Apple to meet with Norwegians, Danes, and Swedes over alleged unfairness of FairPlay

Apple to meet with Norwegians, Danes, and Swedes over alleged unfairness of FairPlay

Summary: While US antitrust officials seem content to let Apple's growing monopoly grow, several European countries appear less willing to let Apple so easily steamroll their consumers.  France correctly spotted the potential market dangers of Apple's growing share, drafted a law, and then removed that law's most important teeth in what is pretty much a joke in antitrust intervention.

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TOPICS: Apple
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While US antitrust officials seem content to let Apple's growing monopoly grow, several European countries appear less willing to let Apple so easily steamroll their consumers.  France correctly spotted the potential market dangers of Apple's growing share, drafted a law, and then removed that law's most important teeth in what is pretty much a joke in antitrust intervention.  But in Norway, Apple's implementation already violates that country's laws.  And two other Scandinavian countries -- Sweden and Denmark -- are also concerned about the degree to which Apple' digital rights management (DRM) technology known as FairPlay affords the  Cupertino, CA company an opportunity for nearly unimpeded market domination.  Now, Apple has agreed to a meetup with the Scandis.  According to BetaNews:

Apple will meet with representatives of consumer rights groups from Sweden, Norway and Denmark to discuss concerns over the closed nature of iTunes, an executive with Sweden's consumer rights agency told Reuters on Wednesday. The meeting is expected to take place sometime in September, although no solid date has been set....The Cupertino, Calif. company has responded to concerns voiced by the groups, but has also requested that the sides meet in person. Apple reportedly wants to explain its position, and likely why it intends to keep the iTunes Music Store an iPod-only service.

Let's see. Could that be because every time a song or video is sold through the iTunes Music Store, the buyers of those songs or videos will have no choice but to either own iPods and iTunes software for the rest of their lives or throw away their investment in content? You see? That growing "installed-base" of iPod only content is what is securing Apple's future. Quite franky, it's a great plan -- an amazing plan actually -- if no one (or no country) is prepared to stop the company.

Question: What happens if Apple's dominance of portable entertainment (and the entertainment industries themselves) gets so big that it decides it doesn't want to make a Windows version of iTunes anymore? There's no Linux version.  As Apple's technology becomes more deeply entrenched in the entertainment infrastructure and as that entertainment infrastructure becomes more integral to desktop/mobile computing and the Internet, desktop Linux remains an outsider that's being completely marginalized. Call me crazy, but, once Apple's share gets to a certain point, Apple could easily seek to marginalize Windows in the same way. The company already told the record labels where to stick it when the record labels asked for variable pricing. Realizing how powerful Apple is, the record labels buckled.  We're talking about a company that's issuing cease-and-desist letters to small single-person and family-run businesses because of their use of the word "pod" in their product names.  Is there any doubt to how ruthless and predatory Apple can get?

The story continues:

In Norway, two aspects of Apple's position are technically illegal in the country...Norway had threatened to take the company to court if it did not comply with requests.

So, Norway is the one with the existing laws in place and the Swedes and Danes are apparently tagging along from a "consumer activisim" point of view.  At least for now. It'll be interesting to see if these Scandinavian countries can shake something loose from the Apple tree that can ripple around the world or, if they'll just end up where France did -- with a watered down resolution that basically allows Apple to maintain and grow its global monopoly.

Topic: Apple

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  • Easy solution

    Just sell the songs without DRM in Norway. Problem solved.

    It's going to be intereresting to see where the tipping point is--when will there be more money to be made licensing FairPlay than in selling iPods? My guess is this won't happen for a while, given the mediocre (at best) sales of online song downloads.

    Still, if someone's gonna have an abusive monopoly, it's nice to see Windows users potentially getting the short end of the stick for a change.
    tic swayback
    • There is a difference that the Europeans don't understand

      The difference in the monopolies -if you can call the iPod a monopoly, is that it is consumer-driven. There are PLENTY of other options. This is a monopoly of choice.
      The Microsoft monopoly -as it has existed, was a matter of one software vendor strong arming the PC manufacturers. When this took root, Apple was not strong at all and Linux was not on many peoples' radar.
      crash89
      • I agree...

        I'm afforded many options that are just as good as my iPod (which I just bought recently).

        I got swayed to go to the iPod because of the sleekness, and all the extra after market products I can buy for it.

        I won't even use iTunes to purchase music. I have it obviously but you won't catch me buying the music.

        I still have choice, because iPod allows me the capability to play MP3 files.

