Is Apple Ripe for the Picking? Mark Mark Anthony M

CEU eTD Collection CEU eTD Collection Prof. Andrzej Baniak IMPLICATIONS OF APPLE’S ITUNES MODEL DISSECTING THE LEGAL AND ECONOMIC for the degree of Master of of degree the for andEconomics Arts Law in Submitted in partial fulfillment of the requirements the of fulfillment partial in Submitted IS APPLE RIPE FOR THE PICKING? MARK MARK ANTHONY M. CATAM Central European University, European Central 2012 Department of Economics of Department Budapest, Hungary THESIS BY CEU eTD Collection n cmeiin ad efcec. ih te itrainl pesr ruh gis the against brought pressure international the With efficiency. and competition on model business iTunes the of implications economic and legal the is contention primary Opponents’ tie-in. virtual a consider many that practice a service, iTunes the with only compatible directly are players music portable Apple’s and players, music portable own Apple’s with only works iTunes incompatibility. and inoperability of model business iTunes its of practice an anti-competitive and violations antitrust alleging probe international others, many among faces, company The price. a with came success Inc.’s Apple largestworld’scompany, technology Nevertheless, of $60billion. excess in annual revenues with the now is fruit, a on based was name whose company, the decades, three to forward Fast name. remarkable yet company,simple a the name – Inc. to Apple decision the to catalyst the was farm apple an in spent he time the of Jobs’ memories Steve doting giant. technology a of name company the inspired serendipitously fruit apple actual An there legal and economic justifications that a suggest better alternative? are so, if and revenues, in billion-dollar brings that practice a scheme, iTunes its shelve and picking the for ripe Inc. Apple is practices, competitive more employ to company ABSTRACT 2

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BIBLIOGRAPHY CONCLUSION Competition CHAPTER 3: Economic Analysis –Achieving Efficiency and Effective CHAPTER 2: Legal Analysis – Alleging Antitrust and Anti-competition CHAPTER 1: – iTunes Decrypting FairPlay INTRODUCTION TABLE OF CONTENTS ABSTRACT ...... TABLE OF CONTENTS 3 ......

31 29 22 11

6 1 3 2 CEU eTD Collection 4 CEU eTD Collection copyright infringement, but only stifles entry of legitimate consumers, innovation and innovation consumers, legitimate of entry stifles only but infringement, copyright of rights digital protects the DRM that establish conclusively protect to evidence no and is there that argue promote consumers, to aims that organization nonprofit a – (EFF) Foundation Frontier Electronic the as such opponents streams, revenue ensure and infringement copyright fighting in necessity absolute an is DRM of use the that believe a provider, AOL and Apple Inc. content the by AT&T,Sony, Microsoft, intended Amazon, as such or companies by used desired innovation technological not is that content digital of use sale. after devices and content digital of use of limitation the allows that individuals and holders copyright publishers, manufacturers, hardware by utilized %20Asked%20Questions%20about%20software%20patents 4 2002, http://w2.eff.org/IP/DRM/cfp_fair_use_and_drm.pdf 3 http://en.wikipedia.org/wiki/Digital_rights_management#cite_note-0 has 2 (“Apple”) Inc. 1 Apple improvements. technological and innovations scientific market free a from barrier trade a perspective. as DRM viewed has market, information the in market free a establishing to dedicated organization non-profit a – (FFII) Infrastructure competition. importantly, more Free Information Infrastructure (FFI), FAQ, accessed May 5,2012) http://www.ffii.org/Frequently Fred Von Lohman, “Fair Management”, Use andRights Digital Electronic Frontier Foundation, April Management, Rights accessed Digital May 5, 2012, Digital Millennium Copyright Copyright Millennium Digital Act The music industry has experienced tremendous growth since the explosion of explosion the since growth tremendous experienced has industry music The providers content Although controversial. is technologies DRM of use The is that technology control access an is (“DRM”) Management Rights Digital 4 2

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CEU eTD Collection sold over 4 billion songs billion 4 over sold iPod (referred to “alternative as model”). the with store music online music other from downloaded music portable of compatibility and other devices, with files iTunes of interoperability allowing files, DRM-free is practice this to alternative The model.”) “iTunes the as paper this in to referred be will is devices. hence, music and and technologies competing other iPod, with inoperable i.e. devices Apple with compatible exclusively is iTunes from downloaded and purchased music file; music downloaded the of use unauthorized and re-selling sharing, copying, file protect to order in (DRMs) systems Management Rights sharing. unauthorized from music (“iTunes”). Store Music iTunes called platform music-downloading its using iPad, and iPhone iPod, the as such players, music portable proprietary its creating by industryburgeoning this on capitalized 2012, http://news.bbc.co.uk/2/hi/7329886.stm http://newsfactor.com 10 Industry-Leader iTunes 9 IDEA 533,534(2010) ofImplications Apple's Fairplay Technology with A Nodthe Peculiarities to of Intellectual Property,” 50 8 industry-antitrust-analysis-apple-s-#sdendnote10sym 2012, Apple’s of Services Combination and Products,” National Law Review, April 20,2011, accessed May 1, 7 detail.html 6 music-industry-for-better-or-for-worse?page=2 accessed May 6,2012,http://www.helium.com/items/1682235-have-apple-and-the-ipod-changed-the- 5 PQDVD.com, History and Design, iPod (accessed May 2,2012) http://www.pqdvd.com/ipod-software- Press Release, May 26,2010,“ Noonan Willow, “Antitrust,Intellectual Property, and the Itunes Ecosystem: A of the Study Antitrust “Antitrust,Intellectual and Rui, Propertythe OnlineLi Music Industry: Rights, An Antitrust Analysis of Buffy Cranford, “How Apple Have and iPod Changed the Music Industry,” December Helium, 19,2009, BenLevine, “Apple’s iTunes Becomes No. 1Music Store,” April 4,2008, accessed May 20,2012 http://www.natlawreview.com/article/antitrust-intellectual-property-rights-and-online-music- Today, the iTunes Store is the biggest retailer of digital music in the U.S. and has and U.S. the in music digital of retailer biggest the Today,is Store iTunes the ; “iTunes; Music U.S. Seller,” Biggest News, BBC April 4,2008, accessed May 20, , accessed May 1,2012, 5 iTunes uses a discordant DRM system to prevent copyrighted prevent to system DRM discordant a uses iTunes 9 ; it is the number-one music vendor in the United States. United the in vendor music number-one the is it ; Amazon Ties Wal-Mart as Second-Ranked Music U.S. Retailer, Behind 6 Apple’s iTunes platform is equipped with Digital with equipped is platform iTunes Apple’s http://www.npd.com/press/releases/press_100526.html 8

