French Lawmakers Give Anti-iTunes Bill Green Light

French lawmakers have passed legislation that could force Apple Computer (Nasdaq: AAPL) to make its iPod music player and iTunes Music Store compatible with competitive offerings.

"Any artist's work that is legally acquired should be playable on any digital device," Culture Minister Renaud Donnedieu de Vabres told lawmakers before the vote Friday.

The five lawmakers from the governing conservative Union for a Popular Movement that introduced the legislation are concerned that without guaranteed interoperability, there is a major risk of "captive client bases and an anti-competitive situation, with the consumer held hostage as a result."

Music purchased on iTunes can only be played on iPods. Likewise, iPods cannot currently play songs purchased from competing digital download stores, such as Napster and Sony's (NYSE: SNE) Sony Connect. Allegations of anti-competitiveness have mounted against Apple, whose business model depends on keeping its file format, called "FairPlay," proprietary.

Europe Rises Up

Britain, Sweden, Denmark, Norway and Poland have risen up against Apple over the same issue, claiming the iPod maker is violating their laws by keeping its platform closed. Governments in these countries may be looking to the outcome of the French legislation to decide on recent proposals and regulatory moves to force Apple to open up iTunes.

"If there are enough countries claiming violations, Apple is probably not going to be able to pull the plug on all those particular countries because it would erode a significant part of its market," Francois G. Laugier, corporate transactions and international business attorney in the Redwood City, Calif., office of Ropers Majeski Kohn & Bentley, told MacNewsWorld.

Laugier had predicted the bill would pass the Senate and the National Assembly.

Reviewing the Bill

The latest version of the bill does strike some language that would have allowed consumer groups to file complaints against Apple. Specifically, the bill proposes a new regulatory agency with the authority to order companies to license their proprietary file formats to competitors -- if the restrictions they impose are "additional to, or independent of, those explicitly decided by the copyright holders."

The new draft also allows Apple, Sony and others to skirt the issue by signing deals directly with record labels and artists that would give them permission to sell their songs with their proprietary copyright-protected formats intact. Artists are considered likely to cooperate with the iPod maker because of the sheer marketing power it wields. Apple sells 80 percent of the legal U.S. downloads.

"This bill has lost a lot of its teeth since it was first voted in. At this point, I think it has become bearable for Apple. But it's the interpretation. The devil is going to be in the details," Laugier remarked.

Apple's Next Move

Still, there remains speculation about Apple's intentions. Some analysts assert that the bill's passage could cause Apple to shut down its iTunes France site and remove its bestselling MP3 player from the French market.

Apple sells about 3 million songs a day for 99 US cents each, and sold its 1 billionth digital song in February. The company is now making moves to replicate its song success with digital video downloads. As Laugier noted, the law could take a bite out of Apple's foreign revenues, especially if other European companies follow suit.

Apple was not immediately available for comment.

Unless the Socialists and the Greens, two opposition parties, are successful in attempts to challenge the constitutionality of the bill, the anti-iTunes legislation will become law. The process to challenge the Senate and National Assembly's decision takes several weeks.