        This is no where near monopolistic as let's say Microsoft and it's O/S.. I only have one O/S of choice if I want to use applications, and games (that are mainstream). Then again, DRM hasn't locked me in yet. Nor will I ever let it. The moment I can't buy CD's without any form of DRM, that will be the day I stop buying anymore. I don't buy DRM'd CD's today so I deffinitly won't in the future.

        Where as with iPod, I can transfer my mp3 files to any portable player that can play them. Simple as that.

        I'm not locked into using a non-mp3 music file to play music on it. So I feel I have the freedom I want.

        NOW, if you look at it from an iTunes perspective. I still don't think it's monopolistic because consumers choose to use iTunes (although only limited to that choice when buying an iPod). But then again, everyone wants their own standards.

        Atleast we have a standard that circumvents their locking me into their iPOD DRM.. It's called MP3.

        Let's roll this around to where MS was involved, you don't think eventually their own players will only support WMV and their own DRM? And nothing else? They'll do exactly what iTunes does to WMV files and convert's them to a format that's accepted by the player.
        ju1ce
      • Regardless of how a monopoly came to be...

        People seem to think that if a monopoly emerges from a seemingly healthy market, that there's no problem. This is not the case with US antitrust law. It doesn't matter how a monopoly came to be. If you end up with one, it's illegal in the US to maintain it. I am not a lawyer, but in Apple's refusal to open up or license its technology on reasonable terms and in the tying of iPods to the iTMS in ways that each serves the dominance of the other, I see similarities to other monopoly maintenance cases.

        David
        dberlind
        • Clarification

          ---If you end up with one, it's illegal in the US to maintain it---

          Don't think this is the case (or it's stated poorly). If company A ends up with 90% of the widget business because it has the highest quality product at the best price, it's not illegal for them to maintain this status by maintaining quality and price at the same (or better) levels. There are actions that can be taken to maintain a monopoly that are illegal, but maintining it is, in and of itself, not illegal.
          tic swayback
        • Barriers? Consumer harm?

          Where is this monopoly you are speaking about? Digital music is
          currently locked in a battle where the underdog, Apple, has
          fortuitously grabbed the upper hand. It has been a victory of
          singular vision, innovative design and vertical integration over
          the world entertainment domination designs of a truly abusive
          monopoly (as proven in US and European courts), Microsoft.

          The battle is far from over, but Apple has been fighting it fair
          and square with innovation, products and marketing that have
          been winning the lion share of consumer mind share and
          dollars.

          Your rhetoric is peppered with ifs but you completely fail to
          show any real consumer harm or any tactics by Apple that
          constitute barriers to entry into the larger digital music online
          sales, download and device playback space.

          You would have Apple destroy their market advantage while
          effectively praising Microsoft for their "open" ways despite the
          fact that they are still a convicted monopolist with over 90% of
          the desktop market. Apple would probably not even be enjoying
          their current position if it weren't for the antitrust oversight on
          Microsoft's actions. But a WMA based market place for music
          would be preferable because it comes with the choice of player?

          If this is all about protecting consumers, please, at least do it by
          finding some actual harm that is being done to these people.

          The Swedish and Norwegian governments, like most
          governments, are more likely reacting at the behest of industry
          lobbyists within their countries rather than to any ground swell
          of consumer dissatisfaction. Industries within these countries
          want a piece of the digital music business. They may want to sell
          their own DRM and/or their own services and devices. Fair
          enough, unless moneys are being funneled to these lobbyists by
          any of the monopoly players.
          Len Rooney
          • You got it wrong, very wrong...

            Quote:
            [i]"The Swedish and Norwegian governments, like most governments, are more likely reacting at the behest of industry lobbyists within their countries rather than to any ground swell of consumer dissatisfaction. Industries within these countries want a piece of the digital music business. They may want to sell their own DRM and/or their own services and devices. Fair
            enough, unless moneys are being funneled to these lobbyists by any of the monopoly players."[/i]

            You clearly have no understanding of how things works in Scandinavia. It is the Consumer Ombudsman that is handling this case. The Consumer Ombudsman is independent from the government and, as I've written in my other replies, this case is about Apple and the terms and conditions of their products. The terms and conditions are illegal in Scandinavia and the ombudsman is requesting that changed. If Apple refuses, then the case will end in the courts.

            And btw. consumers are being harmed - Apple have on more than one occation changed the terms and conditions of their service. One of the more obvious changes have been the number of times you are allowed to burn a playlist to a CD. That is in clear violation of the laws here.

