OUT-LAW News, 24/01/2007

Apple faces renewed calls to allow third parties access to its closed iTunes and iPod system as consumer groups in France and Germany join anti-Apple action begun by Nordic consumer groups.

The company faces investigation in Scandinavia over its iTunes-iPod tie-in but the addition of consumer groups in two of Europe's biggest markets, France and Germany, to the action could cause it serious trouble in Europe.

The action alleges that Apple's business practices break contract law and are anti-competitive. Music bought from Apple's iTunes service tracks can only be played by PCs or iPods but not other digital music players. It is this 'lock-in' that is the subject of consumer group protests.

"This is important because Germany and France are European giants," Norwegian Consumer Ombudsman Bjoern Erik Thon told news agency Associated Press. "Germany, in particular, is a big market for digital music."

"Apple hopes that European governments will encourage a competitive environment that lets innovation thrive, protects intellectual property and allows consumers to decide which products are successful," said an Apple spokesperson regarding the actions.

France had previously passed a law which threatened to undermine Apple's lock-in. It mandated suppliers of music to make their digital rights management (DRM) code available to other vendors, but though passed by both of France's houses of parliament it was ruled unconstitutional by its Constitutional Council.

France was a battleground over the issue once before. In 2004 its Competition Council was asked to rule on whether or not Apple's refusal to licence its DRM code to other vendors was anti-competitive.

The Competition Council said that it did not break French law because the technology was not necessary in order to operate a digital download service.

The news of France and Germany's support for the Nordic action came as record industry executives admitted to reporters that the major labels may be prepared to perform a U-turn on using DRM technology to control downloaded files.

At the annual Midem music industry conference in Cannes executives told of a weakened resolve to stick with DRM, which remains controversial with users and is opposed by many who believe it imposes new and restrictive conditions on consumers.

A number of DRM-free pilots are emerging. EMI will offer free streamed music in China on the market leading Baidu search engine. China is one of the markets worst hit by music piracy.

Yahoo! is said to be about to continue experiments begun last year in offering DRM-free tunes. Sony BMG and EMI both agreed to have artists such as Norah Jones and Jessica Simpson provide music for the tests, a Yahoo! executive told the conference.
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