Apple Inc. (AAPL) Puts Economic Strategy In Its Defense Against iPod Antitrust Lawsuit

Apple (AAPL)

After presenting the technical reasons in the previous sessions to support its claim, the iPhone maker, Apple Inc. (NASDAQ:AAPL), has presented an economic strategy to support its technology tweaks. The iPod maker is fighting a case against over 8 million customers who claim that the company intentionally promoted monopoly in digital music by blocking off its competitors.

The iPad maker used “Two-Economists-Are-Smarter-Than-One” strategy to defend itself in the $1 billion antitrust case. Apple Inc. (NASDAQ:AAPL) called two University of Chicago professors, Robert Topel and Kevin Murphy, to rule out the opinion put forward by Roger Noll, Stanford Economist, in favor of the plaintiffs.

According to Noll, Apple’s strategy to restrict its users to iPod itself led into damages equaling $350 million; however, the two Chicago professors have justified the increase in price with superior music quality and device innovation. The duo highlighted features such as ability to sync music on iPod with personal computers, download games, and play music accompanying the technology upgrade.

Apple (AAPL)

Topel further added,

“There is no way to tell what the independent effect of the features are because they all happen at the same time.”

The case against Apple Inc. (NASDAQ:AAPL) was first filed in 2005 but took up to nine years to get into trials. The plaintiffs include 8 million customers and nearly 500 retailers and resellers involved in iPod who purchased their devices between 2006 to 2009. According to their claim, the iPod maker made software upgrades to block music downloaded from other sources, like RealNetworks Inc (NASDAQ:RNWK), and hence, maintained a monopoly in the digital music world.

Earlier, Apple Inc. (NASDAQ:AAPL) presented former University of California professor in its case stating that the technology upgrades were targeted towards better security and anti-piracy concepts. The antitrust laws impose fines ranging up to three-times the digital damages caused in the process.

This article has been written by Prakash Pandey.

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