            Let me end by saying that more or less any product that uses CRAP (others call it DRM) is harming the consumer. I haven't seen a CRAP endabled product that didn't in some way hinder my fair use rights.
            pointwood
          • RE: You got it wrong, very wrong...

            "Let me end by saying that more or less any product that uses
            CRAP (others call it DRM) is harming the consumer. I haven't
            seen a CRAP endabled product that didn't in some way hinder
            my fair use rights."

            I have to ask you that since I can take any iTunes song and play
            it on any player on the market that plays MP3 format, How are
            my fair use rights being violated? As for the Ombudsman, If you
            truly believe that such an organization can't be swayed by
            pressure form big business then I have a bridge about three
            miles from my house that I would be glad to sell you.
            Protagonistic
          • What percisely is illegal?

            What parts of Apple's ITMS terms and conditions are illegal in
            Scandinavia? Apple should be respectful of the laws of each
            country it operates in, however in any modern free society, they
            should also be able to appeal those laws and argue against their
            enforcement if they feel they are unfair. So perhaps you are right
            and this may go to court. That's ok, it would be interesting to
            watch. May the best arguments win.

            OK, there's a Consumer Ombudsman in your country, but are
            you trying to tell me that this person is deaf to the concerns of
            business and industry. Don't you as a citizen want to know who
            all the special interests in this case are? I doubt very much that
            hordes of angry citizens have been knocking on the
            Ombudsman's door about ITMS, but you can bet many industry
            groups have been. To think otherwise would be hopelessly
            naive.

            Yes, Apple changed the number of times you can burn any given
            playlist to a cd. This change however was a concession made to
            the record companies. The record companies don't want people
            privately manufacturing and perhaps selling copies of their
            properties. But most iTMS customers understand that if you
            simply make a small change to any given playlist--change its
            track order, for instance--you can keep on burning copies of it.
            This is somehow harming consumers?

            Actually, from what I've seen, Apple has been doing a good job
            of protecting consumers fair use rights. They have acted as a
            buffer between the record industry and the consumer. They've
            kept their prices fairly consistent and stable. If you'd like to see
            some real harm being done to consumers, take Apple out of the
            picture and watch the record companies and monopolies like
            Microsoft go to work on your fair use rights! They won't won't be
            happy until you're micro-charged for every listen.

            But I actually do share your aversion to DRM. My entire music
            collection is maintained as mp3 files, which means I have to
            convert each file that I buy from iTMS. But I certainly don't feel
            harmed by this. It's really no different than when I had to use
            tapes to make copies of my cds or LPs. I don't own an iPod, I use
            a cd based mp3 player in my car.

            But tell me pointwood, why are you so against Apple on this
            issue. Are you truly just a concerned citizen or do you happen to
            support an other industry player in this debate?
            Len Rooney
          • The Test

            Legal tests have to go ahead. I will weigh alleged harm against
            alleged benefit.

            You imply Apple will extend disreputable actions like license
            changes. The fear is that large music collections will be held
            hostage by Apple. To prevent this abuse, the current music
            collections may be made invalid by Scandinavian courts. It's a
            social vanity that plays white knight and presumes to protect the
            people from themselves. This is hardly a seat belt law, this is the
            music market, and buyer beware. To raise righteous indignation
            about Apple's position, is to draw into sharp focus, the extent to
            which we have been "abused" already by the music industry. Is
            this really some new insult? Is selling music collections rather
            than single songs an abuse? Is requiring a trip to a brick and
            mortar store, gas, parking et al, an abuse. Well stand me up and
            slap me silly. Please get your Ombudsmen on these aged
            indignities first. Don't hold your breath waiting for those RIAA
            cheques.

            If you presume to parrot Berlind's CRAP (DRM and it's evils) I'd
            challenge you to never accept to another EULA. You'd have to
            abstain from all software as it all requires digital rights
            management in some form or other.

            Perhaps this is just a fundamental inability with a new
            marketplace that deals in nothing but trust and bits. This is a
            pivotal opportunity to own bits rather than lease them. Take it or
            leave it, but don't presume to dismiss it. The recoveries of
            mammoth energies from switching to digital distribution can not
            be ignored.

            The potential for abuse can never be eliminated in the digital
            realm. Apple has to be given a chance to fail. If Scandinavia
            chicken's out and "rescues" it's citizens from their self
            destructive Tom Petty habits, they send a hypocritical message,
            and exhibit an irrational fear of a gestative market.
            Harry Bardal
        • Monopolies are NOT illegal

          First off, whether the iTMS is even a monopoly is not even close
          to clear. It depends on what you define the market as. If the
          market is music in general, iTMS has a very small part of the
          market.

