After an almost decade-long legal battle in federal court, Apple is facing a jury in Oakland on Tuesday that will decide whether the Cupertino, Calif.-based company violated antitrust laws when it blocked music downloaded from competitors' software from playing on iPods.
The case that is being tried Tuesday is different from what was originally brought before the courts almost 10 years ago. In 2005, plaintiff Thomas William Slattery claimed that Apple’s bundling of the iPod with iTunes, as well as the iPod's lack of interoperability with music downloaded from stores other than iTunes, were unlawful and violated antitrust laws. U.S. District Judge James Ware, who retired in 2012, threw out those claims. The only surviving claim, which is being presented to a jury, alleges that a 2006 iTunes update illegally shut out RealNetworks Inc. from the MP3 market.
Attorneys representing as many as 14 million consumers who bought iPods from 2006-2009 claim that Apple modified iTunes in an update specifically so that music downloaded with RealNetworks software could not be played on the device. The attorneys claim that this effectively locked iPod users to iTunes and stifled competition, giving Apple a monopoly on the MP3 market, and allowing it to charge more for the music players.
In court filings, plaintiff attorney Bonny Sweeney said Apple’s dominance with the iPod and iTunes led to customers being overcharged by 7.5% and resellers being overcharged 2.3%. The overcharges amount to almost $352 million in damages, a figure that, under federal antitrust laws, could triple if Apple loses.
In its own court filings, Apple called this theory “implausible,” saying that RealNetworks was a minor player and there was no evidence consumers were locked into buying an iPod. It argued that the iTunes modifications provided security and anti-hacking fixes, ensuring that items available for download remained secure and high quality. It also claimed that the update in question was a genuine product update, which introduced features like the album and cover flow views for music, TV shows and movies.
Apple declined to comment.