then re-sync with iTunes.” This is just like iTunes finding a problem with your iPod/iPhone/iPad software and saying, “Something’s not right, you should reinstall the OS.” Apple did not just simply reach into the devices of its users and delete select files.

Some people will say that Apple should have just allowed the files from competing services. And guess what? They DID. You could put any MP3, WAV, etc. on your iPod, as long as it wasn’t locked to another system with DRM. Remember, Windows, Real, and all the other major services had their own DRM. Apple didn’t license theirs and they didn’t license FairPlay.

Was it incumbent upon Apple to either license those myriad of services, or allow others to license FairPlay? I just don’t think it was realistic at the time. Their service was exploding, they were developing new iPods, they were making new Macs, they were brokering deals with music labels as well as the movie and television studios. They were authoring software. They were growing like mad and making a pile of cash. Other services were running their own businesses. Other companies were making other MP3 players. I think it is ridiculous to say that Apple had any responsibility to do anything other than concentrate on its own business. People had the freedom to use other devices and other services, and they did that.

This lawsuit essentially says that competitors couldn’t make a device as popular as the iPod, so they should have been able to use the iPod to drive sales of their own DRM’d music. And that’s bullshit.

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