FairPlay DRM. Did Apple play fair in the lawsuit?

Apple’s long-standing lawsuit against FairPlay DRM has finally concluded in the company’s favor but allegations are made claiming that, by constricting its collaboration with music pertaining to other music stores in order to keep iPod prices high artificially, Apple put on the appearance of an illegal monopolist. What is interesting about the case is that the suit referred strictly to iPods bought from September 12, 2006 to March 31, 2009. In the five years since the first reveling of the iPod in 2001, Apple put itself back in the lead through huge iPod sales.

The main focus of the lawsuit brought before the US District court of North California was the fact the Apple’s then-latest iPod software update of 2006 essentially removed any and all songs purchased through any competing stores and not through the company’s music store, iTunes. This claim was supported by Apples own Fairplay Digital Rights Management (DRM) which is applicable only to Apple products and music content purchased from iTunes.

The FairPlay Digital Rights Management

One key fact which should be taken into account is that the Fairplay DRM was created for the sole purpose of sorting out Apple-purchased content from others, thereby making the incompatible content unusable. During that period, Apple’s only real competitor was the Windows Media DRM nicknamed PlayForSure. Microsoft’s policy covered much more online music stores and device vendors. DRM-wise, PlayForSure was not only significantly different from Fairplay but also incompatible with Apple iPods. Both an iPod and other music players could play music formats but online store-wise, anything other than iTunes meant any other device than an iPod.

The basis for the anti-competitive claim was RealNetworks’ Harmony system put forth in 2004. This system was created in order to allow the iPod access to content from RealNetworks’ Rhapsody music store. However, RealNetworks’ Helix DRM was not compatible with the iPod and customers already preferred the iPod over other devices. Since it was already built into the RealPlayer desktop software, Harmony came up with a ‘œback door’-type of method in order to take RealNetworks content then re-encode them so that the said content would be Fairplay-compatible. Basically, Harmony exposed and took advantage of a weakness within Apple’s DRM. The company branded Harmony as a hack and announced that future updates would block any related content. In the past, RealNetworks attempted to license Fairplay but Steve Jobs stated during a shareholder meeting that such a move made no logical sense from a business perspective.

Lawsuit Conduct

Among the plaintiffs lawyers’ questions, Apple executives were requested to explain why they had opted to restrict Fairplay to iTunes only and cease association with Harmony. Current Senior VP of Internet Software and Services Eddie Cue testified that Apple’s DRM revolved around secrets which if you wanted to technically decode in order to make them inter-operable, you had to share those secrets with another party. Essentially, this is true. During that time, Microsoft was licensing its PlayForSure DRM and audio technology, proving that ‘˜sharing those secrets’ was possible. But it all depended on contractual requirements, passing an impressive number of verification tests, and implementation in the software.

Licensing is not an obligatory requirement though. In its early 2003 debut, iTunes offered only 200,000 songs and had no market share while in October 2004 Microsoft announced its Windows Media Player 10 along with its partnership with Dell, HP, Samsung, Creative, Rio, and others. By 2006, Apple was estimated to hold 77% of the market, meaning competing against the iPod was challenging.