Apple 'iPod iTunes' antitrust case sent to jury after closing arguments
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Closing arguments in a class-action lawsuit against Apple's iPod iTunes ecosystem were heard on Monday, with each side arguing their case for what could potentially result in a $1 billion penalty for Apple.
On Monday, lawyers for both Apple and plaintiffs offered closing arguments to a jury of eight in a California antitrust lawsuit regarding the tech giant's supposed scheme to use iPod, iTunes and FairPlay digital rights management to effectively lock customers in to its digital music ecosystem.
According to in-court reports from The Verge, plaintiffs targeted Apple's iTunes 7.0 software update, with attorney Patrick Coughlin saying security tweaks that came as part of the update "knocked out competitors" like RealNetworks. Released in September 2006, version 7.0 brought various user features to Apple's iTunes software, but certain security modifications are under scrutiny.
Specifically, iTunes 7.0 broke compatibility with RealNetworks' Harmony, a technology created to thwart FairPlay DRM and allow users to playback on their iPods music not purchased from the iTunes Music Store. Plaintiffs argue the change introduced "switching costs" that discouraged existing iPod users from leaving Apple's ecosystem when it came time to upgrade hardware.
Coughlin went on to reassert claims about a software error that reportedly wiped an iPod's library if songs not purchased or imported through iTunes were found.
"I liken it to blowing up your iPod," Coughlin said in court, repeating an analogy he used in presenting the supposed iTunes flaw earlier this month. "It's worse than a paperweight. You could lose everything."
"There is no evidence anyone went through the restore process and ever had this happen. Not even a complaint about it." — Apple lawyer William IsaacsonTo this point, Apple's lead counsel William Isaacson said, "There is no evidence this ever happened. There is no evidence anyone went through the restore process and ever had this happen. Not even a complaint about it."
During trial proceedings, Apple argued its iPod and iTunes security measures were installed to protect users from potentially malicious software outside of their control. The company's security director Augustin Farrugia testified in court that Apple was "very paranoid" in implementing an extremely protected digital music service, especially when it came to possible pirated music and malware. Late Apple cofounder Steve Jobs said much the same in a deposition videotaped just months before his death in 2011.
In Jobs' view, Apple's subsequent iTunes revisions targeted DRM hacks, which were prevalent at the time. He said Apple would "constantly" revise both iTunes and iPod software to keep out what the company considers hackers.
Another major concern for Jobs was a series of tenuous deals made with record labels to sell music through iTunes. Without adequate protections and assurances that owned content would not be pirated, or alternatively that pirated content would not be promoted by iPod playback capabilities, iTunes would lose backing from content owners. When asked if music companies complained about RealNetworks' Harmony technology, Jobs said, "It doesn't really matter because in fixing holes for DRM hacks, it might screw up the Real technology anyway, as collateral damage."
While Jobs' statements are plausible, former Apple FairPlay engineer Rod Schultz disagreed, saying in court that the company's DRM deployment "intended to block 100% of non-iTunes clients" and "keep out third-party players."
Apple, however, maintains all iTunes, iPod and FairPlay enhancements were made to protect consumers and foster innovation in the digital music space.
"We now have a plaintiff that is asking you to hold Apple liable for innovating, for providing security, that is what they are asking you to do," Isaacson said during closing statements. "They are doing that and asking you to hold us liable for providing consumers a choice, for providing integrated products, for providing iPod plus iTunes, and saying that's how our products work best."
hTe suit has seen its share of troubles over the past two weeks, not the least of which being improper representing class plaintiffs. Last week, the suit against Apple lost its last named plaintiff after another withdrew one week prior due to ineligible iPod purchases. The lawsuit stipulates claimants must have purchased an iPod between Sept. 12, 2006 to March 31, 2009.
Lawyers for the plaintiffs found a suitable replacement in 65-year-old ice dancer Barbara Bennett, who is representing a class of 8 million iPod buyers.
A jury will now decide whether Apple is accountable for $350 million worth of damages, an amount that would automatically trebled to more than $1 billion under U.S. antitrust laws.