After years of baselessly harassing Microsoft for selling a product that people want to buy (solution: force them to sell a product people don’t want to buy — to make them better off), Eurocrats are now setting their sights on Apple:
The Dutch consumer protection agency became the latest in Europe on Thursday to pressure Apple Inc. into changing restrictions that tie songs bought on iTunes to its market-leading iPod players.Consumentenbond spokesman Ewald van Kouwen said his group had filed a formal complaint with the Dutch antitrust watchdog NMa asking for an investigation into what he called “illegal practices” by Apple’s iTunes online store.
“What we want from Apple is that they remove the limitations that prevent you from playing a song you download from iTunes on any player other than an iPod,” van Kouwen said. “When you buy a music CD it doesn’t play only on players made by Panasonic. People who download a song from iTunes shouldn’t be bound to an iPod for the rest of their lives.”
The Dutch complaints follow similar ones from consumer-rights groups in Germany, France and the Nordic countries.
This is, of course, utter nonsense.
First of all, digital music is not a natural resource. A file format is not centuries-old technology that anyone and everyone can share and that Apple is now somehow “stealing” or “hoarding.” They invented their particular format, and people are free to embrace it or shun it as they see fit. And if many, most or nearly all Europeans are indeed embracing it, then wouldn’t that suggest that the best course of action is no action at all? Why should offering people what they want be considered either an offense or offensive?
Apple has competition, both within the narrow market of digital music and in the broader market of “music” generally. If iTunes continues to thrive, it will only be because it continues to indenture itself to its customers. This, to a European, is somehow a sin.
The “Panasonic – CD” analogy is particularly retarded (not least because the compact disc was invented by Philips and Sony, not Panasonic). The correct analogy would be a law requiring all CD players to also play cassettes, or to include a radio, or to have both European and American plugs. Requiring a company to sell a product that customers don’t want simply does not make those customers better off, especially if (when) the company, facing higher costs, raise prices or exits the market altogether.
Let’s hope the Eurocrats don’t force Apple to “Think Different” about doing business there.
—
Did I mention Microsoft?
A coalition of rivals charged on Friday that Microsoft’s new Vista operating system will perpetuate practices found illegal in the European Union nearly three years ago.The European Commission found in 2004 that Microsoft used its dominance to muscle out RealNetworks and other makers of audio and video streaming software and that it made its desktop Windows deliberately incompatible with rival’s server software.
Those “practices found illegal” were, again, selling a product people wanted to buy. Go figure.
Antitrust laws do not protect competition, they protect competitors — who, recall, are not “consumers.” How sad that Microsoft’s “rivals” are seeking unearned enrichment via the coercive power of corrupt governments.
16 responses so far ↓
Link Dave // Jan 26, 2007 at 7:37 am
One need not be conversant in technology to understand that MSFT's "dominance" is withering away quicker than Bob Dole's erection. One need only look at its most recent earnings report.
Link Tony // Jan 26, 2007 at 9:25 am
I wonder how European purchases mirror those in the U.S. I don't buy all, or even most of my music on iTunes. Now that I can buy the album on iTunes, brick-and-mortar stores are much more flexible on price. Often, a physical copy can be purchased for the same $10. Then the cd can be ripped to whatever former, independent of iTunes and the iPod.
Link Delurking // Jan 26, 2007 at 9:36 am
I think your analogy is bad. CDs could easily be made with different file formats by different manufacturers, such that each manufacturer's player would only play their own CDs. The CD player manufacturers and the music industry got together and decided on a standard.
In fact, the same is true of iPod's competitors. Most players play mp3s without a problem, and mp3 is a standard voluntarily agreed to by most of the industry. iPods play mp3 files without a problem, and there are plenty of competitors to iTunes where you can get them.
So, in the end I agree with your conclusion. Consumers can already buy whatever file format they want. If iTunes is enough better in either user-friendliness, price, or whatever, that consumers are willing to forgo the platform flexibility offered by mp3 files, then why does anyone feel they have a complaint?
Link Dr. Kenneth Noisewater // Jan 26, 2007 at 10:08 am
Aside from using Panasonic as the example, I don't see how the CD analogy is inapt. Your "force CD players to play cassettes" strikes me as nonsensical in this particular context. The Eurocrat in question wants to force Apple to license the Fairplay DRM in much the same way that Phillips licenses the Red Book CD Audio standard. I don't necessarily agree with the Eurocrat, but his analogy is pretty spot on (aside from using Panasonic as the example).
