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According to sources close to the talks, it appears the U.S. Justice Department has been looking into whether Apple "unfairly dominates" the digital music market with its popular iTunes store.

The sources say the Justice Department has been contacting music labels and other digital music providers, asking broad questions about the nature of the market in general, and Apple's role in it.

The new inquiries may have been stemmed by accusations in March that Apple was using its giant market share lead to prevent rival Amazon MP3 from debuting new songs exclusively before they hit iTunes a day or two later.

The iTunes store currently has about 70 percent market share, with Amazon trailing at around 9 percent.

Global music sales have fallen from $26.5 billion at the start of the decade to just $17 billion last year, even as digital music sales have exploded.

AT&T has announced today the launch of an AT&T Wi-Fi Hotzone in Times Square, the company's latest effort to ease congestion on their 3G data networks in high-population areas.

The Wi-Fi service was installed on 46th street and 7th avenue and will service a large portion of Times Square.

The Hotzone is free to all of AT&T's subscribers, as long as they have a device that can connect to wireless. This includes smartphones and laptops with 3G LaptopConnect modems.

AT&T has received almost constant criticism for dropped calls and choppy 3G service in New York City and other high-population areas, especially from iPhone users that are notoriously bandwidth hungry.

Says John Donovan, AT&T's CTO (via press release): "Whether they're emailing photos and videos to friends back home, downloading a restaurant review, or ordering discount Broadway tickets online, people in Times Square want the mobile broadband connection that lets them get the most done in the least amount of time. With this pilot AT&T Wi-Fi hotzone, we're examining new ways to combine our Wi-Fi and 3G networks to help ensure that AT&T customers in Times Square always have a fast mobile broadband connection to do what matters most to them. It's another example of how AT&T is exploring the ideal blend of technologies to maximize the mobile experience for our customers in New York City."

Davenport & Company analyst Drake Johnstone has made a bold prediction this week, saying that AT&T would lose up to 40 percent of its iPhone subscribers if the carrier was to lose its exclusivity pact on the iPhone and the smartphone moved to Verizon.

Says Johnstone in a client note: "Over the past several years, AT&T indicated that 40 percent of its new iPhone customers came from other carriers. We estimate that AT&T has 15 million iPhone customers (as of Q-1 10) and believe that AT&T could lose as many as 6 million, or 40 percent, of its iPhone customers when Verizon begins selling the iPhone in 2011."

Because of these expectations, the analyst says: "We are reducing AT&T’s 2011 wireless subscriber additions from 6 million to 2 million (most of these new additions may be lower value connected devices such as eReaders instead of higher value long-term wireless customers), since we believe that Verizon could obtain Apple’s approval to sell and provide wireless service for the iPhone as early as mid-2011."

While the numbers seem sensationalist, they could be a possibility. AT&T does have some measures in place to prevent such an "exodus," however. The company just raised its ETF (early termination fees) to $350 for smartphones, meaning leaving for another carrier could be a pricey transaction. Additionally, family-talk and business-discounted plans are hard to switch to new carriers with, and AT&T says about 80 percent of its customers have those types of plans.

Sony has announced that the PlayStation Store is now the first console marketplace to offer original content from HBO, the premium cable channel.

Owners of the PlayStation 3 and the PSP handheld can now purchase individual episodes or full seasons of their favorite HBO shows, right to their consoles, through the PSN.

As of today, the first two seasons of "True Blood" are available, the first season of "Eastbound and Down," the first three seasons of "Big Love" and the first two seasons of "Entourage."

Additionally, catalog shows such as "The Sopranos," "Sex and the City," "The Wire," "Rome," "Da Ali G Show," "Curb Your Enthusiasm," and "Flight of the Conchords," are available, although not all seasons are available of each show.

Each episode costs $3 USD, with season prices varying.

According to The Hollywood Reporter, Legendary Pictures has bought the rights to create a Mass Effect movie, based on the popular EA-Bioware video game on the Xbox 360.

