First, I feel the need to point something out. My understanding of the French law is NOT that there can be no DRM. So everyone saying, no DRM = no digital downloads, you are barking up the wrong tree. The French law says IF you have DRM, you must be willing to license it to other companies. Not license for free, not give away, but license. So, if iRiver for example wanted to pony up and pay Apple a licensing fee, Apple would give them the right to use FairPlay on iRiver mp3 players. Note I said "use." Not reverse engineer. Simply use it. This would allow users who prefer iRiver mp3 players to download from iTMS.
Now that that is out of the way, a little about monopoly. Monopoly is not, itself, illegal. USING monopoly power to gain power elsewhere as a general matter is. Case in point, Microsoft. Microsoft is considered a virtual monopoly with Windows. That's no problem. That's not why the federal government got after them. The problem arose when Microsoft USED its Windows monopoly power to force its BROWSER down the public's throats. This is called, I believe, "tying" - as in, tying two products together. You leverage your monopoly power to increase your market share (or even form a monopoly) in a DIFFERENT area. Everyone wonders why there is no Microsoft iLife? This is why. Microsoft has a monopoly, so if THEY tried to do something like iLife (not saying it'd be good.. but bear with me

), they'd get sued again. They'd be using their monopoly of windows to kill competition in other areas (photo management software, movie creation software, etc). Apple gets away with it precisely because its market share is tiny. No one is worried about iCal putting other calendaring software out of business. So Microsoft has to just sit and watch while Apple gets accolades for things Microsoft couldn't do legally even if it wanted to. Microsoft is sort of like a big slobbering dog on a chain. Apple is the annoying poodle that's prancing around yapping, *just* out of reach.
So.. now that you understand tying, lets move to the matter at hand. iTMS and iPod. Online music sales *IS* an area where Apple has or is at least getting pretty close to a virtual monopoly. No problem there. But Apple is USING its monopoly power to gain an advantage in a completely separate market - the MP3 player market. THAT is the issue the French are concerned with. It is an issue other governments may become concerned with very soon, because the minute Apple has a virtual monopoly of online music sales, they are clearly guilty of tying with the iPod.
No one really cares that iPod can't play Sony music store files. That just means iPod lacks some features other music players have. If you want Sony music, you can buy a different player that has that feature. The issue is what I noted above - iTMS is a virtual monopoly, and if you use it, iPod is your only option. CLASSIC tying. So, I see what the French are getting at. Their methodology is weird, as it seems normal antitrust law would work just fine - if not immediately, pretty soon as iTMS continues to grow. I don't see the need for a new law here, but I agree with the general concern the French government is displaying over the situation.
As a final aside, let me just say that I LOVE Apple products. I'm not some MS fanboy out to get Apple. I have two macs myself. But I also like consumer choice - and I see that Apple is leveraging its iTMS semi-monopoly to force iPod on people. Thats wrong, and I'll call Apple on it, despite the fact I like the company as a whole. I actually think this is more of Apple's stupid fears that it can't compete. They always fear competition for some reason. They feel they need to protect and coddle the iPod by boosting it up by tying iTMS to it. I think its nonsense. iPod is a great product that can compete with other MP3 players ON ITS OWN. It doesn't need to be bolstered by tying. Come on Apple.. its time to let the baby iPod fight its own fights - its all grown up now! Stop the monopoly leveraging, end the tying, and license fairplay. Heck, you may ever MAKE MONEY from the licensing fees!