Psystar accuses Apple of anti-competitive tactics in countersuit

[AppleInsider]

Itself attacked for allegedly violating Apple's licenses, Psystar made offense its best defense on Tuesday when it filed a countering lawsuit in federal court, accusing the Mac maker of unfairly squeezing out possible rivals.

A statement from custom PC builder Psystar rejects the basis for Apple's complaint, which asserts that Psystar's OpenComputers violate the Mac OS X end-user license by running the software on non-Apple hardware. The firm instead argues that it's Apple breaking the law through the terms of the agreement in question.

By insisting that its software be tied to its hardware, Apple is violating pro-competition laws that include the Clayton Antitrust Act and the Sherman Antitrust Act, Psystar claims. Apple is characterized as a monopoly-like entity, abusing its copyright to guarantee its position as the only authorized PC maker for the operating system.

Since Psystar began selling what are effectively Mac clones as of April, the Florida-based company has repeatedly challenged Apple and insisted that Apple is deliberately ratcheting up the prices on Macs knowing that there was no real alternative for running its operating system, although Psystar has never elaborated on this perceived cost difference.

While the plaintiff in the new lawsuit intends to negate the restrictive clauses of the Mac OS X license as well as obtain damages, company chief Rudy Pedraza tells CNET that the goal is simply to make non-Apple Mac OS X systems a possibility rather than forcing complete access to the platform.

"What we want to do is to provide an alternative, an option," he says. "It's not that people don't want to use Mac OS, many people are open to the idea, but they're not used to spending an exorbitant amount of money on something that is essentially generic hardware."

Apple has kept to its traditional silence regarding lawsuits, but in this circumstance won't have that option for much longer; the California-based electronics designer is legally required to respond to Psystar's complaint within 30 days.

Simultaneously, Psystar has no intentions to reverse course even after the threat of an Apple lawsuit intimidated what's allegedly a small portion of its customers. In addition to the OpenComputer and the more recent OpenServ, Pedraza's company is planning a portable computer that would also support Mac OS X through unofficial, community-sourced methods.

[ View this article at AppleInsider.com ]

[JeffDM]

Yeah, good luck with those arguments. You'll need it.

[internetworld7]

Psystar, will you just roll over and die please? Pretty Please? No one wants Mac OS X on cheap PC hardware. This cheapens a genuine Mac experience. Mac hardware and OS X go hand in hand. One without the other is just not quite right.

[Foo2]

Since when does the software for anything have to be separable from the hardware? If Psystar is so intent on making Mac clones, why don't they just make a Mac OS X clone that runs Mac apps?

[Ireland]

Either Psystar are very rich or very stupid. They don't have a case.

I wish they did. Their original intentions were no doubt good, but they are in over there head now, and they had no right to sell OS X on non-Apple hardware. Despite the amount of people who wanted it.

[Wally]

Originally Posted by Foo2

Since when does the software for anything have to be separable from the hardware? If Psystar is so intent on making Mac clones, why don't they just make a Mac OS X clone that runs Mac apps?

Exactly.

That is the only way they can offer a "true alternative".

Apple made their own system (OS and hardware combo) so the whole anti-competitive yammer is baseless. Now if Apple was trying to keep Psystar from creating their own unique system (OS and hardware) - then they would have a legit complaint - but because they are making money selling hacked Mac systems (using Apple's own OS), they seem to be in for a big fight.

That's part of the reason Microsoft got busted was because they were trying to keep other companies from creating their own unique alternatives to Microsoft's products (i.e. Netscape) - not because they were the only ones selling Windows.

[iVlad]

They gonna loose anyway.

[Steve's son]

Even if they were successful with the lawsuit, I would imagine the Mac community coming together and not purchasing there products. I also think this is more possible than most people think it is. I would presume they have figured the cost's out also, they probably have a large investor backing them of some sort. Who knows it could be a large computer manufacturing company.

I am anxious to see how this turn's out.

[irnchriz]

Ultimate FAIL !

