France’s lower house of parliament passed a law on Tuesday that
could challenge Apple Computer Inc.’s dominance of the online digital
music market by making it open its iTunes store to portable music
players other than Apple iPods.

French officials said the law is
aimed at preventing any single media-playing operating system, such as
Apple’s iTunes or Microsoft Corp.’s Windows Media Player, from building
a grip on the digital online music retail market.

"These clauses,
which we hope will be taken up by other countries, notably at the
European level, should prevent the emergence of a monopoly in the
supply of online culture," Richard Cazenave and Bernard Carayon,
National Assembly deputies from the ruling UMP party, said in a
statement on Tuesday.

The new legislation would require that
online music retailers such as iTunes provide the software codes that
protect copyrighted material — known as digital rights management
(DRM) — to allow the conversion from one format to another.

Apple responded on Tuesday night in California that if the law passes, it would only lead to increased piracy.

"The
French implementation of the EU Copyright Directive will result in
state-sponsored piracy," spokeswoman Natalie Kerris said from Apple
headquarters in Cupertino, California. "If this happens, legal music
sales will plummet just when legitimate alternatives to piracy are
winning over customers."

Shares of Apple fell more than 3 percent to close down $2.18 at $61.81 on the Nasdaq on Tuesday.

"Any
interested party can ask the court … to get a supplier (of content)
… to provide information that is essential for ‘interoperability,’"
France’s new copyright law states, so that content can be read on any
hardware support.

It remains to be seen whether Apple would
comply with the law, or just shut down the iTunes store in France,
which would have a minimal effect on Apple’s sales. Shaw Wu, an analyst
at American Technology Research, estimates that less than 5 percent of
Apple’s overall revenue comes from sales of iPods and iTunes songs in
France.

The new legislation would also allow consumers to use
software that circumvents DRMs only if it were done to convert digital
content from one format to another. Using such software is currently
illegal in much of the world.

By Astrid Wendlandt
Reuters