In a video that was recorded six months before his death for an ongoing antitrust trial, late Apple co-founder Steve Jobs answered questions regarding the accusations that the company broke antitrust regulations during the early years of digital music.
The never-before-seen video is part of the testimony of plaintiffs in a class-action lawsuit that has been filed against Apple in 2005. The plaintiffs are accusing Apple of using updates to the iTunes digital music library between 2006 and 2007 to cause harm on rival music services.
One of the attorneys for the plaintiffs, Patrick Coughlin, explained to the U.S. District Court of Oakland, California, that when iPod users attempted to sync their devices to their iTunes libraries to transfer music files that were downloaded from competing service, the program would display an error, telling the users that they would have to restore their iPod to its default factory settings. Once the user has done so, the music files would be found to be deleted from the iPod.
Because Apple did not allow users to download music files from rival services into their iPods, the company was able to maintain a monopoly on the digital music industry, forcing customers to be locked into Apple's ecosystem of hardware and software. This monopoly was masked as a dominance in the industry, allowing the prices of iPods to be artificially kept at higher rates and hindering the development of the music players and music file stores of rivals.
The statements of Jobs recorded on video reflected what executives of Apple have been saying: the company was not looking to hinder rivals or inflict harm on the users, but rather was protecting the contracts that it signed with record labels by implementing security measures meant to protect their devices and systems from hackers.
The contracts that Apple signed with record labels had a stipulation that if iPod users were allowed to load their devices with music files downloaded from other services, the record labels could stop providing Apple with music. To prevent this, Apple developed and implemented its FairPlay digital rights management system.
Jobs said that breaking the software of competitors was "collateral damage," such as in the case of the Harmony software by RealNetworks. The software would allow iPod owners to transfer music from RealNetworks onto their devices, but it was repeatedly pushed out from the device with updates to iTunes.
While plaintiffs claim that Apple's actions were anticompetitive, showing how the company looked to monopolize the market. Jobs responded by saying that what Harmony was doing was undermining Apple's ecosystem.
Jobs also said that record labels sent conflicting requests to Apple, with some asking the company to open up their system to competing devices for increased sales while others wanted Apple to keep making updates to its DRM technology to suppress hackers.
"There are lots of hackers trying to hack into these things so that they can do things that would put us in noncompliance with the contracts we have with the music companies," said Jobs. "We were very scared of that."
