Out-Law News 1 min. read

French competition case against iPod DRM dismissed


The French Competition Council yesterday dismissed a complaint filed by the French division of internet retailer Virgin Mega alleging that Apple has acted anti-competitively in failing to license the digital rights management (DRM) software in its iPod.

The complaint was filed in June and concerned software, known as Fairplay, which controls the type of music that can be played on the iPod.

To date Apple has been zealous in keeping it secret – effectively restricting the downloaded music playable on the device to that which can be purchased from Apple's iTunes – and has refused to license the technology to other on-line digital music retailers.

According to reports, the Conseil de la Concurrence did not find this refusal to be in breach of competition rules because, while the Conseil could not rule out the possibility that Apple was dominant in the market for the supply of portable music players, access to the Fairplay software was not essential in order to support the development of the on-line download market.

The market contains other music players using Microsoft's DRM system, which Virgin Mega's site is currently compatible with, and consumers can access Virgin Mega's downloads through these, said the Conseil.

Consumers could also get round the iPod interoperability issue by burning the music onto CD, it added.

According to Nicholas Francis of consultancy firm Reckon, which specialises in the interactions between markets and regulatory institutions, the key to the decision seems to be how music downloads are used.

"In effect," said Francis, "the Conseil found that competition in the supply of music downloads currently takes a broad form, in which suppliers of content in different secured formats compete against each other to reach customers who are not, on the whole, restricted to any one particular format."

"In the future," he warned, "the relative importance of transfers to portable music players can be expected to increase as penetration of devices such as the iPod rises. Going forward, one might be able to identify separate relevant markets for the supply of music downloads that are to be used on portable music players. In that case, the relevant customers could well be tied to particular DRM technologies."

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