7 (This inoperability (This 10

CEU eTD Collection subject matter. the on position the strengthening and understanding deeper a fostering in ideal thus, and complementary, is approach, and mechanisms in differences their albeit context, same the in models economic and theories legal the both of application an that emphasizes paper the Further, efficiency. economic and antitrust competition, affect that factors the of investigation the in relate economics and law of field the how on observations offers paper This models. economic and theories legal of application the through model remains.issue laws. antitrust of violation in and anti-competitive is action Apple’s that alleges Court District U.S. the with suit action class a Currently, E.U. and anti-competitive. be to model perceive Apple’siTunes many However, https://ipodlawsuit.com 14 http://www.businessweek.com/globalbiz/content/jan2007/gb20070131_492654.htm January 31,2007,accessed May 1,2012, 13 http://www.nytimes.com/2010/05/26/technology/26apple.html?_r=2&dbk MaySection, 25,2010,accessed May 16,2012, 12 and Apple 2012), http://www.pcworld.com/article/136949/is_apple_the_new_microsoft.html welfare: total improves 11 the and since competition efficient efficient economically espouses is alternative model” “alternative the that illustrates model Whinston’s efficient. less economically is model” “iTunes the that positing by further step a inference this takes analysis economic An competition. impeding consequently, and scheme, tying unlawful in engaging by violation antitrust to results model” “iTunes

Apple iPod C-05-00037-NW, Litigation, Antitrust for DistrictCourt U.S. Northern California, Dan “Europe Carlin, vs. Apple: facing the Music,” Bloomberg Business Week, Technology Section, Mike Elgan, “Is Apple the New Microsoft,” ComputerWorld, September 7,2007(accessed May 8, Brad “Apple Face Stone, to Said is Inquiry About Online Music,” The New York Time, Technology Specifically, this paper shows that an application of legal theories to Apple’s to theories legal of application an that shows paper this Specifically, The intention ofthis paper isto analyze the competitive implications ofthe iTunes 13 have taken steps to investigate the alleged anti-competitive practices of of practices Apple. anti-competitive alleged the investigate to steps taken have

14 Thus, a continued interest in this in interest continued a Thus, 11 Both the U.S. the Both 12

CEU eTD Collection the paper outlines an economic analysis based on Whintson’s tying game model in model game tying Whintson’s on based analysis economic an outlines paper the Finally, practices. antitrust and anti-competitive Apple’s alleging case court contentious to relate issues legal FairPlay. these how and matters technology and software to applicable laws antitrust of complexities legal the conveys It analysis. legal the outlines 2 Chapter antitrust. and competition of context the in controversial become has technology the how technology,called of Apple’sDRM narrative a with ends 1 Chapter Union. European and States United the in DRM of basis legal on the information detailed piracy.repressing providesand chapter copyright of same protection The – laws antitrust of goal the promotes DRM how technology,and (DRM) Management Rights Digital the (Pareto off worse is none and off, better is improvement actors economic the of one least at and, increased; is surplus producer’s and consumer enhanced; are profits competitor’s Equilibrium, whereEquilibrium, nomore Pareto Improvements can be made. one party. It suggestsPareto that Improvements keep achieves will it the addingeconomy to until a Pareto 15 this which devices, music portable other with incompatibility and iPods’interoperability and iTunes of ramifications legal the provide authors The technology. DRM Apple’s of tendencies anti-competitive the and dilemma antitrust the discuss (2008) Greenhalgh and (2008) Jozefcyk (2007), Sharpe (2007), Roth in analyses the example, For practices. the relays the welfare ofall economic actors. and efficiency and economic competition efficient on models alternative the the and iTunes the both examines of implications chapter last This 3. Chapter

In economics, Pareto Improvement an is action done an in economy harms that noone and helps at least Numerous papers in legal journals confront the issue of Apple’s alleged antitrust alleged Apple’s of issue the confront journals legal in papers Numerous describing iTunesand of overview an providing by begins paper this of 1 Chapter In particular, Inconceivably,and current, the highlights 2 Chapter most single the 15 ). FairPlay and shows and

CEU eTD Collection collection oflegal and economic analyses prepared a as single study. a is paper this Overall, (2004). Kramer in observations the including adopted, Whinston is (1990) by developed model game tying basic the paper, this of content the economic to regards with And models. economic legal of the application is the papers not and these interpretation, of thrust the However, 2. Chapter in highlight will paper

CEU eTD Collection ad die n raie ter msc uig pwru erh rwe ad pa list play and browse search, features. powerful using music their organize and drive, hard computer’s their on them store format, MP3 the into them squeeze CDs, favorite their from songs in bring users lets iTunes store, virtual iTunes the from files music purchase to capability the having to addition In applications. easy-to-use and user-friendly with equipped computers, their on library music virtual own their organize to users its permits music portable player.or device computer a on it download directly and on-demand music 2003. 1.1. 19 18 17 16 1.2. incorporating technology with restrictions.” use by copies of making theirthe control to protecting right the holders for copyright gives method DRM copyrights. a as technologies (DRM) Management Rights Digital to turned have holders copyright result, a As quality. in loss corresponding a without infinitely copied be can files media digital media, analog with case the unlike because, Digital Rights Management, Rights Digital iTunes, accessed April 29,2012,http://en.wikipedia.org/wiki/ITunes Willow, Id. Introduction 16 17 iTunes is an online store where the public can conveniently purchase digital purchase conveniently can public the where store online an is iTunes The United States implemented the Digital Millennium Copyright in Act (DMCA) in European and inStates theUnited DRM Union concerns more raised has iTunes the as such media digital of introduction “The of in April launched subsequently was and 2001, in iTunes conceived Inc. Apple, The concept was the creation of an excellent and easiest “jukebox” software that software “jukebox” easiest and excellent an of creation the was concept The 18 see note 8 CHAPTER iTunes 1: –Decrypting see note 2 19 (Roth, 2007) FairPlay

CEU eTD Collection oges dcdd nt t rhbt cruvnin o oy cnrl; atr al f the if all, after controls; copy of circumvention prohibit to not decided Congress offenses. DMCA circumvention. for marketed is or from, aside purposes significant commercially limited has for, designed primarily is it if qualifies device the instances, trafficking both In controls"). ("copy distribution and copying like rights, exclusive holder's copyright the protects that DRM for devices circumvention in trafficking third, and, controls, access circumvent can that devices in trafficking prohibits it Second, controls"). ("access work copyrighted a to access gaining from someone prevents that DRM circumventing prohibits DMCA the First, offenses. DMCA the of provisions anti-circumvention University, Harvard the against remedies circumvention of effective technological measures." legal effective and protections legal "adequate for call treaties two Worldwith comply to 1998 OrganizationProperty treaties. (WIPO) Intellectual 24 23 ofMedia,Business Digital p.36 22 21 the 20, 1996,art. 18 of behalf on Union European 20 of Council the by approved 2000, 16, March of for excuse an be not should uses circumvention. legitimate subsequent then unauthorized, is work the to access if that reasoned Congress hand, other the anyway. On infringement copyright for liable be will individual the purpose, legitimate a for not is circumvention Rui, Rui, 1201(1998) 17USC WIPO Copyright Treaty, Dec. 20,1996, Art. 11, and WIPO Performances and Phonograms Treaty, Dec. Universal v. Reimerdes, Berkman Center for Internet and Society, “iTunes, How Contract and Copyright, Technology Shape see In Europe, the WIPO Copyright Treaty is implemented by Decision 2000/278/EC Decision by implemented Treatyis Copyright WIPO the Europe, In of Society and Internet for Center Berkman the of report the to According note 7 24 23 In an attempt to balance this law with typical copyright exceptions, copyright typical with law this balance to attempt an In 111 F. 2d294,321-324 Supp. (SDNY 2000) 22 None of the typical defenses to infringement apply to apply infringement to defenses typical the of None 21 forbid three specific three forbid 20 The

