A decade-old class-action lawsuit over the iPod and Apple’s practice of locking the media player to its iTunes ecosystem is kicking off this week and with it comes a videotaped deposition of Steve Jobs, recorded in 2011 shortly before he died.
It’s full of snarky comments and as if that wasn’t enough, attorneys have unearthed emails between Apple executives and other evidence casting light on the company’s inner workings at the time.
The suit revolves around the iPod, iTunes and FairPlay, Apple’s digital-rights management (DRM) system for copy-protection of music sold through the iTunes Store. FairPlay was dropped in 2007 following the ‘Thoughts on Music’ open letter by Steve.
The antitrust claim casts Steve Jobs as a conspirator who wanted to smear competitors as unethical “hackers” and asked his lieutenants to thwart rival music stores in order to maintain a monopoly over digital players.
Jobs was rattled after one of his lieutenant wrote in a 2005 e-mail that iTunes market share fell to 68 percent from 70 percent after RealNetworks had ran a 49-cents-a-song promotion.
That Real Networks had found a way to have songs from their service work on iPods didn’t help either, prompting Jobs to reply to an iTunes executive that “we may need to change things here,” company emails reveal.
“There was a concern by Apple that this would eat into their market share,” plaintiff attorney Bonny Sweeney told the eight-member jury.
Asked during his deposition whether he had heard of Real Networks, Jobs quipped “Do they still exist?” Moreover, during his testimony Jobs responded 74 times with “I don’t remember,” “I don’t know” or “I don’t recall.”
The Cupertino firm had been actively threatening anybody who tried to circumvent its FairPlay DRM or make it interoperable. Angered by Real Networks’ software dubbed Harmony, Apple later issued the following statement.
“We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod and we are investigating the implications of its actions under the DMCA and other laws,” it reads.
“I like likening them to hackers,” Apple’s marketing honcho Phil Schiller wrote back to Jobs in an email.
Real Networks responded to Apple’s statement, saying that Harmony technology does not remove or disable any digital rights management system.
”Apple has suggested that new laws such as the DMCA are relevant to this dispute,” said Real. “In fact, the DMCA is not designed to prevent the creation of new methods of locking content and explicitly allows the creation of interoperable software.”
When asked if Apple’s statements about Real Networks sounded angry, Jobs said: ”They don’t sound too angry to me when I read them,” adding that “usually, a vehement – I don’t know about the word ‘vehement,’ — but a strong response from Apple would be a lawsuit.”
The company later issued a software update which prevented RealPlayer music from being transferred to the iPod, a move plaintiffs say discouraged iPod owners from switching to another music player device.
The class-action lawsuit is asking jurors in Oakland, California, to find Apple violated antitrust laws by locking customers into iTunes. Lawyers representing the affected consumers who purchased iPods from 2006 to 2009 are seeking more than $350 million in damages because locking them into iTunes amounted to stifling competition while letting Apple charge more for iPods.
The result was overcharges of 7.5 percent on iPods sold to retail customers and 2.3 percent on iPods sold to resellers for total damages of almost $352 million, Sweeney said in court filings. That figure would be automatically tripled under antitrust laws, potentially resulting in a $1 billion fine.
Issued on February 6, 2007, titled ‘Thoughts on Music’ and published on company website, Steve Jobs’ open letter to the music industry called out the big four U.S. record labels over their insistence that Apple wrap iTunes music in FairPlay DRM or risk forfeiting these contracts.
The mercurial Apple co-founder said openly that his company wanted to drop DRM but couldn’t because the four major labels wouldn’t condone the move out of fear of piracy.
The commotion stemming from Jobs’ ‘Thoughts on Music’ eventually resulted in record labels eventually agreeing to sell their music unprotect on iTunes. All music sold on the iTunes Store is now DRM-free.
Here’s the funny moment when Apple’s Phil Schiller lost patience and abruptly interrupted his 2007 interview with Channel 4 News after reporter Benjamin Cohen asked him whether Apple was acting in a monopoly way.
Movies, television shows and books, however, to this date remain protected with FairPlay DRM in order to prevent unauthorized copying and limit content playback to iOS devices and Mac and Windows computers which are authorized with the same Apple ID used to purchase content.
Apple’s boss of Internet Software and Services, Eddy Cue, and SVP of Worldwide Marketing Phil Schiller are both expected to testify.