Apple do not sell a standalone OS. All of the Mac OS X software sold are, in effect only upgrades as you have to have an existing Mac to install it on. Unless they actually start to manufacture Apple computers under license they have no right whatsoever to install the Mac OS on any of their systems.

[EsquireMac]

Originally Posted by AppleInsider

Apple has kept to its traditional silence regarding lawsuits, but in this circumstance won't have that option for much longer; the California-based electronics designer is legally required to respond to Psystar's complaint within 30 days.

Don't expect anything telling in that Answer. It will very likely be a boilerplate Answer generally denying all liability. Answers to Complaints are rarely very revealing. Sometimes they are, but rarely.

[minderbinder]

"Apple is characterized as a monopoly-like entity..."

And that's where their entire argument goes down the toilet. The market is for OPERATING SYSTEMS, not copies of OSX.

In the OS market, Apple is under 10 percent, pretty much the opposite of a monopoly.

Apple would only have a monopoly if Windows didn't exist.

I can't wait for this nonsense to be over and Psystar to get their ass handed to them. Honestly, I don't know why their lawyers were even stupid enough to take this case.

[genovelle]

Maybe Apple should give in and release their OS for Psytstar so they can
compete with them. Just charge $899.00 for the Full Retail OS, include it for free for New Mac buyers just as they have always done. Offer discounted $129 upgrades to Mac owners that require specific hardware to function, but $499 for others who have a OS non mac hardware disc to prove they purchased the full OS. I would even specify that the product was offered to appease those who wanted access to Mac OS without the Apple Hardware and that apple could not warrant that the experience would be remotely equivalent to running on Apple's prefered platform.

[wobegon]

Can't wait to see how Psystar's inevitable OpenXbox360s that use the console's custom OS bundled with near identical hardware fly with Microsoft. Then the OpenWii, OpenPS3, OpenPSP, OpenDS.

[solipsism]

Originally Posted by genovelle

Maybe Apple should give in and release their OS for Psytstar so they can
compete with them. Just charge $899.00 for the Full Retail OS, include it for free for New Mac buyers just as they have always done. Offer discounted $129 upgrades to Mac owners that require specific hardware to function, but $499 for others who have a OS non mac hardware disc to prove they purchased the full OS. I would even specify that the product was offered to appease those who wanted access to Mac OS without the Apple Hardware and that apple could not warrant that the experience would be remotely equivalent to running on Apple's prefered platform.

Hypothetically, if Apple lost that is along the lines of what would happen. But they won't. The whole premise makes me think they are getting taken for a ride by their lawyers after they ponied up a retainer.

[wobegon]

Originally Posted by minderbinder

Apple would only have a monopoly if Windows didn't exist.

Oh, so the iPod has a monopoly position simply because it has a majority percentage of the mp3 player market? The Wii must have a monopoly in the home console market then too, right!

Those were leading questions. The correct answer to both is no.

[ltcommander.data]

Why don't they also sue ATI and nVidia for limiting Crossfire and SLI to their own licensed hardware? Afterall, the graphics card drivers support all chipsets ("generic hardware" like their Apple claim), they just artificially lock SLI to nVidia chipsets and Crossfire to ATI and select Intel chipsets.

And what about the XBox 360 and PS3. Ignoring the SPEs, the XBox 360's CPU is basically just three of PS3's PPE with the same instruction set. It's should be possible for the XBox 360 and PS3 OSs to be interchangable since they are both PowerPC based, they just need appropriate drivers like what OS X needs to run on generic hardware. Perhaps Microsoft and Sony should open up their OS to each other.

Or even better, why was Microsoft allowed to keep control over the original XBox's OS. The OS was basically a modified Windows 2000 build, and the XBox was built on generic parts including an Intel Celeron and what is pretty much an expanded GeForce3 GPU. There is nothing proprietary about the original XBox's hardware. Shouldn't PayStar sue Microsoft to allow for the right to run original XBox games on third party consoles built on generic parts?

