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iTunes Draws Ire of EU Commissioner

By Keith Regan MacNewsWorld ECT News Network
Mar 13, 2007 8:21 AM PT

Apple has been feeling increased regulatory and rhetorical heat in Europe, where its iTunes-iPod near-monopoly in digital music is under heightened scrutiny.

iTunes Draws Ire of EU Commissioner

A member of the regulatory body overseeing antitrust and consumer protection for the European Union (EU) lashed out at Apple, saying its policy of tying together the iPod music player and the iTunes Music Store is "improper."

Consumers should be offered a way to "return" downloaded music after they discover it comes with such severe restrictions, according to European Commissioner for Consumers Meglena Kuneva.

Kuneva on Monday told a German magazine that she felt the contrast between the compact disc -- which can be played on any hardware maker's device -- and iTunes, where the only portable device that will play downloaded songs is the iPod, was troubling.

"Do you find it proper that a music CD can be played on all trademarks of players, but the music sold in iTunes can be played only on an iPod?" said Kuneva, who is from Bulgaria. "I find it quite improper and I will do my best to change it."

Already, many jurisdictions in Europe are pressing Apple on its policy of making iTunes and iPod compatible only with one another. Norway has threatened to take action against Apple if it does not open up its digital rights management (DRM) system to other companies by October.

DRM not OK?

Kuneva's comments came as the European Commission is preparing a major consumer protection push aimed at boosting the amount of cross-border e-commerce taking place in Europe, including the creation of a uniform policy that consumers can use for returning goods they bought online.

The commissioner suggested that because some consumers may not realize that iTunes songs will only work on the iPod, a time frame for returning downloaded songs may be necessary.

There are no immediate plans to take action against Apple. Instead, the agency will likely meet with Apple representatives to discuss ways to open up its proprietary DRM scheme to third parties, such as device makers or other retailers of digital music.

Ironically, the two concerns may be in conflict: Any return policy on digital music would likely require some kind of DRM solution so that Apple or another music seller could pull a user's rights to play or copy a song if a refund was granted.

Wave of Discontent

Apple's European headaches began early last year, when France proposed a law requiring digital music retailers to make all downloaded songs compatible with various MP3 players. The law is aimed squarely at Apple as iTunes dominates the French market and many other countries.

The stakes for Apple are high. The iTunes and iPod link has driven the company's sales in recent years, with the growing line of iPod devices fueling its transformation from a computer maker into a consumer electronics player.

If Apple gives in to the European Commission's regulatory demands, then others will likely press for the same openness.

Apple CEO Steve Jobs, who recently took a public stand against the need to protect songs with DRM, has told the record labels to back free and open exchanges of music.

The latest comments underscore the "wave of establishment discontent towards Apple," JupiterResearch analyst Mark Mulligan told MacNewsWorld.

Other music download sites use a variety of DRM technologies that are incompatible with the iPod, meaning that all organizations that sell DRM-enabled music -- not just Apple -- will have to change the way they do business in order to make downloaded songs compatible with all audio players.

Meanwhile, Jobs' missive against DRM may have been an attempt to deflect political and regulatory criticism away from Apple and onto the record labels.

"Apple can see that the legislative tide is turning in Europe," Mulligan said. "This is all about precedents and other markets following suit. How long would it be before the big European markets and the U.S. would ultimately follow suit?"

Indeed, the drum beat against DRM is mounting. This week, the Free Software Foundation began collecting digital signatures on a virtual petition calling on Jobs to drop Apple's DRM controls on iTunes music, saying that as the top seller of digital tunes Apple "carries a large part of the responsibility for the situation in which consumers now find themselves."

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Which of these tech companies has the greatest *positive* impact on society?