Apple Rebukes RealNetworks Over Rhapsody Flap

Updated from 12:39 p.m. EDT

In comments likely to encourage rumors of animpending lawsuit, Apple ( AAPL) issued a harsh retort Thursday to online music rival RealNetworks ( RNWK), which surprisedonlookers earlier this week with news that it hascracked open the proprietary software for Apple's iPoddigital music players.

In its statement, Appleaccused Real of adapting "the tactics and ethics of ahacker" and said it's delving into the legalimplications of its rival's actions.

In further comments aimed to undermine consumerinterest in Real's offerings, Apple added, "Westrongly caution Real and their customers that when weupdate our iPod software from time to time it ishighly likely that Real's Harmony technology willcease to work with current and future iPods."

In a follow-up release, Real said: "Consumers, and not Apple, should be the ones choosing what music goes on their iPod." While Apple has invoked the digital Millennium Copyright Act in support of its position, Real said the DMCA "explicitly allows the creation of interoperable software."

On Monday, Real said it has developed software tolet consumers play songs from its Rhapsody music storeon Apple's iPods. The announcement was not welcomed byApple, which designed iPods to only play music purchasedfrom its own iTunes music store, and prompted a waveof speculation that Apple will respond in court. AnApple spokesperson said at the time that the companyhad no comment on whether it would file suit againstReal.

Apple, which has long cast itself as the puristloner of the tech world, has lately reversed course inan effort to broaden the reach of its highly popularonline music store and iPod technology. Over the pastnine months, it's struck deals to extend its musicalreach into non-Apple computers, high-end autos and even cell phones via arrangements with Hewlett-Packard ( HPQ), BMW and Motorola ( MOT).

But it has shown no interest in working with Real,rejecting an offer from its competitor earlier thisyear to develop iPods into an open platform that wouldplay music from Real's online store.

In recent trading, Apple was up 29 cents, or 0.9%, to$32.56, while Real was off 8 cents, or 1.4%, to $5.50.

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