[JimDreamworx]

The only thing Psystar has going for them is that the OS is sold separately from the hardware and it is not called an upgrade as there is no upgrade pricing. For example, if you owned a 10.2 computer, you could've skipped 10.3 and bought 10.4 as 10.3 was not required for the upgrade. And 10.3 purchasers did not get a break on 10.4 pricing (though pricing has nothing to do with qualifying what an upgrade is.)

Yeah, yeah, owning a Mac is required for the upgrade, but Psystar must've gotten some bad advice regarding Apple's EULA thinking that hacking something you bought is acceptable. If that's the case, I guess the DMCA gets thrown out the window because now you can hack all protected media. Hurray!

Not gonna happen...

[gbrandt]

Originally Posted by iVlad

They gonna loose anyway.

Lose, they are going to lose. Loose is where something is not tight, does not fit snugly. Lose is to not win.

Thanks

[amerist]

It's senseless that Psystar would start making these clones in the first place. Furthermore it's just insane to think they are making their living off of what is, essentially, a legal loop-hole or at best a gray area in the EULA. Give it up Psystar, before you hurt yourself even more.

If I thought that Apple was adding an unfair margin to their macs I would probably not buy one or buy a used one. It's all about what the market will bear. If it was really unfair then nobody would buy a mac. That said, I really don't think that macs are that much more expensive than a comparably-specced pc. Not only that but macs are still significantly prettier than PCs.

When I see a new PC laptop come out, I have to yawn. (with very few exceptions) There's just nothing exciting about new PCs.

Yay it has a faster processor, more RAM and a bigger hard drive. Who saw that one coming?

Oh look, they added a swiveling screen, a fingerprint reader and a stylus. Now Windows is actually more difficult to use. *snore*

Someone wake me up when Windows X comes out.

[minderbinder]

Originally Posted by wobegon

Oh, so the iPod has a monopoly position simply because it has a majority percentage of the mp3 player market? The Wii must have a monopoly in the home console market then too, right!

Those were leading questions. The correct answer to both is no.

I'm not sure what your point is, or whether you're disagreeing with what I said - your response doesn't seem to have anything to do with what I said. Maybe you just misread my post?

A monopoly doesn't come from having a majority of a market, it comes from having almost all of it, in the range of 90%+. Windows fits that. I don't know the iPod market share, but it's probably pretty close. Wii might be the biggest seller, but they're probably nowhere close to 50 percent of the market much less 90.

[nagromme]

It would kind of interesting if Psystar wins the suit, and Apple is required to sell non-upgrade boxed copies of OS X. They'd cost $400 (only fair that it costs a bit more than the less-capable VIsta Ultimate), with no bulk OEM discounts, and would be sold "as is" with no guarantee that the OS would even run, no tech support, no guarantee that future updates wouldn't break, and no guarantees that 3rd-party software would run right either.

That way Apple wouldn't have to test and debug for every other hardware maker's machines. And I don't see a court forcing them to do THAT. It would slow OS X development to a crawl and add Windows-style bloats and workarounds. More complexity, more bugs, slower innovation.

Either Apple spends a LOT of time and money making sure their OS runs on non-Apple hardware, or it will not run reliably. Ditto for many 3rd-party apps. So naturally, 3rd-party Mac software would all have the disclaimer "may not be compatible with non-Apple hardware." They'd have to cover themselves in such an unpredictable situation.

And who wants to buy a machine whose OS and apps may or may not run, with every software update being Russian roulette?

I think the user agreement is the LEAST of Psystar's problems if they want a viable business.

[bdkennedy1]

"What we want to do is to provide an alternative, an option," he says.

This guy has a case of "Apple has too much and we deserve some".

Apple covered their asses by writing their own operating system. Just because a company forced the OS to run on non-Apple hardware doesn't mean the world is entitled to start a business over it.

That's like walking up to a stranger in a restaurant and taking food off their plate because they have too much.

