Apple had fiercely opposed the bill, calling it "state sponsored piracy". In March, the National Assembly, France's lower house, had approved a bill which mandated interoperability between services.
Currently only iPods and computers can play music from the world's leading legal music download site iTunes. Similarly, music from other sites can often not be played on iPods. The law sought to change that and force all shops and all devices to work together.
This meant allowing users to crack digital rights management systems and forcing Apple to inter-operate with other music platforms and sales operations. French lawmakers have diluted the law, however, and expect it to be voted on next week.
While it still says that all systems must inter-operate, the new law says that that requirement can be waived with the permission of the rights holders in the music. That means that with the permission of record labels and artists, Apple can carry on in exactly the same manner as before.
The new law was drawn up by a committee of members of the two French houses and will be voted on by both the Senate and the Assembly later this month. It establishes a regulator which can order companies to license their music in rivals' formats.
The law would, in France at least, prompt a shift in power between Apple and labels. Apple has held the upper hand till now because it runs the massively popular iTunes service, selling all music at the same price, against the preferences of labels. But if Apple needs the permission of music labels to carry on trading under the same terms in France that could shift the balance of power, say industry observers.
Apple had threatened to pull out of France altogether if the law was passed. It may yet do so. "We are awaiting the final result of France's legislative process," said a company statement. "[We] hope they let the extremely competitive marketplace driven by customer choice decide which music players and online music stores are offered to consumers."