iTunes Antitrust Case Accusing Apple of Monopolizing The Digital Music Market
Fresh and interesting article posted on The New York Times about the third antitrust lawsuit Apple is facing on December 2 this y: "The Apple iPod iTunes Anti-Trust Litigation". U.S. District Court Judge Yvonne Gonzales Rogers is presiding over the case.
"SAN FRANCISCO — Three years after his death, Steve Jobs is very much a presence in courtrooms across the country.
And that’s not necessarily good news for Apple.
In December, the company is set to go to trial in the third major antitrust lawsuit it has faced since Mr. Jobs died. His emails will play an important role in the case, as they did in the last two. But lawyers will probably have to work hard to give his statements a positive spin. The potential damages — around $350 million — are a pittance for a company that in its last quarter had an $8.5 billion profit.
Executives are often told by their lawyers to be careful what they put in writing for fear it will end up as evidence in a courtroom. Perhaps Mr. Jobs did not get the memo. His emails in past lawsuits — a mix of blunt litigation threats against his opponents and cheery financial promises for potential business partners — have made him an exceptional witness against his own company, even beyond the grave.
The emails in all these cases present the good and bad of Steve Jobs — charmer and bully, someone who may not always have played by the rules.
He was a “genius in terms of his vision for the future,” said Michael A. Carrier, a professor at Rutgers School of Law. “But it went along with a really healthy ego and perhaps the lack of an antitrust filter — thinking about how these words would appear years later tossed up on the screen in front of a jury.”
The latest case to bring Mr. Jobs’s spirit into a courtroom is set to begin on Tuesday in Oakland, Calif. It is a class action involving older iPods, which played only songs sold in the iTunes Store, or those downloaded from CDs, not music from competing stores. The plaintiffs are consumers who say Apple violated antitrust law because to keep their music, people had to stay with the iPod, and buy higher-priced ones rather than cheaper, alternative music players. Apple has since discontinued this system.
Mr. Jobs’s emails and videotaped deposition taken before his death, plaintiffs’ lawyers say, will portray him as planning to break a competitor’s product to protect Apple’s grip on digital music.
“We will present evidence that Apple took action to block its competitors and in the process harmed competition and harmed consumers,” said Bonny Sweeney, the lead plaintiffs’ lawyer.
Apple declined to comment.
A few of the emails have already been made public. In one, sent in 2003 to other Apple executives, Mr. Jobs expressed concern about Musicmatch, a software company, opening its own music store.
“We need to make sure that when Music Match launches their download music store they cannot use iPod,” he wrote. “Is this going to be an issue?”
More emails are expected to become public during the trial.
In this case, the overwhelming impression of Mr. Jobs is likely to be of an aggressive businessman eager to ensure and protect the iPod’s success. In other cases tried since his death, he appears in a far less flattering light — as a ruthless executive willing to strong-arm smaller companies.
In 2010, Apple and five other Silicon Valley companies were accused in a class action of conspiring to keep wages down by agreeing not to recruit one another’s workers. The case is set to go to trial in January, after the judge rejected a settlement agreement. Mr. Jobs will be a star witness — or his words will.
Plaintiffs’ lawyers have portrayed Mr. Jobs as a ringleader of the conspiracy, pointing to his emails like one sent in 2006 to Eric Schmidt, a Google executive.
“I am told that Googles new cellphone software group is relentlessly recruiting in our iPod group,” Mr. Jobs wrote, according to the court documents. “If this is indeed true, can you put a stop to it?”
Mr. Jobs also tried to make a no-poaching agreement with Palm. When a Palm executive rejected that idea in an email, Mr. Jobs replied, “My advice is to take a look at our patent portfolio before you make a final decision here” — a threat to embroil Palm in patent litigation.
In 2012, the Justice Department accused Apple and five other publishers of colluding to raise e-book prices. In the trial, government lawyers showed an excerpt from Mr. Jobs’s authorized biography in which he said he wanted publishers, not retailers, to set the price of titles.
“Yes, the customer pays a little more, but that’s what you want anyway,” Mr. Jobs told the publishers, the biography said.
Throughout the trial, government lawyers frequently brought up an email written by Mr. Jobs to a media executive, in which he suggested that by teaming up with Apple, publishers could sell titles for higher than Amazon’s $9.99 pricing for e-books.
“Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99,” he wrote.
A federal judge found Apple liable in the case, and on Nov. 21 approved a settlement in which Apple could begin paying $400 million to as many as 23 million consumers.
The case involving the iPod has kicked around various Bay Area federal courts for a decade. It is an amalgam of multiple suits, with over 900 filings from lawyers on both sides.
The jury will hear from some of Apple’s top executives, including Philip W. Schiller, the head of marketing, and Eddy Cue, who oversees iTunes and Apple’s other online services.
Part of the case will involve RealNetworks, an Internet media service that had come up with a workaround to allow songs sold in its store to play on iPods and other media players. In response, Apple in 2004 issued an incensed statement, accusing RealNetworks of hacking the iPod and warning that future software updates might prevent songs sold by RealNetworks from playing on iPods. RealNetworks is not a party in this suit.
Apple’s lawyers are expected to try to show that various iTunes updates were designed to make improvements to its products rather than deliberately cripple a competitor and did not harm consumers.
And they will probably point out that the price of iPods have gone down over the years, not up, regardless of what Apple did with its software".