[nagromme]

Originally Posted by bdkennedy1

That's like walking up to a stranger in a restaurant and taking food off their plate because they have too much.

We prefer car analogies. Always car analogies!

So, it's like walking up to a stranger and taking food off their car because they have too much.

[penchanted]

Originally Posted by solipsism

Hypothetically, if Apple lost that is along the lines of what would happen. But they won't. The whole premise makes me think they are getting taken for a ride by their lawyers after they ponied up a retainer.

Taken for a ride or being underwritten by someone with very deep pockets. Even if they win the case, they will ultimately lose the battle.

Over the long haul, I still expect Apple to use some proprietary hardware component to eliminate future challenges that revolve around "essentially generic hardware". Even if that was not a motivating factor at the time of the P.A. Semi acquisition, I think it has now come into play.

The more immediate response if Apple loses would be to raise the retail price of the OS and use vouchers or registration to qualify buyers for a discount, as others have suggested. Apple could also extend AppleCare to provide an OS update service.

[NasserAE]

Originally Posted by AppleInsider

abusing its copyright

[ View this article at AppleInsider.com ]

hmmmm... I though that was the whole idea of copyright laws, to protect the copyright owner against people like Psystar. If Psystar succeed, god forbids, Mac owners might lose the luxury of upgrading their OS for $129. Apple may fight the clone market by pumping up the price of Mac OS DVD so high that it becomes impossible for clone makers to compete with Apple systems. However, Apple might also offer some type of discount for verified (don't ask me how) Mac owners.

[BuzDots]

Originally Posted by JimDreamworx

The only thing Psystar has going for them is that the OS is sold separately from the hardware and it is not called an upgrade as there is no upgrade pricing.

NO, the only thing Psystar has going for them is that their lawyers ARE their dumb-ass brothers-in-law!!!

[gmon750]

Originally Posted by minderbinder

"Apple is characterized as a monopoly-like entity..."

And that's where their entire argument goes down the toilet. The market is for OPERATING SYSTEMS, not copies of OSX.

In the OS market, Apple is under 10 percent, pretty much the opposite of a monopoly.

Apple would only have a monopoly if Windows didn't exist.

I can't wait for this nonsense to be over and Psystar to get their ass handed to them. Honestly, I don't know why their lawyers were even stupid enough to take this case.

Are Psystar's lawyers working on contingency? If not, they get paid whether they win or lose. Obviously, if they win they hit the cash cow but I'm hearing a big flushing sound right now and it's coming from Psystar's office.

Somebody has money to burn. They are the new SCO scourge.

[auxio]

So let's, for the sake of argument, say that Psystar is allowed to separate the Mac OS software from the Mac hardware and build their clones. Now, let's think things through a little further...

People start to buy Psystar's computers with Mac OS installed and find that there are issues here and there with hardware compatibility (since Psystar can't possibly clone every little detail of Apple's hardware). Is Apple then supposed make the necessary changes to Mac OS X to fix the issues? Or will Psystar want Apple to open-source Mac OS X completely so that they can make the changes themselves?

Obviously the Darwin kernel is open source and so there are some areas where Psystar could fix the problems themselves (assuming they have a team of software developers), but there are other areas of Mac OS which aren't open source which could cause problems with incompatible hardware.

This is exactly the reason why Apple wants to keep the OS software tightly bound to their hardware: because they don't want to spend effort supporting every two bit hardware manufacturer that comes along trying to undersell the next guy.

I'm all for competition, but seriously, some of the PC hardware which is out there is complete garbage.

[JML19]

I've owned or used a Mac since the 512K version came out in the 80's (the 128K was a little weak) So it may come as a surprise to some on this forum that I really, really wish Psystar had a leg to stand on legally. I know they'll lose, but I wish they wouldn't.

Of course Apple has a right to do what they do. At the beginning they controlled pretty much every commercially available application as well. It guaranteed a safe, stable platform. But I say let the OS be licensed - I think it would open up a new revenue stream for Apple, first from those who would love to run OS X but can't afford the hardware, and then from those who have grown to love the OS after trying it but now want the cool hardware to match.

