Apple’s Media Monopoly The Ethics of iTunes and iPodsFrench Lawmakers Get Involved in the Digital Music Dispute o n March 21, 2006, the French government voted 296 to 193 in favor of a law that would force Apple to open up its digital music format. If the law is instated, the exclusive iTunes/iPod compatibility will cease to exist. Any mp3 player will be able to play songs downloaded off of iTunes, and iPods will be able to play music off of any online music retailer. France’s ruling will have a far-reaching influence. It’s the first step in dissolving the Apple monopoly worldwide. The overarching issue is Apple’s dominance in the digital music market. The following analysis is meant to motivate readers to consider the ethics of Apple’s monopoly in a rapidly growing online retail industry. Apple’s exclusivity between iTunes and iPods is preventing competitors from achieving an equal level of success. Apple’s dominance in the digital music retail market is unfair, and the company should open up its format to other retailers. In 2001, Microsoft was faced with the same dilemma. It unfairly dominated the software market, and refused to change its policies before being struck down by the U.S. Supreme Court in an anti-trust case. Apple needs to take action before a similar lawsuit in its home country. The decision would give struggling music retailers a chance to expand and encourage legal downloading. It is, ethically, the right thing to do. Additionally, the decision to open up music formatting is positive for Apple and its stakeholders. Opening up the format would increase the sales of iPods and the number of sales on iTunes. Both Apple and its competitors would benefit.To fully understand why Apple must make this ethical decision, I will examine the Microsoft anti-trust case, as well as the social and financial benefits of opening up the iTunes/iPod format. I will then consider how each stakeholder is affected by Apple’s dilemma. Lastly, I will recommend an ethical course of action for Apple - a media giant.l french tech-revolution: the case against apple According to a March 21, 2006 article by BBC News, French MPs “backed a draft law to force Apple… to share [its] proprietary copy-protection systems.” In other words, Apple must share the format to its iTunes and iPod mp3 programs. With the code made public, any competing digital music retailer could create and sell by Kristin HammeriPod-compatible mp3’s. Currently, iTunes is the only digital music retailer that is compatible with the iPod, and the iPod only plays mp3’s downloaded from iTunes. If the law were enacted in France, users would no longer be forced into using an iPod just because it’s the only mp3 player that works with the iTunes store. The BBC claims that, “The aim is to ensure that digital music can be played on any player, regardless of format or source.” The decision in France stems from a concern that Apple’s iTunes/iPod business has a grip on the fast-growing digital download industry. In France, iTunes reigns with only one other competitor even close to challenging Apple’s status. According to the BBC, “iTunes accounts for more than 70% of paid digital downloads in some countries,” and the business continues to grow. By passing the law to open up the iTunes/iPod format, the French government plans to “level the playing field” for consumers and competitors alike. France wants to encourage ethical corporate behavior, and spark competition in the digital retail industry. The decision, if enacted, will change the way the digital music business is done in France. Apple is successful with iTunes and the iPod because the two parts work exclusively with each other. This new law would break down all entry barriers for competing online music retailers. The Apple-centric industry would be turned on its head. l apple’s ethical dilemma As of now, the decision in France only affects French citizens. But this movement by the government is a sign of things to come. As in the earlier case against Microsoft, a government is cracking down on a software manufacturer that is monopolizing the market and creating brutal conditions for competition. Apple must soon decide how to move forward in its role as the leader in digital music. It would be unwise to get caught up in a massive lawsuit in the United States, like Microsoft did. A lawsuit is time consuming and results in bad publicity for the company. Before the U.S. government follows France, Apple must either act ethically and release the iTunes/iPod format, or act in the standard profit-driven model. l the right choice: why apple must hand over the formatThere are three reasons for Apple to make an ethical decision: • Microsoft didn’t act ethically, and paid a heavy price• Apple has benefited from ethical behavior in the past• Ethical behavior could be good for Apple’s businessThe following analysis of the three reasons explains why Apple must release its iTunes/iPod format. l the microsoft case An ethical decision by Apple would result in equal opportunity for competition. Digital music retailers, such as Yahoo! Music, could challenge iTunes on a level playing field. Competition is encouraged in the computer industry, because it provides the consumer with more variety and spurs innovation. Monopolies constrict the industry by dominating the business and giving the consumer only one option. For this reason, monopolies are disbanded through legal action. Such an instance occurred when the United States government publicly slapped Microsoft with an anti-trust lawsuit. Apple’s situation with iTunes is similar, as will be its legal fate if it does not decide to open up the iTunes/iPod format. According to the article, “Microsoft’s anti-trust tryst: Ethical implications” in the May 2003 edition of Strategic Direction, Microsoft went beyond having a competitive advantage. The company created entry barriers and overpowered competing companies. Microsoft was a full-blown monopoly when the United States government entered the picture. The author of the article defines a monopoly as having three qualities, and explains howMicrosoft displayed these characteristics:• Control of the Market (Microsoft controlled over 90% of sales)• Barriers to market entry exist in order to prevent competition (The high cost of developing an alternative when Microsoft clearly ran