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Apple music monopoly lawsuit seeks class-action status

Lawsuit claims Apple unfairly restricts iPod, iTunes use to beat out rivals

By Jeremy Kirk
January 4, 2008 12:00 PM ET

A class-action suit filed against Apple Inc. alleges the company unfairly uses technological restrictions with its iPod line and iTunes Store to beat out competitors.

The suit, filed in U.S. District Court for the Northern District of California, is the latest one to accuse Apple of unfair business practices. Apple is facing similar legal actions and scrutiny in the U.S. and Europe.

The suit was filed Dec. 31 by Stacie Somers, a resident of San Diego County, Calif., who bought a 30GB iPod from a Target retail store. Others who bought an iPod or content from Apple's iTunes Store after Dec. 31, 2003, may join the suit.

The suit calls for Apple to forfeit money it earned from the unfair practices and pay the plaintiffs damages.

It alleges that Apple has constricted the market by not enabling iPods to play content in the Windows Media Audio (WMA) format, Microsoft Corp.'s copy-protection technology. Further, Apple sells songs on the iTunes Store site with its own copy-protection technology, FairPlay, which is incompatible with music players other than the iPod.

The suit contends consumers who own iPods can buy music only from iTunes, an unlawful tie-in that violates U.S. antitrust laws. Apple could license the WMA format for as little as .03 cents per iPod, or for a total of $800,000 based on Apple's 2005 iPod sales, the suit reads.

The suit may quickly become less relevant as many online music retailers, including Apple, expand their offerings of music that is free of copy-protection restrictions, also known as DRM (digital rights management).

DRM-free tracks offer the advantage of being compatible on a wider range of devices. In May, Apple began selling songs from the music label EMI without DRM. Also, Amazon.com now sells songs in the MP3 format, and Universal Music Group has tested selling DRM-free music.

Apple doesn't comment on pending litigation, a company spokeswoman said.

Agam Shah in San Francisco contributed to this report.
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