In talks to write the movie is Mark Protosevich, the man behind the blockbuster I Am Legend, and the movie will be produced by Avi and Ari Arad, or Thomas Tull and Jon Jashni of Legendary.

Mass Effect was released in 2008, and its sequel was just released in 2010. The science fiction game follows a human soldier and his starship in the future, and features many different alien species on a variety of foreign planets.

Avi Arad is the former chairman of Marvel Studios, and is currently developing a film based on the video game "Drake's Fortune."

Says Tull of the game, and subsequent movie: "[Mass Effect] has depth, compelling characters and an engaging back story."

Harmonix has released the demo for the upcoming Rock Band sequel, Green Day: Rock Band and included is a teaser image that seems to imply that the upcoming game will have keyboard support, an all-new instrument for the popular music game series.

Users can download the two-track demo from the XBL Marketplace and play the songs "Boulevard of Broken Dreams" and "Welcome to Paradise."

The image shows off the four standard icons, (mic, guitar, bass, drums) with the keyboard fifth.

The original game of the series sold over 5 million tracks, and led to a revolution in DLC (downloadable content), selling over 40 million tracks.

Rock Band 2 continued strong sales for the franchise, although reviews were not as great.

Pic via JoyStiq:

The Amazon Kindle, the most popular e-reader by market share will eventually have a color version, says CEO Jeff Bezos, but that day is not soon.

Speaking at the e-tailer's shareholder meeting this week, Bezos says that while not impossible, adding color to the Kindle's e-ink display is "a difficult technical challenge" and that the device is "still a long way out."

Bezos adds that he has seen some prototypes "in the lab" but none of them are "ready for prime-time production."

The e-reader market continues to get more and more crowded, especially with Apple's introduction of the iPad tablet in April. The iPad has e-reading capabilities on a full color screen and a connection to the growing Apple iBookStore.

While Bezos refuses to disclose the amount of Kindle devices sold since launch, DisplaySearch reported last month that the number is somewhere in the 3.3 million unit range.

After 11 months of ongoing development, Google Chrome for Macs and Linux is finally stable, moving out of the beta stage.

The company even admitted that for the first few months the popular browser was extremely buggy and should only be used by more advanced users. Today, that is no longer an issue.

Along with the "stable" tag, Chrome for Macs and Linux now include advanced syncing for bookmarks and settings, geolocation APIs, app cache and other HTML5 tools.

Perhaps more notably to the casual end user, the browsers now have access to all 4500 Chrome extensions.

Not included in the new release is built-in Flash, as you will need to manually download it. By Flash 10.1, Google promises a stable version.

Get the Windows version here: Chrome at AfterDawn
Get the now stable Mac and Linux versions here: http://www.google.com/chrome

Microsoft and Netflix have announced today that the video rental service has chosen PlayReady as its DRM of choice for upcoming Netflix-ready streaming devices and apps.

The decision, says Netflix, will allow for subscribers to watch the over 12,000 movies and TV episodes available via "Watch Instantly," the company's popular streaming catalog, on Blu-ray players, Internet-enabled TVs and other devices.

PlayReady is already used for instant streaming on the PC and Macs, and the companies say the first PlayReady devices should hit shelves "as early as this summer."

Says Bill Holmes, vice president of business development at Netflix: "Netflix ready devices are a popular way for our members to instantly watch the huge library of TV episodes and movies available from Netflix that can be watched instantly on their TVs. Netflix is expanding our investment in PlayReady and making PlayReady our primary DRM technology because it best meets the requirements of our content suppliers and device partners while allowing us to benefit from efficiencies in our content delivery infrastructure."

In an ironic twist, Warner Bros. has been sued this week for stealing an anti-piracy technology patent.

Medien Patent Verwaltung(MPV) of Germany is the company doing the accusing, saying Warner and Technicolor began unlawfully using the technology after it was shown to them in 2003.

The studio was shown the technology, which is "a method of marking films with a distinctive code so it could track back sources of piracy to the exact theater in which an unauthorized copy originated," in 2003, says TheHollywoodReporter.

Warner has been using it without paying an licensing fees since 2004, adds the complaint.

