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Apple prevails in iPod class-action trial

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  • Customers tried out the Apple iPod Nano at an Apple store in Palo Alto

OAKLAND, California >> A federal jury handed Apple a win in a long-running antitrust case on Tuesday, rejecting plaintiffs’ claims that the company had sidelined competitors and hiked up prices during the iPod’s heyday.

After just a few hours of deliberations, the eight-member jury sided with Apple that iTunes 7.0 was a meaningful improvement over previous versions of the software, rather than a plot to hobble rivals.

The verdict defuses a case that could have cost Apple as much as $1 billion. During a two-week trial in Oakland federal court, plaintiffs argued that Apple orchestrated a digital music monopoly by restricting music downloads on the iPod to the iTunes store. In particular, they pointed to iTunes 7.0, which blocked RealNetworks’ Harmony, a program that let users download music outside the iTunes store.

Lawyers for Apple countered that iTunes 7.0 brought users many key features, such as enhanced security, games and movies. The company’s legal team also noted that prices for Apple fell from 2006 to 2009, the period covered by the case, undercutting theories of a monopoly.

The decade-old case harks back to a time before music streaming services gained popularity, when Apple had a near-stranglehold on the market for digital music. Although Apple has already changed its policies, the case threatened the company with a steep bill. To compensate consumers for inflated iPod prices, plaintiffs sought about $350 million in damages, which could have been tripled under antitrust laws.

U.S. District Judge Yvonne Gonzalez Rogers asked the jury to decide first whether iTunes 7.0 was a genuine product improvement as companies cannot be penalized for enhancing their products, regardless of how competitors are affected. Had they sided with the plaintiffs, the group would then have proceeded to damages and other legal issues.

The trial was full of legal drama, including an eleventh-hour search for a plaintiff after Apple revealed that the two class representatives had not bought iPods covered by the case. Gonzalez Rogers appointed a new plaintiff just hours before closing arguments were given on Monday.

Although a few Apple executives took the stand, Steve Jobs was the trial’s star witness. Plaintiffs played a deposition taken of the late Apple CEO shortly before his death in 2011.

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