CEU eTD Collection exists in the Software Directive. (Berkman Study) exception an such though engineering, reverse include not do EUCD the in exceptions the Notably, respectively. Directive, Access Conditional the and Directive Software the in specifically provided is services to access and programs computer regarding protection Anti-circumvention copying. personal for ones optional as well as accommodate must countries that exceptions limited significantly discrete, lists also Directive The services. and devices of circumvention in trafficking circumvention the against of as well as act measures technological the against protection provide should States Member that provisions necessaryto comply with the Directive before December 22,2002. administrative or regulations laws, all force into bring to required were States Member management. rights digital the as such measures” protection “technical circumventing for devices prohibiting 2001/29/EC, Directive is DRM of subject the covers Community. which European Directive, Union European The 27 26 of certain aspects of copyright and related the information in society rights 25 files.music sharing of unlawful and infringement prevent to Store iTunesMusic the from files music purchased sufficient technological to protect know-how the intellectual properties ofcopyrighted works. utilize and develop provide, to online music selling in engaged companies 1.3. FairPlay, accessed May 10,2012,http://en.wikipedia.org/wiki/FairPlay Directive of the European 2001/29/EC Parliament and of of 22May Council 2001onthe harmonization Directive see 2001/29/EC, is nrdcd i Arl o 03 Apes DM DRM, Apple’s 2003, of April in introduced First other as well as Inc., Apple, DMCA, the of 1201 Section with compliance In FairPlay mandate DMCA, the as terms similar very in EUCD, the of (2) and 6(1) Article – Apple’s technology DRM 27 Music sold through iTunes through on sold sold music Music from is distinguishable note 24 25 Under the terms of the EUCD, the of terms the Under FairPlay nrps legally encrypts 26 the

CEU eTD Collection onc h ui eie io o te atoie optr ei ucaig and purchasing begin to files music the transferring computer, thereafter, and store, music iTunes on authorized music downloading the to iPod device music the connect can user a complete, is authorization Once device. computer that for ID user a to create MacBook) or PC Computer (Personal computer user’s the use to authorization an with Apple’saccount server, creation ofwhich signals both the registration ofthe with user iTunes,iTunes and an create to has user a First, process. coding complex of series iTunes digital music files with other portable devices. iPods, as such devices, music portable Apple of number unlimited on an on play files can files iTunes music While playing players. music portable and transferring as well as downloading, easy for allowing FairPlay Coding) files instead ofthe common formats MP3 or WMA formats Audio (Advanced AAC are iTunes on music since Music Amazon i.e. store online other http://itunessupport.com/node/177 29 blog.com/sync/2007/06/acronym-soup--a-html Saltxman, Acronym Soup: A Quick Guide MP3, to WMA and JuneAAC, SYNC, 29, 2007,http://sync- reduce theof amount data necessary reproduce to versions high-quality of the originalrecording. Marc iPod the to copied and transferred 28 be not will de- file music or such unauthorized – computer another authorized from downloaded was file music the either – key user a lacks that library iTunes his in music a has user a if Consequently, account.) iTunes (The account. iTunes user’s the on authorized not is that computer a from iPod an to music keys. user using decryption of series Accordingly, after computer transfer cannot user the authorized the from iTunes the from purchased music play only can iPod An iPod. the iTunes “How Support.com, Does FairPlay Work,” accessed May 2,2012 iTunes, FairPlay FairPlay FairPlay see DRM. The MP3, WMA and AAC formats reduces the file size of the audio, the of size file the reduces formats AAC and WMA MP3, The DRM. note 26; MP3, MP3, note 26; WMA and AAC formats are compressive audio files designed significantly to encryption system authorizes up to five different computers using a single a using computers different five to up authorizes system encryption works by encrypting every song purchased from iTunes store through a through store iTunes from purchased song every encrypting by works FairPlay DRM restricts the operation of the of operation the restricts DRM 29

28 , and encrypted with

CEU eTD Collection such as iPod, as iPhonesuch and iPad. devices, music portable Apple with Store Music Microsoft i.e. stores music digital other on purchased music and players, music digital portable other and iTunes on purchased lacks the necessary than other DRM with protected music play not will iPod Finally,the iPod. the on existing already music retaining time same the at while music transfer and computer unauthorized an to iPod his dock cannot user Moreover,a file. the decrypt to key user the of absence the of because http://www.businessweek.com/debateroom/archives/2007/02/apples_internat.html FebruarySection, 26, 2007, accessed May 12,2012, 31 2005, accessed May 16,2012, 30 Howard Wenn, “JHymm Goes Behind andAtoms DRM-FreeApple Bring to Music,” OSDIR, Jan. 27, Arik Hessaldahi, “Apple’s International iTunes Controversy,” Bloomberg Business Week, Technology Apple’s DRM music store model results in a case of inoperability between music between inoperability of case a in results model store music Apple’sDRM FairPlay FairPlay http://osdir.com/Article3823.phtml (i.e. Windows Media DRM) since the music file of Windows of file music the since DRM) Media Windows (i.e. user key.user 31

