Norway takes a bite out of Apple

July 2006

Internet, record labels

Norwegian consumers were already up in arms about iTunes’ digital rights management (DRM) system and the lack of interoperability between Apple and other platforms. But then some brave Norwegian souls read the iTune’s end user licence agreement (EULA). The Norwegian Consumer Council called the EULA “grossly unreasonable” pointing out that (amongst other complaints) it required Norwegian consumers to consent to English law while the music store reserves the ability to change the rights to the downloaded music even while disclaiming all liability for possible damage their software may cause. The Norwegian Consumer Ombudsman ruled that certain of Apple’s terms were illegal under Norwegian law and the Company has been given to June 21 st to amend its rules. Consumer Agency officials in Denmark and in Sweden have taken the same line. Apple has also been told in Norway that it must defend its DRM system, Fairplay, which restricts downloaded songs to being played on the consumer’s iPod.

To be fair, its not just Apple – most EULA’s are wholly unreasonable and most online users ‘click to consent’ without ever reading the draconian terms they are agreeing to. But Norway has strong consumer protection rules and it will be interesting to see if a further test case is brought regarding the validity of the terms if not amended. The validity of AOL’s terms and conditions contained in a EULA were struck down by a French court. In UFC v AOL France, a number of different clauses in the AOL standard form contract were at issue, including such fundamental provisions, for example, as those relating to AOL disclaimers of liability (including liability for content information originating from third parties and liability for failure to provide the online service contracted for) and AOL’s rights of termination (including the right of AOL to terminate the contract unilaterally). Several of the clauses in the AOL Contract were found to be abusive and unenforceable because they were contrary to French local law or, in some cases, contrary to EU-wide laws such as theUnfair Terms in Consumer Contract EC Directive 1993. Under the latter legislation, courts have the power to decline to enforce provisions in consumer contracts that are seen to demonstrate a “significant imbalance” of bargaining power between the parties. ( Archive November 2005).

However the EU has said that it has no plans to investigate whether Apple’s iTunes Music Store breaches its competition laws despite the intention of Sweden and Denmark to investigate whether the digital music service violates local consumer protection laws. In the week that MyCokeMusic gave up the uphill battle to survive, Philip Lowe, director general of competition at the European Commission, said ‘We wouldn’t at this stage regard this as an instance of major concern until we’ve seen further market developments’ he said and noted that Apple has obtained its strong market position in open competition with many similar players.

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