Aided by Steve Jobs' testimony, Apple prevails in iTunes antitrust case

A class-action lawsuit against Apple that had been working its way through various courts for nearly 10 years was finally settled on Tuesday, in Apple’s favor.

The jury of eight agreed with Apple’s case that it changed its iTunes software and its then-dominant iPod MP3 player in 2006 to make a better experience for customers, not to try to achieve a digital music monopoly.

At the time, songs purchased from iTunes came embedded with software that made them incompatible with other music players, and the iPod was made so that it couldn’t play songs purchased from competing online music stores.

The case gained notoriety because it featured a videotaped deposition from Apple’s late cofounder Steve Jobs, recorded several months before his death in 2011. The plaintiffs had hoped that Mr. Jobs’ famously blunt e-mails would help their case (in one communication, he flatly stated that the iPod should be made incompatible with Musicmatch, then a competing download service) and there was speculation that the video would reveal a Jobs determined to crush iTunes’ opposition.

But though Jobs took some jabs at companies that competed with Apple in the middle part of the decade, including RealNetworks, he also noted in the video that Apple had to strengthen the security of its software as part of its contracts with music labels. At the time, he said, many people were trying to hack the iTunes digital rights management system, and Apple acted to protect the integrity of its platform, not to unfairly dominate the marketplace.

The plaintiffs’ case faltered early, when lawyers learned that the named plaintiff hadn’t actually purchased an iPod between 2006 and 2009, and so couldn’t claim that Apple’s actions had harmed her. Apple’s lawyers argued that the plaintiffs weren’t able to demonstrate any actual harm that had come about as a result of Apple’s actions, since no iPod customers testified that they had suffered. Top Apple executives Phil Schiller and Eddy Cue, the head of iTunes, testified as part of the trial, arguing that Apple hadn’t broken antitrust law.

With the court victory, Apple avoided a judgement of nearly $1 billion. The plaintiffs had asked for $351 million, which would automatically have tripled under antitrust law. The case was also a reminder of how much the online music landscape has changed in the past decade. In 2006, when the case was filed, Apple was an underdog competing with RealNetworks, Microsoft, and other companies with their own online music services, as well as with brick-and-mortar record stores such as Tower Records.