; also see; Willow, note 8

CEU eTD Collection business practices. As indicated by the author of the act, Sen. John Sherman, “the Sherman, John Sen. act, the of author the by indicated As practices. business anti-competitive and unfair abusive in potentially engage that regulating parties by penalizing so and practices does economic it market; the in compete to parties for opportunities equal maintaining of purpose trade.” the with this passed 1980, was in Act Enacted of rule the preserving as at competition unfettered aimed preserving at Act aimed Sherman liberty the “economic enacted Congress the States, United the In the World by guided treaties, and agreements international Tradeof Organization(WTO). companies.” of practices anti-competitive regulating by competition market promotes or maintains the “law is law antitrust and Competition law. antitrust of existence the of role primary 2.1. Introduction http://ethics.csc.ncsu.edu/commerce/anticompetitive/dominance/microsoft/study.php 34 restraint of trade or commerce among the several or States, foreign with declared is nations, be to illegal.”) 33 32 and monopolizing the market forinternet software. browser competition, equitable eliminating power, market its maintaining consequently, and system, software operating the of monopoly its abusing by rules antitrust violated company the that concluded government the case, Microsoft the In Microsoft. against which intend, to advance the to cost ofgoods the consumer.” or designed arrangements, preventing by consumers the protect the to of was purpose Act §1(2004) 15U.S.C. (“Every contract, the form in combination of or trust otherwise, or conspiracy, in Competition Law,Competition http://en.wikipedia.org/wiki/Competition_law#cite_note-Taylor_2006_1-0 Antitrust, Antitrust, What’s Deal? the Big CHAPTER 2: Perhaps the most notable antitrust case of the recent times is the anti-trust case anti-trust the is times recent the of case antitrust notable most the Perhaps the be to remains competition economic balanced and fair a of prospect The 32 Whilst International competition is generally protected through a variety a through protected generally is competition International Whilst Legal Analysis – Alleging and Antitrust Anti- competition 34

CEU eTD Collection companies, under strict monitoring ofcompliance. third-party with interfaces programming application its share to Microsoft required which 2004, in settled was case the Ultimately, the cost. without receive Explorer Internet consumers of benefits favored; ultimately are consumers that and together, linked inextricably are products the actuality in that innovation, company’s the of consequence a was Explorer WindowsInternet its and merging of the that argued Microsoft browsers. application competing other the Window’s over Explorer Internet favor altered exclusively to interfaces programming purposely Microsoft whether – arose also application interfaces of manipulation of issue The Firefox. and/or Netscape as such browsers web other for competition restricted bundling this whether and market, browser internet the in stand leadership Microsoft’s to contributed hugely system operating Windows the with browser web Explorer Internet of bundling and merging the whether as concerns issue central paper.the Microsoft, discussion this In of heart very the is which bundling, id=1298667420478033 Action No. 98-1232, November 12,2002.(Archive at 35 an overview ofthe current litigation against Apple. provides discussion following The anti-competition. as arrangement bundling and tying alleged the specifically, allegations, violation antitrust with wrestle firms technology

"United States of"United States America, Plaintiff, v. Microsoft Corporation, Defendant", Judgement Final The case of Microsoft is of importance in the discussion of the both the as of case discussion Apple the in importance of is Microsoft of case The and tying of issue similar the with deals Microsoft of case the Interestingly, ) http://www.webcitation.org/query? 35 , Civil , Civil

CEU eTD Collection In re iPod Antitrust Litigation. actioncertification, class granted was lawsuit the 2008, of December In 2009) (Jozefcyk, store. music online other from music purchasing from consumer the deters it iTunes, and markets.” video and music online the of monopolization attempted (3) and, market; player music digital the in power and Video Online of bundling or tying unlawful “(1) in: engaged company the that alleging tying. Inc., Computers, antitrust unlawful an is practice Apple’s that claimed Inc. Computers, Apple v. 2.2. Class Antitrust Action Suit 38 37 courts/california/candce/5:2007cv06507/198939/1 36 the pricing ofthe product. The case remains pending with the court. influence not does and consumers, benefiting ultimately products, actual the to are improvements updates software regular the that claiming by practice its been. defended have Apple would otherwise they than higher iPods its price to leverage the given is scheme, this of Apple music,because that iTunes.Further, alleges on it purchased not are which playing from device music the prevents iPod the on updates software regular that identifies suit The laws. state and federal violates therefore, and arrangement, tying

Tucker, Tucker v. Apple Computers,Inc In re iPod https://ipodlawsuit.com/FrequentlyAskedQuestions.aspx Litigation, Antitrust FairPlay FairPlay In essence, the crux of the class action suit anchors on the determination of determination the on anchors suit action class the of crux the essence, In unlawful an virtually is Apple’sthat practice claims action class the particular, In cases, TwoU.S. similar significantly see note music files to iPod; (2) unlawful acquisition or maintenance of monopoly of maintenance or acquisition unlawful (2) iPod; to files music 42 plaintiff Melanie Tucker filed an antitrust class action suit against against suit action Apple class antitrust Melanie Tuckerplaintiff an filed 37 hlegd pl’ R DRM Apple’s challenged ., http://docs.justia.com/cases/federal/district- Consequently, through disallowing operability of the device the of Consequently,operability disallowing through Tuckerv. Inc. Computers, Apple arlyFairPlay 36 n In uies shm and scheme business 38

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CEU eTD Collection cameras and films, videogame players and videogame tapes, refrigerators and Freon, and refrigerators tapes, videogame and players videogame films, and cameras to business for one important understand.” an is legal and illegal tying between distinction The market… separate a in exists that product another purchase must consumer the product, service. or one buy to order in good) where arrangement, illegal often “an as tying tied describes Investopedia (the good distinctive the second on a conditional customer) of jure purchase de (or customer facto de the to service or good) 2.3. Tying Arrangement tying arrangement. a of elements the identify to is order first The marketplace. the in competition the kills tying that the effects anti-competitive bears whether arrangement this whether and arrangement, lawful, is arrangement tying a to tantamount is scheme Apple’s whether 41 40 39 tie the whether explore violates the Sherman to Act orany other antitrust laws.” necessary is it established, is arrangement tying a “after Law, Entertainment and Property,Media Intellectual Fordham the in published study his in Roth author by consumer,any,indicated the if as to and caused harm is tying unlawful and lawful separates that assessment final The others. among browser, web operating and system Microsoft, of case the in as and carriers, phone mobile and phones mobile N. Ry. Pac. v. Co. United States http://www.investopedia.com/terms/t/tying.asp#axzz1xz5lQNTr Tying (commerce), http://en.wikipedia.org/wiki/Tying_(commerce)#cite_note-horizvert-0 h ors hv etrtd n te css o oten Pcfc Railway Pacific Northern of cases the in reiterated, have Courts The tying (the good one of sale the “making of practice the as defined Tying simply is 40 Some examples of tying include cars and tires, copy machines and paper, and machines copy tires, and cars include tying of examples Some 39 Additionally, 41 and

CEU eTD Collection functionality. Perhaps, the basic question is whether the consumer typically purchases typically consumer the whether is question basic the Perhaps, functionality. their on not and products two the for consumers by demand of character the on focuses test This test. demand” the of “character the created Court Supreme the Here, together. seller the by tied been have which products, separate are products certain if examine to test robust a down laid have Courts the obvious, seems test this Although product. tying the and product tied the products, separate two of existence the is place take to International Salt Co. 42 tying arrangement in of Apple the begs question: question the Railway, Pacific Northern in forth set as arrangement, tying of iPod/iTunes2.4. Is Unlawful an Tying Arrangement? the products separately ortogether.

