Is iPod, iTunes, iTunes Music Store A Monopoly?

In the basic sense of the word ‘monopoly‘, Apple has one in the iPod ecosystem. There are multiple definitions as to what constitutes a ‘monopoly.’ There’s Microsoft’s Windows. Apple’s iPod ecosystem. Merriam-Webster’s definition. And the legal definition. Has Apple created a monopoly?

Yes. What goes around, comes around. Apple’s iPod ecosystem, which includes the ubiquitous iPod, iTunes on Mac and Windows, and the iTunes Music Store, is truly a monopoly.

Or, nearly a monopoly. Or, could be proven to be a monopoly. Or not. That’s how law seems to work these days.

Thomas Slattery sued Apple Computer, claiming the iPod is configured so that it will only play music from iTunes Music Store and not music from other online stores.

In short, Apple is facing a number of federal and state antitrust claims, and a California judge has ruled that the plaintiff (Slattery) in this case has met the qualifications which assert a “tying” claim.

The case may now proceed as a monopolization claim under the federal Sherman Antitrust Act and other claims for violation of California’s antitrust and unfair-competition laws.

Microsoft chairman Bill Gates must be smiling. RealNetworks CEO (former Microsoft employee) Rob Glaser probably helped himself to another jelly doughnut.

The judge noted the basic facts: Apple has an 80-percent market share for online music sales, and more than 90-percent of the market for portable hard-drive music players.

According to Merrium-Webster (the only authority who would comment), there’s a non-legal definition for ‘monopoly’:

Main Entry: mo·nop·o·ly
Function: noun
Inflected Form(s): plural -lies
Etymology: Latin monopolium, from Greek monopOlion, from mon- + pOlein to sell
1 : exclusive ownership through legal privilege, command of supply, or concerted action
2 : exclusive possession or control
3 : a commodity controlled by one party
4 : one that has a monopoly

If Windows is a monopoly at 90-percent of operating systems on PCs, then Apple can have a near-monopoly on portable music players and online music sales with the iPod’s ecosystem.

But a monopoly does not illegallity make.

The issue is how Apple wields that monopoly and both the plaintiff and the judge in the California case think Apple may need to loosen the iPod’s ecostrings.

It’s the whole ‘closed system’ perspective that seems to continue to haunt Steve Jobs and Apple. Granted, the iPod ecosystem works very well. No one else has bettered the mousetrap.

That’s the point. It’s a trap. Mostly. Once you buy an iPod, you’re pretty much obligated to use iTunes if you want to listen to music on said iPod.

Once you start with iTunes, you’re just a click away from the iTunes Music Store, and, if you’re an iPod owner, that’s pretty much the only store from which you can buy tunes that will play on the iPod.

Except Wal-Mart, or Tower Records, or Sam Goody, or Target, or… you get the idea. There are alternatives, but online it’s mostly iTMS or nothing if you’re an iPod owner.

For example, you can’t buy music on Microsoft’s Music Store and play them on your iPod or within iTunes (not easily, not legally). But that’s not Apple’s fault.

Then again, Microsoft is not the monopolist when it comes to music on PCs. It’s an also ran. A runner up to the crumbs left by Apple’s stampede.

The lawsuit, and others of similar ilk, have a case, though with many holes. While Microsoft abused their monopolistic position by forcing manufacturers to pay for Windows on every PC shipped, and to bundle software (illegally, it was determined), Apple doesn’t really ‘force’ iPod buyers to use iTMS.

That’s the difference, and it’s a big difference. The problem is that you can’t use other music from other online stores employing DRM (digital rights management) not compatible with iTunes.

Whose fault is that? Apple’s? Yes and no.