I'm not saying it would be easy; hardware compatability issues and piracy issues would become much more of a problem. Apple would risk looking like Microsoft unless they also got into the business of approving various platforms as being acceptable for OS X, but I suppose that brings us right back to the beginning...

[shahvikram123]

Apple need to have some sort of system where they certify certain hardware parts (not OEM's but actual hadrware parts). So for example they can certify only this processor, this type of ram, video card etc.

Then the OEM's (Acer, Dell, sony, toshiba etc) could put together all those hardware parts and build there own machine. Apple would obviously have to licence OS X to the OEM's to allow them to put OS X on those machines

This way Apple would not have to support every single hardware configuration, only the ones they choose too

However an issue with this method of opening OS X to other OEM's is that the other OEM's will most likely undercut Apple with the price of the machines. Therefore you may see more people buying dell machines with OS X then iMacs for example. On the other hand Apple would still be making money because they would be licensing their OS to these other OEM's

[hillstones]

The small portion of customers....funny...who? MacWorld? They bought it and proved what a POS it really is. When people buy a Mac, they want quality, and they are not overpriced!

Apple has a right not to license their software. They are not required to allow cloning. They already learned their lesson in the past and they are not going to do it again.

Good analogy with the game consoles. Those devices are not cloned either.

I love the side by side photos of the Mac Pro and the Psystar in the review by MacWorld...showing the quality and workmanship going into the design of the Mac Pro, and the piece of shit job done with the Psystar! Duh, choice is obvious.

[gmon750]

Originally Posted by JML19

I've owned or used a Mac since the 512K version came out in the 80's (the 128K was a little weak) So it may come as a surprise to some on this forum that I really, really wish Psystar had a leg to stand on legally. I know they'll lose, but I wish they wouldn't.

Of course Apple has a right to do what they do. At the beginning they controlled pretty much every commercially available application as well. It guaranteed a safe, stable platform. But I say let the OS be licensed - I think it would open up a new revenue stream for Apple, first from those who would love to run OS X but can't afford the hardware, and then from those who have grown to love the OS after trying it but now want the cool hardware to match.

I'm not saying it would be easy; hardware compatability issues and piracy issues would become much more of a problem. Apple would risk looking like Microsoft unless they also got into the business of approving various platforms as being acceptable for OS X, but I suppose that brings us right back to the beginning...

You may want to read your history books. Apple did license their OS in the nineties. It did not end well.

You want compatibility with all hardware?? Go with Windows from Microsoft.
See how well Windows works with hardware with inferior drivers/components???

You want Open source for the masses?? Go with Linux
See how well it works on the desktop when you have thousands of developers each with their own different coding style and ideas as to how it should function? Try finding drivers for new pieces of hardware.

There are plenty of options.

All-in-all, it's actually a pretty funny thing to see as it evolves. One would have to admire the bravado that Psystar is touting but I don't see this as a David-vs-Goliath epic. I really wonder what these guys at Psystar were thinking. I really think it's going to end badly for them and they will have to move back into their parents' basement.

[SpamSandwich]

Psystar will disappear pretty quick unless they are secretly being bankrolled by Microsoft...

[wizard69]

I said it before and I will say it again Pystar has more of a chance to be successful here than many are giving them credit.

First; Apple is and has engaged in monopolistic practices, there os no way to come to any other conclusion. They have 100% of the Mac OS market. That very fact will hurt them unless they can twist the fact that OS/X is just another UNIX variant competing in the UNIX work station market. Apples marketing of Mac hardware could be a problem too.

Second I doubt the EULA means much of anything and may even be illegal in some states. I think this is one of the reasons Apple waited until they had a copyright issue to go after Pystar. Even here there are protections for Pystar for interoperability. The question is did they cross the line.

In the long run I suspect that Pystars success will depend on the political environment. If the political landscape changes such that the justice department becomes more active in enforcing laws already on the books then Apple will have more trouble than it can afford.