Int'l Co. Salt v. United States The question of iPod/iTunes is core in this research paper. Utilizing the standards the paper. Utilizing research this in core iPod/iTunes is of question The arrangement tying a for requirement first the case, Railway Pacific Northern in As (4) (3) (2) (1) 1.) o nusata mut o nesae cmec n te te rdc is product tied affected. the in commerce interstate of amount insubstantial not a enable it to restrain trade in the market forthe tied product; and, to product tying the for market the in power economic sufficient has seller the sale oragreement to sell one isconditioned onthe purchase ofthe other; two separate products orservices are involved; Does theDoes alleged tying ofiPod and iTunes include twoseparate products? 42 that a tying arrangement requires that: a showing , 332 U.S. 392,396(1947), 332U.S.

CEU eTD Collection tie once would beuser ona evident the Windows operatingattempts system browse to the was consumer the obvious; initially separate not is products Microsoft considered in claim tying The are explored. products both whether of and system, browser operating Explorer Windows Internet products the between arrangement tying the whether a. 44 43 shuffle. the of consists which devices, music iTunes not does require an iPod purchase. to subscription a because obvious initially be not may iPod and iTunes Apple’sbetween consumer. a by product or service a of purchase the to subsequent arise they “ that is case tying iTunes/iPod Apple’s the to relevant case, Microsoft the of crux The browser. another on Internet iTunes, e.g.,See, Jefferson Parish; Microsoft Apple sells its iPod and iTunes products separately. The iPod is a line of portable of line a separately.is iTunes and products iPod The iPod its sells Apple of case infringement property intellectual the In theDoes alleged tying of iPod andiTunes include two separateproducts? 4.) 3.) 2.) see note see All four iPod products have varying price points: iPod classis is sold at $249; at sold is classis iPod points: price varying have products iPod four All Is the sale and purchase of iPod conditioned on the sale and purchase of purchase and sale the on conditioned iPod of purchase and sale the Is device affected? music portable the in commerce interstate of amount substantial there Is music market? downloadable the in trade restrain to enough sufficient market, device music portable the in power economic dominant the have Apple Does iTunes, and vice versa? 16 courts have found tying arrangement claims even when even claims arrangement tying found have courts Pdcasc PdTuh Pdnn nano iPod Touch, iPod classic, iPod 44 (Roth, 2007) irsf,Microsoft, h usin of question the 43 “ The tie The “ and iPod

CEU eTD Collection on the record labels determination. In 2009, Apple indicated that it would leave it up to up it leave would it that indicated 2009, Apple In determination. labels record the on $1.29. or $0.99, $0.69, of prices with device), portable users’ in stored subsequently (and Store iTunes the on purchased (playlist). library a into music digital organize these for devices vary from $150to high as $500. as points price The pricing. and accessibility formats), file music other (with compatibility life, battery storing), of capable is it files music of number (the capacity memory aesthetics, design its on based other each amongst compete players portable others. among Walkman, Sony Zune, Microsoft Zip, Clip Sansa SanDisk Player, Galaxy Samsung the include market device music portable same the in competing players Other changes. feature and design multiple through gone have products iPod the market, the into introduction its Since 16GB. to 2GB from range products these of $49. shuffleatiPod and, iPod $149; Touchat nano iPod $299; at September 1,2012 http://edition.cnn.com/2009/TECH/01/06/macworld.keynote/index.html?iref=newssearch 49 48 1, 2012 47 46 45 and product development. are iPods soldonprice points basedonthe fourdifferent kinds wouldare pricedsongs at $1.29. songs. individual of pricing the determine to labels record the Brandon Griggs, SubduedReactions to Apple’s Macworld Final Key Note, www.apple.com/iTunes www.pcmag.com/reviews/mp3-players www.apple.com/ipod Apple Introduces iTunes, Additionally, Apple markets and sells iPod and iTunes separately based on price on based separately iTunes and iPod sells and markets Additionally, Apple download, and purchase, used to iTunes the also store;Whereas, music virtual a is http://www.apple.com/pr/library/2001/jan/09itunes.html 48 It must be noted that pricing of the music files is based is files music the of pricing that noted be must It 47 Individual songs (music files) can be can files) (music songs Individual 45 49 The storage capacities storage The However, most new most However, , accessed September , accessed 46 These

CEU eTD Collection consumer choice on other devices), while iPod become the tied product. Absent the Absent product. tied the become iPod (restricting while devices), product other on tying choice consumer the becomes iTunes Accordingly, music other restricted. choose is to software freedom users the format, AAC-secured playing of capable only is iPod the However, if iPod. and purchase and so do freely can he device, portable a acquire to wishes user a If iTunes. the purchase to users iPod its requires explicitly different they purpose, are distinct and separate products. Apple not does vehemently and each provide separately.to firm a for efficient is it that so demand consumer sufficient be must Co.,theKodak Supreme Court noted that fortwoproducts to be considered distinct, there Eastman In Power.) Economic Sufficient below, discussed extensively be will (This market. music downloadable and device music portable the dominate iTunes and iPod both Regardless, points. price iTunes the determining on control limited has thus, Apple and labels, record the by determined mostly is $1.29 to $0.69 from ranges, price iTunes whereas, $299; to $49 between range price a at shuffle) nano, touch, (classic, iPods if 51 atU.S. 21–22) 50 Conditions, and Terms iTunesApple’sIn points. price and market target their on based marketing independent ACC-format requirement, there will exist noconsumer restriction.

Eastman Kodak Co. v.Eastman KodakCo. Image Technical Serv., Inc., http://static.fsf.org/nosvn/mirrored/apple.com/legal/itunes/us/terms.html s dsusd aoe Pd dvcs ad iue r od sprtl, with separately, sold are iTunes and devices iPod above, discussed As 50 Because the iPod is marketed to a different market, and iTunes is sold for a for sold is iTunes and market, different a to marketed is iPod the Because 51 there is no explicit requirement that the sale of the iTunes is iTunes the of sale the that requirement explicit no is there 504 U.S. 451,642(1992).(citing 504U.S. Jefferson Parish, 466 b. odtoe n te sl and sale purchase of iTunes, andvice versa? the on conditioned iPod of purchase and sale the Is