There IS another issue involved with respect to iPods that would make your analogy more appropriate. Some would like to legally force Apple to open up the iPod so that other DRM-protected formats can be played on the device. In that instance, it WOULD be like forcing a company to add a cassette player to a CD player. Other folks, such as Real Networks just went ahead and added the capability to play THEIR songs on iPods without asking Apple for permission.
I'm curious about your answers to the following:
Should folks like DVD Jon be legally allowed to create software that enables people to play FairPlay-protected content on devices other than iPods?
Should companies like Real be legally allowed to create software that allows THEIR digital audio files to be played on iPods? To follow your analogy, should Apple be given the authority to prevent Real from adding a cassette player to a device that only comes with a CD player?
I think it's important to note that, while I find much of what the Eurocrats look to be doing pretty repellant from a libertarian POV, it's taking place within a legal context where, thanks to Draconian copyright laws like the DMCA, there are significant legal risks to anyone who pursues interoperabilty without the express permission from likes of Apple and the content cartels. Back in the more enlightened times of early 80s (or maybe they were just times where the cost of implementing the CD Audio standard dwarfed the cost of obtaining a license for the standard), Phillips and Sony saw fit to cooperate and license the CD Audio technology for the good of the format. Back then, the good of the format was also good for consumers.
Link Chris // Jan 26, 2007 at 10:17 am
Norway has found iTunes to be illegal.
http://www.ipodobserver.com/story/30075
Link KipEsquire // Jan 26, 2007 at 10:36 am
Dr. KN,
Your entire post is one giant non sequitur. If Apple's policies offend you, then don't do business with them. But leave the rest of us out of it.
Link dolphin // Jan 26, 2007 at 11:54 am
I have to agree with you on this. The market can and is already taking care of this problem. If you've seen the latest sales numbers coming from iTunes you know that people are starting to wake up and realize that the conditions imposed by Apple on using their music (because let's face it, with all the conditions in place, the "purchased" music is clearly not owned by the consumer) is just not reasonable for the average person in today's world. Apple will either change or lose their (still currently substantial) lead in the portable digital music industry.
Still pretty content with my decision to NOT buy an iPod.
Link Dr. Kenneth Noisewater // Jan 26, 2007 at 1:05 pm
So then it's safe to assume your answers to my questions would be:
"No" and "No"?
If "don't do business with Apple if you don't agree to their policies" is the answer, then most of your post, bad analogies and all, seems like quite a non-sequitur as well. Why get into the power plugs and media format stuff? You could have simply said, "iTMS customers voluntarily entered into an agreement. If they want to listen to their music on a non-iPod device, they can use some of the software out there that allows them to do this as long as they are aware they open themselves up to a tort for violating the iTMS service agreement."
By the way, what do you think would be fair compensation to Apple for violating the iTMS terms of service? DVD Jon might be liable for quite a sum if Apple could somehow prove that $X of iPod sales were lost because of his software. But what about someone who just used the software to listen to his collection on a non-iPod portable? What damages should she be liable for?
I'll grant that what DVD Jon did is likely a violation of the iTMS TOS — or at least would clearly be a violation of the current iTMS TOS. I'm not sure if those same terms applied back when he developed FairPlay. Then again, Apple isn't solely relying on tortious remedies to contain the PlayFair genie that's been let out of the bottle. They've cited the DMCA when trying to get FairPlay software removed from web sites. So it's not just a matter of an agreement between Apple and their customers. There's also an issue with how Apple markets the iTMS and how it conflicts with the actual Terms of Service in the fine print. They're not selling ownershp of songs (despite what they say when contrasting themselves with something like the Rhapsody service). They're selling licenses. And it's why I've never hitched my digital music wagon to their star.
In addition, as far as I know, Real Networks violated no agreement with Apple when they released their Harmony technology that allows their music to be played on iPods. They bought an iPod and figured out how to get their own DRM-protected content to play on it. I only brought it up because I thought it was another interesting angle to look at in terms of the "cassette/cd" analogy you were trying to push.
Link KipEsquire // Jan 26, 2007 at 4:16 pm
Not at all: It's safe to assume that I think your post is a giant non sequitur. No more, no less.
"Forcing a company to sell a product that it doesn't want to sell and that customers don't want to buy…" sounds like a pretty good set of analogies to me.
Why you think your examples are relevant escapes me, however.
