By now, surely, we are all familiar with the story: a massive American technology company that controls the majority of a growing software market uses its influence to dominate a related hardware market. Consumers and rivals cry foul, government regulators step in and force the dominant player to dismantle its business model and play fair. A showdown ensues, pitting European regulators’ vow to protect consumer rights against a big company’s right to operate a successful business without government interference.

And who is it lingering behind this cloak of indignity? Not Microsoft, this time, but Apple Computer. Specifically, Apple’s FairPlay digital rights management software that locks consumers into a single option for their iTunes purchases: the iPod. The counter argument that you can always burn your iTunes purchases onto a CD, then upload the contents onto a second player application before downloading the tunes onto a compatible device is preposterous. Consumers could also generate pure ethanol from corn to use as a petrol additive, but most of us have far more important things on our minds, such as grousing about digital rights management.

European competition specialists are among those contemplating the future of DRM, and it doesn’t bode well for Apple. There’s a growing consensus among legal experts that Apple could be the next American firm to face the wrath of EU Competition Commission investigators over its closed system, FairPlay. In fact, it seems to be more a question of when, not if.

So far, all the fuss has been at the national level. Norway, Denmark and Sweden said last week that Apple has to allow customers who download songs from iTunes the flexibility to play these purchased songs on other devices, not just the iPod. The French parliament is going one step further, proposing a law that, if passed, would make all digital media devices "interoperable". And, in the UK, an influential bloc of MPs is seeking to influence the ongoing Gowers Review of Intellectual Property by calling for greater consumer choice built into digital download services.

"The probes in Denmark, Sweden and Norway … appear to be more consumer probes, but that could provide all the impetus needed for a larger competition rules investigation," Giles Warrington, a partner on the competition team of UK law firm, Pinsent Masons, told me this week. "Or, it could even be the [EU Competition Commission’s] own investigation, given that profile has been raised sufficiently."

Alas, frustrated consumer, this doesn’t necessarily mean that Apple will be forced to unlock FairPlay any time soon. EU competition law is built around one basic point: a company is using its dominant position to move into new markets and dominate those, and, exclude rivals from entering these markets.

The phrasing "dominant position" is the key. Regulators are loath to enter into an investigation if it is deemed the market in question is not fully mature for fear of trampling on innovation and natural market forces. Apple may have 80 percent share of the music download market in some countries, but this market is anything but mature, it could reasonably be concluded. The number of gadget makers and mobile phone manufacturers that have launched so-called iPod killers in the past year would attest to that.

But that shouldn’t necessarily stop European regulators looking into the matter either. After all, elected officials in at least five European countries appear determined to establish some semblance of balance in the DRM wars, mindful of how quickly Microsoft Windows came to dominate operating systems. Simiarly, an iTunes/iPod monopoly is in nobody’s interest.

Also, according to Anthony Woolich, a partner at Lawrence Graham specialising in EU competition regulation, the Competition Commission has a proven track record of launching probes into the consumer electronics industry at a relatively early stages of a new product or digital service. In the past 20 years, Brussels has gone after the video game industry, Microsoft for, among other things, Windows Media Player, and the music industry on CD pricing.

Whenever a company in this industry is deemed to be making a product that is incompatible with other products, Mr Woolich says that regulatory red flags are raised.

"A key point to establish is Apple’s dominance," he says. "Is it a dominant player in the market? The next point would be: are they carrying out a practice that has an exclusionary effect? If the answer to both these questions is yes, then Apple could be in trouble."

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Bernhard Warner is a former Reuters internet correspondent in Europe and senior editor for The Industry Standard Europe. He writes about technology, the internet and media industries and can be reached at techscribe@gmail.com

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