CEU eTD Collection c. and purchase ofthe iTunes, and vice versa. device. iPod the on played be to MPs Microsoft i.e. files non-AAC other restricting thus files, required to purchase an iPod. forthe as And iPod, the must user onlybe play ACC-formatted will user the iTunes, on purchased music the play to order in Essentially, Apple. by provided exclusively and only also is that player media a play file, music AAC-format to order in software player media iTunes the have must computer the that noted be must it device), iPod an with only exclusively and necessarily not thus, (and computer user’s a with played be can store iTunes from downloaded music that argue some Although implicit. is sale conditional then device, iPod an with playable exclusively and only is iTunes on purchased files music if Regardless, iPod. the of purchase the on conditioned 53 http://www.guardian.co.uk/technology/2011/mar/18/death-ipod-apple-music 52 continues only price share its and years, several the over increase 8,750% unprecedented $630 at is share Apple’s later, decade a just and $7, at was value industry. audio digital the in hold Apple’sstrong establishing further songs, million 500 over sold has iTunes its while annually, growth sales its increase to continues and iPods million 250 approximately sold market, has audio Apple portable the in share 74% With a years. market sufficient enough to restrain trade in the downloadable market? www.apple.com/investors Johnny Davis, “10 Years of iPod,” The Guardian, Apple’s iPod has been the leader in the portable music device in the last five last the in device music portable the in leader the been has iPod Apple’s device music portable the in power economic dominant the have Apple Does sale the on conditioned implicitly Accordingly,is iPod an of purchase and sale the 52 When Apple initially introduced the iPod to the market in 2001, Apple’s share 53 - an astounding and astounding an -

CEU eTD Collection to lack of substitutes in the market. When Apple adjusted its iTunes price from $.99 to $.99 from price iTunes its adjusted Apple When market. the in substitutes of lack to due choice consumer’s restrict unobtrusively to allows Apple dominance this since trade seller’s ability to command the market through its dominance. (Roth, 2007) output.” restrict and price raise to ability market that power” noted “market the Court has party the Supreme if trade the restricts unfairly Kodak, dominance Eastman In market? this in trade curtail the dominance Apple’s has does but industry, Apple audio Clearly, digital the in 18%). superiority economic at others and 1.1% at Microsoft 7.2%, at (SanDisk competitors its by collectively held 26% by followed market, the of 74% having Apple Apple’s penchant forcombining technology andappeal. mass revolutionized market the to iPod the of introduction undoubtedly,the But AirMac. and iPhone iPad, like products market, the in products innovative injects as Apple increase to 54 relevant “the that held Court The markets. international and domestic its both to device iPod its of commerce the from resulting figures sales its multiplied exorbitantly only has Apple years, ten of course the Over insubstantial. not is transactions these in involved affected? d. the$1.29 per song, consumer tolerated the price increase due to lack ofsubstitutes.

Id. (quoting Fortner(quoting Enter. v. 495,503(1969)). 394U.S. Steel, U.S. As Apple has sold over 200 million iPod devices, it is evident that the commerce the that evident is it devices, iPod million 200 over sold has As Apple device music portable the in commerce interstate of amount substantial there Is restricts dominance continuous and share market enormous Apple’s Similarly, years, five last In thecompetition, with crushedthe and dominated virtually Apple

54 This market power is contingent on the on contingent is power market This visa-a-vie “the

CEU eTD Collection 2.5. iTunes.and border commerce. cross- involves easily thus and product, the purchase easily can locations different geographical from consumers e-commerce, via sold is revenue. iPod dollar Apple multi-million because Additionally, to result will it $1.00, i.e. amount minimum slightest $49. at shuffle iPod and, $149; at nano iPod $299; Touch at iPod $249; at sold is classis iPod sales. 2010 its from decrease 10% a was which 2011, in million $743 were device iPod its for sales net figure isthe total volume ofsalestied bythe salespolicy under challenge ..” 57 56 55 Pacific Railway, it isevident that: Northern of case Court’s Supreme the in forth set standards the Applying arrangement. www.apple.com/ipod Eastman Kodak, Apple Annual Report 2011, www.apple.com/investor 57 Should Apple increase the price point of any or all of the iPod device to the to device iPod the of all or any of point price the increase Apple Should Final Antitrust Analysis 3.) 2.) 1.) tying unlawful an is iPod and iTunes Apple’s of case the above, discussed As iPod the of sale the by affected is commerce interstate substantial Accordingly,a The sale and purchase of the iPod is conditioned on the sale and purchase and sale the on conditioned is iPod the of purchase and sale The The iPod and iTunes tying include twoseparate products; eie mre, sfiin o rsri rd n te dwlaal music downloadable the in trade restrain to sufficient market, music device portable the in power economic dominant the possesses Apple of iTunes, and vice versa; 56 504 U.S. at 504U.S. 269 As mentioned above, all four iPod products have varying price points: price varying have products iPod four all above, mentioned As 55 Apple’s

CEU eTD Collection be placed in a position ofrestricted choice and consumer coercion. wouldnot and substitutes to access would have consumers thenother formats) file play to tying iPod allowing and music, play unlawful encoded to AAC device other allowing (thus, arrangement its discontinue Apple Should claims. antitrust violates inoperability 3.1. Introduction CHAPTER 3: Hence, this study finds that continuing Apple’s practice of incompatibility and incompatibility of practice Apple’s continuing that finds study this Hence, 4.) market. device that isaffected. music portable the in commerce interstate of amount substantial is There Economic Economic Analysis and Efficiency –Achieving Effective Competition Effective

CEU eTD Collection soss atcmeiie patcs oe seiial, ti nicmeiie practice anti-competitive this specifically, More practices. anticompetitive espouses 1993). (HESS approached are competition perfect of results that so products similar siffucuently “effective a producing achieves firms of number large sufficiently system a with structure market a efficient – competition” economically an reality, in present. exists always competiton are “efficiency” simple beyond motivations because world real the in efficient completely be actually cannot system A theoretical. something. of entity another depriving a in utility their maximizes used that manner are resources which in 1993). affairs of (HESS state a good) as is another efficiency economic of Further, production the decreasing (or of being individual well another the reducing without good) one of production increase (or individual http://economics.about.com/od/productivity/f/economic_eff.html [hereinafter “Wikipedia - Economic Efficiency”]; Intermediate Text, South-Western (1990); Co. http://en.wikipedia.org/wiki/Economic_efficiency Publishing 59 58 in comparison to low-volume ofcompetitors. users users, high-volume the are they since costs overall higher a pay generally products tie-in is nothing Consumersof of worthy is Apple’s discriminate. Apple’sthat price to capacity issue However,another competition. the entering from barred virtually is etc. Microsoft, SanDisck, as such competitors store, music online and device music portable the of share market large Apple’s of Because products. competiing of entry of barrier a as serves Formore detailed of definitions economic efficiency, see David D. Friedman, Price Theory: An See http://www.businessdictionary.com/definition/economic-efficiency.html In this section, this paper investigates, the implication on Apple’s profit should profit Apple’s on implication the investigates, paper this section, this In it since laws antitrust violaes tying of practices Apple’s 3, Chapter in noted As one of being well the enhance to impossible is it where outcome an is Efficiency 58 and no entity can derive additional benefits without benefits additional derive can entity no and 59

Absolute economic efficiency, however, is only is efficiency,however, economic Absolute huh n perfect no Though

