Appeared in the Toronto Star on April 17, 2006 as Compatability Worries Fuel Battle Over iPod Law
Appeared in the South China Morning Post on April 18, 2006 as Light Touch Needed When Government Tinkers With Technology
Appeared in the BBC on April 18, 2006 as Rights and Wrongs of the Digital Age
Apple Computer has captured the lion share of the digital music market through its ubiquitous iPod and hugely popular iTunes download service, yet many consumers have been reticent to take the plunge due to compatibility concerns. Apple, along with rivals such as Sony and Dell, use proprietary formats that limit consumers’ ability to easily transfer songs between competing devices, leaving some fearful that their investment in digital music files will permanently be consigned to a single device that may become obsolete.
Emboldened by consumer groups, the French parliament recently attracted Apple’ s wrath when it sought to address those concerns by passing legislation mandating the interoperability of digital products. If the French Senate approves the legislation next month, Apple will be required to reveal technological specifications to its competitors so that they can design compatible devices. As a result, songs bought on iTunes will theoretically play on any digital music device.
Backed by U.S. Commerce Secretary Carlos Gutierrez, Apple has derided this new law as "state sponsored piracy." Many commentators have also panned the legislation, suggesting that Apple might choose to exit the French market altogether rather than comply with the law.
The French parliament may have indeed gone too far since it could likely have achieved the same goal by merely establishing the right of competitors to tinker with Apple’s technology so that they could develop their own compatible devices. However, the law should be understood as a logical reaction to mounting consumer frustration with technological limitations on their purchases and a desire for balance in copyright.
While the final chapter in this French drama has yet to be written, the desirability of governmental intervention into interoperability issues is attracting increasing attention from business groups, consumer advocates, and policy makers.
Although the French law may appear to be unique, many governments regularly tinker with technology through regulation. For example, the Liberal government last year introduced "lawful access" legislation that would have required Internet service providers to dramatically overhaul their networks by inserting new surveillance technologies. Similarly, the U.S. established "broadcast flag" requirements that would have mandated the inclusion of copy-controls within a wide range of electronic devices (a court struck the requirements down as unconstitutional).
Moreover, experience demonstrates that the private sector may not respond to consumer demands to offer compatible products. The satellite radio market provides a recent example, with the two major providers – XM and Sirius – steadfastly refusing to offer a device that supports both services despite the fact that they have jointly developed just such a product.
With government intervention looming as a possibility and the private market unlikely to resolve compatibility concerns, what principles should regulators adopt to provide all stakeholders with greater certainty about the appropriate circumstances for lawmakers to tinker with technology?
The obvious starting point is that intervention is possible – indeed desirable – where companies with dominant marketplace positions exploit the lack of compatibility for anti-competitive purposes (there have been no allegations that Apple has acted illegally with the iPod and iTunes, though the major music labels are the target of several anti-competitive investigations in the U.S. arising from the digital music market). The legal actions against Microsoft in the U.S., Europe, and South Korea, most of which remain active, highlight this principle. Authorities fear that the world’s largest software maker could use its proprietary standards in the operating system market to exclude competitors in other software areas.
Regulators may also be inclined to act in order to protect the public in cases when technology poses a safety concern or is used to eliminate or hamper consumer rights. Technological requirements to meet safety standards or enforce environmental protection are common today, with government setting requirements for many consumer products and mandating testing before certain technologies may be marketed to the public.
Similar issues are entering the digital domain. For example, most DVDs include region codes that link the product to the region in which they were purchased. DVDs purchased in Canada will play on Canadian DVD players, yet discs bought while on vacation in Europe will not function on those same DVD players.
Region coding is a particularly contentious issue in Australia, since it is isolated from the global DVD marketplace due to an Australian-specific region code. In response to consumer concerns, a unanimous Australian parliamentary committee, noting that the technology is used to limit consumer rights rather than protect the underlying content, recently recommended that the government establish the legal right to break region coding.
The Australian response, which the French parliament would have been well advised to emulate in the iTunes case, highlights the need for government to avoid prohibitions that limit the ability of the public to tinker with technology. Tinkering often encourages innovation through new discoveries, while a patchwork of patents, trademarks, trade secrets, and copyright protect the underlying content. Under the Australian proposal, the content on the DVD is protected, but the public is not precluded from trying to break the technological protection that surrounds it.
The intersection between law and technology is particularly challenging when legislators seek to regulate or tinker with technology. Businesses may fear overregulation and a global rush to match the French parliament’ s recent foray into mandated compatibility, but a sound policy designed to protect competition and consumer rights is in everyone’ s best interests.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at firstname.lastname@example.org or online at www.michaelgeist.ca.