Link Brian Miller // Jan 26, 2007 at 8:29 pm
Apple should make the entire issue moot by shutting down the iTunes store in countries that attempt to penalize it. Given that the iTunes store represents the best way for the 80% or so of music player owners, the damage will be severe.
One of the funnier things about the iTunes Store is that Apple doesn't earn much profit on it. It's designed to drive iPod sales, but at this point, the iPod is so far ahead that a competing format cannot win. And the recording industry isn't going to support an end to DRM.
As for Microsoft, they should deal with the lawsuit from their competitors by announcing that Vista releases will go forward on schedule — in the rest of the world — and that Vista is being cancelled in Europe due to regulatory issues. XP will be the only MS OS sold there, and express regret that this "unfortunate decision" had to be taken in light of the EU's "constant regulations targeting our businesses."
Given the overwhelming market share of XP, Microsoft still makes money in Europe, and the Eurocrats can explain how customers are "better off without a monopolistic product" — even as European enterprises lag their competitors.
Link dolphin // Jan 26, 2007 at 9:11 pm
at this point, the iPod is so far ahead that a competing format cannot win.
I think that's antithetical to Kip's post, if I'm understanding him correctly.
In my opinion, if iPod is truly so far ahead that a competing (and better product) CANNOT win, then perhaps the anti-trust laws are necessary after all. I don't think that's the case though. iTunes sales are slowing rather dramatically. Dramatically enough to make Apple and analysts who follow that particular industry sit up and take notice. The fact is that Apple made legal digital music "easy" for the non-techies of the world but as digital music has become more commonplace, people are deciding there may actually be better ways to get their digital music, and Apple's iTunes store is seeing declining sales (they're just at the beginning of the decline so they're not in too much trouble yet). Now granted your statement was about the iPod which hasn't shown the drop-off that iTunes has experienced, but the same principle applies. iPod could be beat by another product, if another product can convince consumers that it is better.
Link Brian Miller // Jan 27, 2007 at 11:00 am
if iPod is truly so far ahead that a competing (and better product) CANNOT win, then perhaps the anti-trust laws are necessary after all
It's far ahead because of its technology and features.
While Apple's competitors were relying on the government to bail them out, Apple was busy developing new products that are truly killer — like 8 GB of storage and a color screen and 20 hours of battery life in a music player smaller than 2 books of matches.
The reason it's so far ahead is because it's better — and Apple's not going to just sit on its laurels and wait for the competition to catch up.
iPod could be beat by another product, if another product can convince consumers that it is better.
Sure, but it's unlikely that product will come from Europe — or that Apple will go quietly without vigorously competing.
Both of those practices, according to the Eurocrats, are "unfair." When Microsoft, Apple and other successful US innovators develop better products that leapfrog beyond others' catchup efforts, the Eurocrats often try to restrain further development. Attacking Apple's DRM and forcing them to create a "format" that "plays on any device" (an impossibility — is Apple going to make sure it works in my old Atari Falcon030, which can play digital music but not Apple's format?) is designed to force Apple's resources not into creating better products, but into subsidizing competitors who cannot keep up.
There's nothing stopping Creative, Sony, et al from launching their own stores — and, in fact, they have. Their stores are also proprietary. Apple's just getting targeted because they've been "unfairly" producing vastly superior products, and will continue to do so.
Link dolphin // Jan 27, 2007 at 1:15 pm
Brian,
Methinks you didn't actually read my comment other than the two sentences you pulled from it. I think we pretty much agree other than the fact that you think Apple truly has a superior product. Apple has a more popular product but there are better ones out there in my opinion.
Either way I think it's these other better products out there's responsibility to prove to the mainstream consumer that they are better, not the government's.
Link JC // Jan 29, 2007 at 9:52 am
I can't let the first post pass unchallenged….
One need not be conversant in technology to understand that MSFT's "dominance" is withering away quicker than Bob Dole's erection. One need only look at its most recent earnings report
If one actually reads the latest earnings report, one might actually find the following:
"Microsoft net profit tops forecasts; shares rise"
here
Link Dave // Jan 29, 2007 at 12:53 pm
JC: consider the delays and costs MSFT incurred as a result of having to bulletproof their software. Were they as dominant as people claim they are, they would have no need to delay the release of the software.
Earnings announcements, and, especially, forecasts, are irrelevant to my point.
Link Brian Miller // Feb 3, 2007 at 12:45 pm
I think we pretty much agree other than the fact that you think Apple truly has a superior product. Apple has a more popular product but there are better ones out there in my opinion.
If they were better for the average consumer, they'd be taking off. They're not.