CEU eTD Collection has no value if not used with a portable digital player; if Apple ties the iPod and iTunes, and iPod the ties if Apple player; digital portable a with used not if value no has good with purchased not is good the goods between relationship one-to-one a Whinston’smodel, on Based to Apple. competitor a – and, market; music digital online in by Apple supplied good player); music (digital good basic Denote good. competing produces that 2) (Firm competitor a from competition faces Apple market. music digital online the in (iTunes) good complementary a supplies and market player music digital portable the of monopoly the has Apple wherein active, are are competing, prices will be lowered orbrought closer to the marginal cost. products. the untying firms in more where and profit competition, effective more a more promote will untying Additionally, generate will Apple that observed be will it iTunes,where and iPod its untie visa-a-vie model tying the to alternative the adopt Apple good B of lack by achieved is which its utilizing by technology iPod and iTunes) on purchased file (music iTunes only music from iTunes value. has A 2 Un-tying (alternative model): (alternative Un-tying model: Tying Based on Whinston’s model, will we analyze the following twomodels. In Whinton’s tying game model, assume Apple (Firm 1)and a competitor (Firm 2) The consumersare uniformly distributed onthe interval [0,1]; consumers demand, . Second, Apple and competitor set their prices. and and B is assumed, with both products as complements. (Good (Good complements. as products both with assumed, is first, assume the following tying game, Apple commits to tie to commits Apple game, tying following the assume first, FairPlay B A upeetr od(ui) (music); good supplementary a .) In this regard, music from an online music store music online an from music regard, this In .) DRM, resulting in compatibility of good B good of compatibility in resulting DRM, Apple offers the goods in the market separately, market the in goods the offers Apple B 2 good produced by Firm 2 Firm by produced good B B 1

FairPlay has no value if value no has complementary DRM 1 with A A a

CEU eTD Collection invest in either their online music stores i.e. negotiation with record labels, etc. Hence, etc. labels, record with negotiation i.e. stores music online their either in invest should competitors while investments, large incur to have not does Apple competitor. positively related with prices forgood Finally,stores. competing use forgood to prefer demand others whereasStore Music good for price same the charge companies X and consumer stores, music online for preferences in heterogeneity or good where system system a purchasing from function utility the model, un-tying the in Accordingly, system. the of unit one most, at technology i.e. i.e. technology consumers donot derive utility from a product that isincompatible with good tying onprofitability and welfare. of implications the analyzing by efficient is arrangement whether Apple’s tying in comes 3.2. ImplicationsProfit: on A, B good marginal for Furthermore, costs products. its sell can it if active always is 2 firm the 1

and 0 ; if consumer buys good B from the competitor then then competitor the from B good buys consumer if ; s Kae bevs ne yn oe opttr ant b cie since active be cannot competitors model tying under observes, Kramer As issue economic the above, discussed as model, game tying Whinston’s on Based and Apple for zero be to assumed are costs fixed simplicity, of purposes For A/Bi

represents the maximum valuation for a system, system, a for valuation maximum the represents B 2 is:

are: X FairPlay FairPlay i

C the location of good good of location the A

≥ 0 and prevented the consumer from playing music purchased in other in purchased music playing from consumer the prevented A/Bi

C B1 is: Accordingly, the utility function from purchasing a purchasing from function utility the Accordingly, is:

= C U B2 A,Bi B =C B i

. j = =

(if consumer buys good good buys consumer (if θ j B B

- , some consumers prefer to buy in the iTunes the in buy to prefer consumers some , ≥ i t| X-X .

. Finally, all consumers buy a system. i | -P A -P

the disutility from purchasing from disutility the Bi = X B X from from then Apple X 2 the location of the of location the

) Thus, if both if Thus, )

A . If Apple X = X B i is

CEU eTD Collection that is charged under tying). Nevertheless, entrance of competitors actually benefits Apple.actually competitors of entrance Nevertheless, tying). under charged is that good from constraints good from obtained is utility this, With iPod. with compatible be will it because value has stores Appendix A). of price located at is X good buy not will consumers Therefore, value. deliver to able is Store Music iTunes the only iPod, an on stores online Apple generates profits by selling system system selling by profits generates Apple at profit at prices set will competitors coverage, market full system the purchase will consumers all not model, game tying a to contrast In losses. potential recuperates P = B1 . [ Consider a situation where where situation a Consider good prices Apple virtual other from downloaded music product; its model, unties Apple un-tying In monopolyiPod/iTunes system, acharge an Music will buy Apple consumers all If P* * ε

m 2 = = B =P s pstv, wih rnes B renders which positive, is 2 u ocmaiiiywt odgood with compatibility to due ( A t +P − 8 t ε ) A/B B1 2

B = – F – 2 1 . Consequently, . . Some will choose choose will Some .

. Apple sets prices at at prices sets Apple -

B2 and and B2 t while U A,Bi monopoly profits equal equal profits monopoly the demand for the product of Apple by consumer by Apple of product the for demand the

= = θ Apple cannot price price cannot Apple A/B 1 - rcd blw mria ot] Sl f of Sale cost.] marginal below priced t| X- 0|-P A/B 1 ; customers of Firm 2 will also purchase also will 2 Firm of customers ; A 2 P . ; Based on Whinston’s assumption of assumption Whinston’s on Based A1 and, Apple then faces competitive faces then Apple and, P B = = B2 and and A

–P

= =

- t – C – t - A t B1 + at: B 2 1 C * 2 a high price (high price (high price high a P m B B B1 + + − = C =

ε and will generate will and

and and - t - B –

- C - ε P

B1 and A = C =

– C – P B A B

= = – – (see P ε A m .

CEU eTD Collection Competitors Apple scenario. model alternative the in achieved is efficiency Consequently,economic (Mankiw,2002) costs. marginal to closer or lower prices bring will competition competing, are more firms If competition. increased an in in resulting market, the in competitors of entry encourrages iTunes untying Additonally, profitable. more is other, each of independent good complementary for demand market in sales the increasing because independently goods its sells greater than the profits from monopoly because is pricing) (independent “un-tying” on based profits Accordingly, profits. generates product its iTunes and iPod separately. A good for Consequently, demand system. the buy they that guaranteeing prices, exceeded system on placed value higher a have tying) A/B1 system good for consumers because benefits more in results Kramer 2004) Table1. is higher and profits generated by Apple rises. In this case, Apple will un-tie and sells and un-tie will case, Apple this In rises. by Apple generated profits and higher is Additionally, if market is not fully served, competition in the market for good for market the in competition served, fully not is market if Additionally, Apple iPod. with iTunes tie not will Apple exist, competitors although Hence, Profits for Apple and Competitors based on Whinston’s Basic Model (excerpt, Model Basic Whinston’s on based Competitors and Apple for Profits A purchasing (as an implication of complementarity) from where Apple also Apple where from complementarity) of implication an (as purchasing 0 Tying (iTunes model) * m A

. Accordingly, selling iTunes and iPods separately, iPods and iTunes selling Accordingly, .