Which brings up a point don't vote for Obama if you want to see companies like Apple continue to be successful. Apple would likely end up with 100's of government hot shots after them due to atleast a half dozen problem areas. Of course if they (Apple) gets much worst they might draw attention anyways.

Dave

[CREB]

Puck Psystar

[solipsism]

Originally Posted by SpamSandwich

Psystar will disappear pretty quick unless they are secretly being bankrolled by Microsoft...

MS would be the last people to back Psystar;

[.:R2theT]

Originally Posted by JML19

I'm not saying it would be easy; hardware compatability issues and piracy issues would become much more of a problem. Apple would risk looking like Microsoft unless they also got into the business of approving various platforms as being acceptable for OS X, but I suppose that brings us right back to the beginning...

Because right now Apple needs more quality control issues.


Apple is already biting off way more than it can chew!

[penchanted]

Originally Posted by SpamSandwich

Psystar will disappear pretty quick unless they are secretly being bankrolled by Microsoft...

I really do not think MS is bankrolling Psystar. If Psystar were to win the case, it would make it easy for Windows licensees like Dell and HP to offer a better alternative to a Windows PC.

[CREB]

Originally Posted by .:R2theT

Because right now Apple needs more quality control issues.

You need to be more specific as there will always be some quality control issues somewhere in a mass-produced product line, but I seriously doubt it runs across the entire Apple product line.

Originally Posted by .:R2theT

Apple is already biting off way more than it can chew!

If you had been around when Apple first started you would know that Apple has always bitten off more than it can chew as it is SOP for Apple since the beginning—Apple thrives on it!

[wobegon]

Originally Posted by minderbinder

I'm not sure what your point is, or whether you're disagreeing with what I said - your response doesn't seem to have anything to do with what I said. Maybe you just misread my post?

A monopoly doesn't come from having a majority of a market, it comes from having almost all of it, in the range of 90%+. Windows fits that. I don't know the iPod market share, but it's probably pretty close. Wii might be the biggest seller, but they're probably nowhere close to 50 percent of the market much less 90.

I was being sarcastic. The iPod, with its 70% market share and the Wii, with its dominant position this generation does not a monopoly make.

A monopoly position is achieved not by obtaining some magic market share percentage, but by achieving said majority percentage through anti-competitive means. Microsoft's Windows doesn't have a monopolistic position on the PC desktop because Windows incredibly popular, but because Microsoft's operating system is sold as the default operating system on every new PC sold thanks to their use of exclusive, anti-consumer, anti-competitive OEM licensing deals with third party hardware vendors like Dell, HP, Gateway, etc. that stifle competition from alternatives like Linux.

There's nothing illegal about Apple's exclusive use of their operating system on their Macs. Same thing with iPods and iPhones. Apple isn't illegally trying to stop RIM from selling their Blackberry phones, which run their own custom Blackberry operating system.

Not only that, Apple also promotes open, industry standards like AAC and MP3 for audio and MPEG-4 H.264 for video. Most of their OS is open: Mach/BSD, Unix, Darwin. Safari is one of the most, if not the most, standards-compliant browsers. They also leverage work done by the open source community, like SproutCore for MobileMe's web apps. This is in stark contrast to Microsoft's closed operating system, their promotion of proprietary formats like WMA for audio and WMV, their standards-noncompliant Internet Explorer web browser.

It isn't illegal for other vertical systems - i.e. products that incorporate hardware and an operating system from the same company - like videogame consoles to exist. All modern video game systems have some kind of custom operating system, but nobody is crying about Nintendo not letting them use their custom operating system with cloned hardware, or Microsoft or Sony for similarly not letting other hardware vendors use their console's operating systems.

People have the choice to use vertical systems or not use vertical systems. But when buying PCs, people don't have a choice. Consumers have a choice in the hardware company, but the operating system is Windows, whether they like it or not.

Hope that makes sense.