Says MPV: "We disclosed our anti-piracy technology to Warner Bros. in 2003 at their request, under strict confidentiality, expecting to be treated fairly. Instead, they started using our technology extensively without our permission and without any accounting to us. However, we had taken care to obtain patents to protect MPV's technology, and we are now in a position where we must assert our rights."

Yankee Stadium, home of the defending World Series champions, has just added the Apple iPad to its prohibited device list, which already included all laptops.

Team officials say it is nothing personal to the iPad, but bunches the tablet in with all laptops.

The ban is a "security-and-safety" issue, they add.

When asked, Major League Baseball said iPad bans are a team-by-team decision, and the New York Mets and the Seattle Mariners have already announced the device is allowed in their respective stadiums.

In April, the iPad was banned in Israel due to wireless standards irregularities, but the ban was subsequently lifted.

Apple has been sued this week over patents relating to its popular iTunes store, in a case that could take down the world's most popular online music store.

The suing company, Sharing Sound, is accusing Apple of infringing patents relating to "djustable length displays of textual and other data," as well as patents related to online music stores.

Sharing Sound says they hold the patent for "distribution of musical products by a web site vendor over the Internet," which seems incredibly broad, and practically describes any music downloading site that has song previews, a shopping cart, and a legal music player.

The exact patent targeting Apple "has a provision that downloaded songs have a unique identifier included in the file to link the files to a particular purchaser," says ArsTechnica.

iTunes infringes on this patent, says the suit, as all songs downloaded through the service have Apple ID, used to identify the original purchaser.

AT&T has settled a class action lawsuit today that will mean that the carrier must unlock all phones locked to their network as long as customers meet a certain set of criteria.

Users of pre-paid phones must "provide proof of purchase of their locked handset," while any contracted user must have "completed a minimum of 90 days of active service," with the account remaining in good standing.

There is one caveat, however: "Handsets for which AT&T has an exclusive sales arrangement with a manufacturer of less than 10 months will have to wait until the 10-month period expires before they can receive an unlocking code."

That means that any phone for which AT&T has an exclusivity pact of over 10 months (namely the Apple iPhone and BlackBerry Bold 9000), then it does not have to issue an unlock code.

The final approval hearing for the settlement is on July 2nd. You can find more information at www.attlockinglawsuits.com.

Wal-Mart has announced, about a month before Apple is set to release the iPhone 4G, that it is slashing the price of the iPhone 3GS in half.

The 16GB 3GS model will go on sale for $97 USD with two-year contract. The smartphone currently costs $197 at Wal-Mart and $199 through Apple.

Despite the iPhone 4G being leaked, Apple has yet to confirm or deny that the phone will be officially released next month.

The annual developer conference starts on June 7th, and Apple has unveiled a new iPhone model each year during the event.

New to the "iPhone HD," are a front-facing camera for video conferencing, a better standard camera (including larger lens and flash), a Micro-SIM slot (just like the iPad), 960x640 resolution, a second mic, metallic exterior (not plastic) and split side buttons for volume.

Hewlett-Packard has announced that it has added at least 50,000 new batteries to its worldwide recall list, adding to the already huge 70,000 number it began recalling in May 2009.

The lithium-ion batteries found in 31 of HP's laptops can potentially overheat and then split apart, which could lead to fires.

Two instances of just that were noted in an initial report by the U.S. Consumer Product Safety Commission (CPSC). Since then, 38 more reports have surfaced. Of those reports, there were "11 instances of minor personal injury and 31 instances of minor property damage."

The laptops affected are from the HP Pavilion, Compaq Presario, HP laptops, and HP Compaq lines.

Recalled batteries come from laptops purchased between August 2007 and March 2008.

Despite the seemingly large number, HP says only 3 percent of all notebooks manufactured during the period are affected.

Says the company: "Consumers should immediately remove the batteries referenced above from their notebook computer and contact HP to determine if their battery is included in this recall (even if the battery was previously checked). Consumers with recalled batteries will receive a free replacement battery."