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Apple faces class-action music monopoly suit

Does iTunes breach antitrust rulings?

Apple is facing a class-action suit that alleges the company unfairly uses technological restrictions with its iPod line and iTunes Music Store to beat out competitors.

Apple is facing similar legal actions and scrutiny in the US and Europe. The suit, filed in US District Court for the Northern District of California, is the latest one to accuse Apple of unfair business practices.

The suit was filed December 31 by Stacie Somers, a resident of San Diego County, California, who bought a 30GB iPod from Target, a retail store. Others who bought an iPod or content from Apple's iTunes store after December 31, 2003, may join the suit.

The suit calls for Apple to forfeit money it earned from the unfair practices and pay the plaintiffs damages.

It alleges that Apple has constricted the market by not enabling iPods to play content in the Windows Media Audio (WMA) format, Microsoft's copy-protection technology.

Further, Apple sells songs on the iTunes store with its own copy-protection technology, FairPlay, which is incompatible with music players other than the iPod.

The suit contends iPod-owning consumers can buy music only from iTunes, an unlawful tie-in that violates US antitrust laws. Apple could license the WMA format for as little as US$0.03 per iPod, or for a total of $800,000 based on Apple's 2005 iPod sales, the suit reads.

The suit may quickly become less relevant as many online music retailers, including Apple, expand their offerings of music free of copy-protection restrictions, also known as DRM (digital rights management).

DRM-free tracks offer the advantage of being compatible on a wider range of devices. In May, Apple began selling songs from the label EMI without DRM. Also, Amazon.com now sells song in MP3 format, and Universal Music Group has tested selling DRM-free music.


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