This strikes me as a terribly misinformed article. This had nothing to do with rival music stores’ music files, and everything to do with rival music stores’ DRM. The plaintiffs in this class action suit are, from what I’ve read, deliberately blurring the lines to conflate the two.
Apple:
Only ever supported one DRM format: FairPlay. They never licensed FairPlay to other device makers or music stores, and never supported any other DRM format in iTunes or on iPods.
Always supported non-DRM music — in MP3 and AAC formats — on both iTunes and iPods.
Included DRM on iTunes Music Store tracks at the insistence of the record labels. As famously made clear in Steve Jobs’s “Thoughts on Music” open letter in 2007, Apple wanted to sell DRM-free music tracks, and, once the record labels allowed them to, they did just that.
The thing with Real Networks is that they backwards-engineered FairPlay in 2004, and Apple responded by closing the loopholes Real exploited. If Real had sold DRM-free MP3 files, Apple wouldn’t have done anything. Amazon’s music store, store has always sold music in plain no-DRM MP3 format, and those files have always worked perfectly with iTunes and iPods.