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Apple Fires Back at French iTunes Plan

Posted by iTech - 2006-03-25

Apple Computer has sharply criticized a pending French law that, if passed, would require all online music stores to open their services to any type of media player.
If Apple were to comply with the law, its iTunes store in France would have to be changed to allow downloads to multiple devices rather than just the company's proprietary iPod player.

Although the law has yet to be approved by France's senate, its easy passage through the country's national assembly, France's lower house, leads many to believe it will become law soon.

In response, Apple has issued a statement rebuking the plan, calling the law state-sponsored piracy and noting that legal music sales will plummet just as legitimate alternatives to piracy are gaining traction.

Matter of Opinion

The approaching wrangle between Apple and France highlights a sticky issue with online services like iTunes.

Because Apple's service is proprietary, and hugely popular, countries like France that historically have shown they are very sensitive to monopolies are likely to challenge whether the service is being unfair to competitors.

But Apple is not likely to apologize for having tremendous market share or give up slices of that profitable pie anytime soon, simply because competitors feel that they do not have a chance in the market.

Also an issue is adequate digital-rights management (DRM) protections. Apple has argued that if France passes the law, such protection will be severely reduced, throwing the market back to the days of rampant music piracy seen just a few years ago.

Their Tunes

Many analysts have predicted that Apple simply will shut down its French iTunes store rather than bow to France's demands. The company would be hesitant to crack open iTunes in one country out of concern that other countries would make the same demand, experts have observed.

At this point, Apple's iTunes music store sells about 75 percent of all legally downloaded songs worldwide, according to some estimates. Its expansion into TV content is expected to boost the service's popularity.

Although he did not comment on how Apple might handle France's recent strategy, Forrester analyst Ted Schadler did note that Apple has been adept at retaining its position in the face of rival services and other market changes.

"Apple has market dominance for music, plain and simple," said Ted Schadler. "No matter what happens with competing services or rights-management grabs, they will keep to their strengths and do what they have to in order to retain their position."

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