FairPlay

Antitrust: Apple accused of bullying Microsoft

January 4, 2008: 7:24 AM ET

picture-22.jpgIn a case rich in irony, an antitrust suit has been filed against Apple (AAPL) accusing the company of illegally maintaining a monopoly in the digital music market by failing to support Microsoft's (MSFT) Windows Media Audio format.

The suit was filed Dec. 31 in San Jose and brought to light Thursday afternoon by InformationWeek. The plaintiff is Stacie Somers, a San Diego-based attorney represented in this case by a gaggle of class-action specialists: Craig Briskin and Steven Skalet of Mehri & Skalet, Alreen Haeggquist of Haeggquist Law Group, and Helen Zeldes. See filing here (subscription required).

Microsoft, of course, is the company usually associated with charges of antitrust behavior, most famously for tying Windows to Internet Explorer in United States v. Microsoft. Apple was named in that case, along with Netscape and Java, as one of the threats to its monopoly that Microsoft tried to crush.

But now the New Balance 991s are on the other foot, according to Somers' lawsuit, which quotes Steve Jobs as bragging that Apple's iTunes store is now "the Microsoft of music stores."

According to the complaint, Apple controls 75 percent of the online video market, 83 percent of the online music market, more than 90 percent of the hard-drive based music player market, and 70 percent of the Flash-based music player market.

Yet among the major digital music vendors, Apple is alone in not supporting Windows Media Audio. The suit estimates that Apple could license WMA from Microsoft for less than $1 million -- or about 3 cents for each iPod sold in 2005.

According to InformationWeek:

... the complaint goes beyond software licensing politics and charges Apple with deliberately designing its iPod hardware to be incompatible with WMA. One of the third-party components in iPods, the Portal Player System-On-A-Chip, supports WMA, according to the complaint. "Apple, however, deliberately designed the iPod's software so that it would only play a single protected digital format, Apple's FairPlay-modified AAC format," the complaint states. "Deliberately disabling a desirable feature of a computer product is known as 'crippling' a product, and software that does this is known as 'crippleware.' " (link)

Apple has faced other antitrust charges over its dominant position in digital music. See for example here. Most of these cases, however, complain that Apple maintains its grip by tying the iPod to the iTunes store. This is the first time Apple has been charged with trying to muscle Microsoft out of the market.

Apple, as usual, is declining to comment on pending litigation.

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