Apple is facing billion-dollar lawsuit
Tech giant Apple is currently before the court facing lawsuit in the California court that it allegedly implemented software changes that blocked users from purchasing music from competitors. This action by Apple has led to iPod selling at a much higher price.
Central to the case before the court are emails sent by former Apple boss Steve Job to a subordinate saying “We may need to change things here,” the Apple boss said in a 2005 email that was shown to jurors in US federal court on opening day of trial on Tuesday in a billion-dollar antitrust lawsuit.
Learning that competitors were about to have their songs played on iPod, Apple put in placed policies in the earliest days of the iPod to control how and where users of iTunes and owners of its music players could play purchased songs. Argumenta put forth by plaintiffs said that this policy by Apple in restricting iPod owners to songs purchased only through iTunes and in banning songs from iTunes from playing on competing MP3 players’ stifled competition.
“Apple made those changes to its software after top executives at Apple learned that competitors had figured out a way to have their songs played on the iPod,” Bonny Sweeney, the lead plaintiffs’ lawyer, said Tuesday. “And there was a concern by Apple that this would eat into their market share.” According to news report by Cnet In refuting those claims, Apple’s lead attorney William Isaacson asserted that “This insertion of the stranger in the middle could not get everything right. It posed a danger to the consumer experience and to the quality of the product”. He further pointed out that Apple changes did not inflate iPod prices instead “iPod prices were inflated happened to be at a time when iPod storage increased while prices either fell or remained flat. “There should be no damages here because prices went down and quality went up.”
Furthermore, a 2003 email from Jobs which was written about the launch of another competitor’s online music store was showed to Jurors, which said: “We need to make sure that when Music Match launches … they cannot use iPod.”
Apple lawyers deny the company competed unfairly asserting that “competing online music stores like RealNetworks, which designed specific loopholes so that customers could load its MP3s onto their iPods, were using the “ethics and tactics of a hacker.” The crucial updates to Apple’s iTunes software, numbered 7.0 and 7.4 and released in September 2006 and September 2007, were designed not to block companies like RealNetworks, Apple says, but to improve the user’s experience and maintain the security of its software” as stated on Cnet
The plaintiffs’ counter-argue that Apple’s software update did not add any real value to users such as making iPod faster or improved sound quality neither did it make the iPod sleeker or smaller or cooler, but instead Apple update “prevented customers who had legally purchased songs from Apple’s competitors from playing those songs on their iPod,” Sweeney said.
iTunes 7.0 deemed by Steve Job as “the most significant enhancement” to iTunes “since it debuted in 2001″ is said to contained specially designed code that would force users to reset their iPods if they were loaded with unauthorized MP3 files, wiping the devices clean.
“These fixes were really directed at competitors — it blew up everything if you used a third-party player,” said Roger G. Noll, a professor emeritus of economics at Stanford University and the first expert witness called by the plaintiffs Tuesday.
Apple’s Isaacson says the iTunes 7.0 and 7.4 updates were designed to improve security and purposefully keep third parties like RealNetworks, which Apple still considers a hacker, out of its system. “Harmony was outdated when FairPlay was updated. All Apple was doing was updating FairPlay,” he said. “That’s what happens when you reverse engineer the product and there’s an update of that architecture.”
Roger G. Noll will testify later in the iPod trial that Apple overcharged iPod buyers by nearly $350m. Under federal antitrust law, the Cupertino, California company could be ordered to pay three times that amount if jurors agree that Apple’s actions were anticompetitive.
Several high-ranking Apple executives are expected to testify during the trial.
According to Isaacson “Apple products would not be as good or secure if third parties can come into the system,”