- t

- C A

– C ε B t 4 − t ε is greater than zero B 2

(who wishes not to purchase to not wishes (who Un-tying (alternative model) * * A/B 2 1 = = = 2 , which will result in result will which , ( * t m B − 8 + + also increases the increases also t ε ) ε 2 (t >ε). t –F 4 − t ε 2

CEU eTD Collection music, consequently increasing the demand forthe more profitable sale ofiPod. for demand increases this products, competitors’ with products its with interoperability creates and unties Apple If tying. by market music online the in competition stifle to iPod. for -isdetrimental device it portable Thus, actual of the from sales originates Apple Moreover, costs. marginal to closer or lower prices bring will competition competing, are firms more If market. the enter to competitors for incentive creates it since competition effective creates untying above, similar siffucuently a 1993). (HESS approached are competition perfect of results that soobserved products As producing firms of number large sufficiently a with structure defines, (1994) Hess As competition.” “effective 3.3. Final Efficiency Analysis As discussed above, it is efficient for Apple to “untie” because untying fosters untying because “untie” to Apple for efficient is it above, discussed As it must be noted a large share of Apple’s revenue Apple’s of share large a noted be must it efcie cmeiin s market is competition” “effective

CEU eTD Collection deal of actual tying takes place in industries in which there appears to be considerable be to appears there which in industries in place takes tying actual of deal culprit. their choice ofportable music players. on restriction the without product integrated an having of benefits the gain Consumers more firms are competing, competition will bring prices lower orcloser to marginal costs. and Apple’s and choices, competitors’ profits. consumer improves and competition effective espouses scheme untying an whereas competition, arguments. efficient of short falls scheme anti-competition tying Apple’s from stemming that illustrating by finding this supports models violation economic of application Additionally,an antitrust of likelihood CONCLUSION 2012) 60 welfare, consumer analysis, final consumers.” for alternative “best the be would software antipiracy without music majority that are not. great the from harmful be may that instances few the distinguish to failing combinations, to firms. technology rise against litigations give numerous by to evidenced as regularly tying, around seem controversies markets dynamic Technologically competition.

Steven Jobs,

Dynamism of this market will be hindered by policies that condemn all such tying such all condemn that policies by hindered be will market this of Dynamism There is something to be said when Steve Jobs indicated that allowing the sale of sale the allowing that indicated Jobs Steve when said be to something is There the be necessarily not may tying that cautioned economists many However, a shows scheme tying Apple’s to theories legal of application an sum, In Lately, some economists have called attention to the important fact that a great a that fact important the to attention called have economists some Lately, Thoughts onMusic, Untying creates incentive for competitors to enter the market, and if and market, the enter to competitors for incentive creates Untying

http://www.apple.com/hotnews/thoughtsonmusic inter alia inter , should weigh the heaviest. It is, anyway, is, the It heaviest. the weigh should , (accessed May 25, 60 In the In

CEU eTD Collection Apple Inc. tree. the of fruits ripe the consume importantly, most and cultivate, plant, who consumers

CEU eTD Collection Business of Digital Media – A Case Study,” Berkman Center for Internet and Society, and Internet for Center Berkman Study,” Case A – Media Digital of Business the Shape Technology and Contract Copyright, How “iTunes, al, et William Fisherman, http://www.pcworld.com/article/136949/is_apple_the_new_microsoft.html Elgan, Mike, “Is Apple theMicrosoft,” ComputerWorld, New September 7,2007 changed-the-music-industry-for-better-or-for-worse?page=2 December 19,2009, Cranford, Buffy, “How Apple and iPod HaveChanged the Industry,” Music Helium, music.2327041.html?_r=1 Herald Tribune, Sept. 12,2006, Crampton, Thomas, “KeyPartsofiPod in Law StuckFrance,” Down International http://www.nytimes.com/2007/04/03/technology/03music.web.html Times, Technology Section, April 3,2007, Crampton, Thomas, “ 29, 2006, Charles, Jade,“Parts ofFrench iPod Law Rules Unconstitutional,” Arts Technica, July http://www.businessweek.com/globalbiz/content/jan2007/gb20070131_492654.htm Technology Section, January31,2007, Carlin, “Europe Dan, vs. Apple: facing the Music,”Bloomberg Business Week, BIBLIOGRAPHY Hsu, Eddy,Hsu, “ http://www.businessweek.com/debateroom/archives/2007/02/apples_internat.html Week, Technology Section, February 26,2007, Hessaldahi, Arik, “Apple’s International iTunes Controversy,” Bloomberg Business Paul, MN, West Publishing Co.(1993) St. Approach,” Analytical An Economics, AEI of “Principles Clark, ROSS, and, DC, Peter Hess, Washington, Restraints,” Vertical and Policy Brookings Joint Center, 2006 “Antitrust Robert, Hahn, 980DEEDD1E39F93BA15750C0A962948260&sec=health&spon=&pagewanted= all Times, Mar. 28,1984, Linda,Greenhouse, “ FederalUnder Law,” Loyola University Law Journal, 2008 Tying Arrangements and VendorExclusion Analyzing “iCompete: Andrew, Greenhalgh, March 30,2004,HarvardLaw School http://artstechnica.com/news.ars/post/20060729-7380.html Antitrust Regulation Applied to Problems in Cyberspace: iTunes and iPod,” http://www.helium.com/items/1682235-have-apple-and-the-ipod- Antitrust Bar to ‘Tying’ ofSales Eased ByCourt,” The New York EMI Dropping Copy Limits onOnline Music,”

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CEU eTD Collection of Intellectual Property,” 50IDEA 533,534(2010) the Antitrust Implications of FairplayApple's Technology with A to Nod the Peculiarities Willow, “Antitrust, Noonan, Intellectual Property, and the Itunes Ecosystem: A Study of 4,Sept.80, No. 1990, Vol. Economic American The Exclusion,” and Foreclosure, “Tying, Michael, Whinston, 27,2005, Jan. OSDIR, Wenn, Behind “JHymm Goes Howard, Atoms and Apple to Music,” Bring DRM-Free Foundation, April 2002, Von Lohman, Fred,“Fairand Digital Use Rights Management”, Electronic Frontier Viscusi, Vernon, Harrington, Economics ofRegulation and Antitrust, 2 http://reviews.cnet.com/4520-6450_7-5102324-1.html (last visited Oct. 18,2007) Van Buskirk,“Five Notto Reasons Buyan iPod,” CNET Review, November 5,2003, http://www.jstor.org/stable/2006711 http://osdir.com/Article3823.phtml http://w2.eff.org/IP/DRM/cfp_fair_use_and_drm.pdf ; also see Willow, note 8 nd Edition, 1995