          Second, having and maintaining a monopoly is not illegal. What
          IS illegal is when you use anticompetitive practices to maintain a
          monopoly, like Microsoft did. Has Apple excluded anyone from
          the market? No. Have they impaired their ability to compete?
          No. Do they have predatory pricing, or price fixed? No.
          V-Train
      • The thing YOU don't seem to understand ;)

        is that this has nothing to do with whether Apple have a monopoly or not.

        We have a consumer ombudsman, an independent office which only job is to check that companies don't violate our consumer protection laws. In this case, Apple is clearly violating some of our very sensible laws and that is what Apple has been asked to fix. They haven't been dragged into court yet, but they will if they don't stop violating our laws. Is that really so strange?
        pointwood
  • The laws in Scandinavia...

    The consumer protection laws in the Scandinavian countries (I'm Danish) are quite similar (and quite sensible I might add!), which is why they are coorperating in this case.

    For one thing, when you buy something here, the seller can't change the terms after having sold the gods. That is exactly what Apple has done on more than one occation with iTunes. That is just one aspect of this case.
    pointwood
  • Let's not jump to conclusions, David.

    "Is there any doubt to how ruthless and predatory Apple can get?"

    You need to back that statement up with proof that the company is engaging in predatory practices. Usually, predatory refers to pricing a product below cost to bankrupt a competitor, in the anticipation that the losses will be recouped by later raising prices. There is no evidence of this behavior by Apple. As I recall, Apple rejected demands by record companies to RAISE prices for music, not lower them. Meantime, music downloads or streams are available at lower prices than iTMS.

    In addition, while I agree with your central thesis that DRM is CRAP, it's Apple's business model. If it doesn't comply with a certain country's laws, that's an issue that has to be addressed. Otherwise, they are entitled to encumber their product with CRAP. I think we need to remember that CRAP was the only way Apple was able to get the iTMS off the ground in the first place.

    However, as pointed out in earlier posts, monopolies are NOT illegal and in some cases can be quite efficient. (The National Association of Realtors' MLS system and utility companies come to mind) However, they tend to be unpopular because they lack transparency and consumers suspect, with good reason, that price gouging or competitive limitations either do or could exist.

    That is not, at the moment, the case with the iTMS. The growing popularity of iTMS is not foreclosing others from making competing digital players, or preventing music from being distributed through other outlets, digital or not. It is simply a much more popular way of legally purchasing music/video online.

    If Apple begins to exert its influence over the digital distribution of music and video to foreclose competition or manipulate prices, then one has a case and the relevant laws for dealing with monopoly powers (in the U.S.) apply. But let's not get too excited about Apple putting record and media companies over a barrel because they have a more popular distribution system.
    Bugbyte
  • RE: Apple to meet with Norwegians

    You continue to amaze me, David. I usually do not expect to find
    you spreading FUD, but here you are with a great big shovel. I
    have an iPod and purchase some of my music from the iTunes
    store. I already play that music anywhere and on any player I
    want to. If I decide to get another brand of player later on my
    whole iTunes library will go with me. There is nothing locking
    me into an iPod.

    Sure I might have to spend a little of my time to make the
    transfer, but it will be far less time than I have to spend when I
    want to transfer one of my LP's to digital format. There has
    always been DRM with owning music, it was just not obvious.
    With an LP you couldn't make another LP. You had to tape it on a
    reel to reel, or later to cassette player. The equipment was
    expensive enough that most people never did that.

    Come to think of it the restrictions were much harder to
    circumvent with a LP than with iTunes. Instead of complaining
    about it why not be constructive and tell people how to transfer
    their iTunes music to another player if they want to. I suspect
    you would find very few takers, though. And I do purchase music
    from iTunes as gifts to friends so that they can load it on their
    non iPod music players.
    Protagonistic
  • iTunes FUD

    David,

    Check your facts. One does not need to use iTunes and keep an
    iPod forever in order to retain access to downloaded music from
    the iTunes store. Included in the agreement I, and obviously
    millions of other people don't find so draconian, is the ability to
    create Playlists and then burn your your tunes to CD (MP3 or
    audio-cd).

    Apple's DRM works because it fits the needs of consumers and
    artists. Remember folks, without supporting musicians you won't
    have the music that you desire. We seem to have lost sight of
    that in this digital age.
    curmudgeon.ca