Apple Inc. (NASDAQ:AAPL) successfully fought off accusations over its business practice involving the pricing of iPods. A federal jury this week sided with the maker of iPhones in a case that would have ended up costing it about $1 billion in damages and related settlements. The company strongly argued in the case that the issues raised by the plaintiffs were invalid and the federal jury agreed with it in the final decision.
Reprieve for Apple
The development in the issue of antitrust violations with regards to iPods removes a longstanding legal challenge that Apple Inc. (NASDAQ:AAPL) has had to bear since the time of its co-founder Steve Jobs. The company can now focus on more productive aspects of its business such as developing new products and services. The favorable ruling also means that the company is spared a possible financial loss, and such money can be channeled to other projects to enhance shareholder value in the company.
In the issue of iPods, whose decision has left the plaintiff disappointed but Apple cheering, issues were raised about how Apple Inc. (NASDAQ:AAPL) was behaving in blocking rival music. It was alleged in the antitrust case that, at some point, Apple made a software update on iPods that effectively denied users the freedom to enjoy music from rival programs.
In particular, it was cited that the software update prompted users to delete music that they downloaded from platforms other than iTunes when they tried to play it on iPod. As such, Apple gained the advantage that it used to charge highly for iPod purchases, leading to iPods costing more than they would have cost in fair case.
The plaintiffs cited that Apple overcharged iPod buyers over $351 million during the period when the alleged violation happened. If the case went the other way, the figure would have been tripled and imposed on Apple as a fine.
However, Apple Inc. (NASDAQ:AAPL) argued that the said software update was not illegal or in any meant to give it undue market advantage. Instead, the company said, the update was in the best interest of the users because it enhanced their protection against hackers. The update also helped the company to boost the security of iTunes, which was increasingly coming under attacks.
Although the iPod case has now been put to rest, Apple also has another case involving illegal collusion to profit from e-book sales.