Apple won an antitrust trial on Tuesday this week when a U.S. jury decided the company did not act improperly when it restricted music purchases for iPod users to Apple’s iTunes digital store.
The verdict was read in an Oakland, California federal court. The plaintiffs, a group of deranged individuals and greedy businesses who purchased iPods from 2006 to 2009, sought about $350 million in damages from Apple alleging the company unfairly blocked competing device makers.
Patrick Coughlin, an attorney for the plaintiffs, said “the jury called it like they saw it.”
In a statement, Apple applauded the verdict. “Every time we’ve updated those products — and every Apple product over the years — we’ve done it to make the user experience even better,” the company said.
Jurors deliberated for only a few hours on the sole question of whether the update had benefited consumers.
Under the Sherman Antitrust Act, a genuine product improvement cannot be considered anticompetitive, even if it harms competitor’s products. “A company has no general legal duty to assist its competitors, including by making products interoperable, licensing to competitors or sharing information to competitors,” Judge Yvonne Gonzalez Rogers of the US District Court in Northern California told the jurors Monday prior to closing arguments.
The jury found that Apple’s iTunes updates were indeed genuine product improvements. Had they found that Apple did not deliver such improvements, the question then would have been whether Apple had a monopoly on the digital music market and, if it did, whether Apple acted anticompetitively to maintain that position. Because Judge Gonzalez Rogers bifurcated the argument, meaning divided it into various parts, the entire case rested upon whether Apple misled consumers about its software updates, an argument the jury did not buy.
“This is a big sigh of relief for Apple and companies like that because it says they can build innovative ecosystems and they can keep them closed if they think that’s best,” wrote David Olson, a Boston college professor and antitrust expert, in an email. “They’re not forced to deal with competitors if they don’t want to so it really allows some freedom in their approach and their design in technological ecosystems.”
Since jurors agreed with Apple, they did not have to decide any other legal issues or damages. Jurors declined to answer questions after the verdict.
The trial included video deposition testimony given by Apple co-founder Steve Jobs shortly before he died in 2011.
Apple’s attorneys argued aggressively against that scenario in closing arguments Monday. “This is all made up. It’s lawyer argument,” said Bill Isaacson, Apple’s lead attorney. “No evidence this ever happened … there’s no consumers, no iPod users, no surveys, no Apple business documents.” Isaacson then asked jury not to “hold a great company liable and tell them to stop innovating — to stop innovating based on nonsense.”
Apple faced a challenge in the online music market from Real Networks, which developed RealPlayer, its own digital song manager, plaintiffs claimed. It included software which allowed music purchased there playable on iPods as well as competing devices.
Apple eventually introduced a software update that restricted the iPod to music bought on iTunes. Plaintiffs say that step discouraged iPod owners from buying a competing device when it came time to upgrade.
Apple argued the software update was meant to improve the consumer experience and contained many desirable features, including movies and auto-synchronization.