...this is about the biggest online music store tying one product to another such that the only portable music player you could use was the ipod.
The iPod was the only player engineered to uphold the antipiracy protections demanded by the record labels when purchasing from iTunes. Could someone else have joined a Fairplay coalition? Of course, but Apple was under no obligation to license that technology. There were many many alternatives to players and the store anyway, so the iPod was far from a monopoly. RealNetworks cracked Fairplay several times which was a breach of Apple's contract with the labels and Apple had to engage in electronic warfare with Real to keep them from cracking the encryption Apple guaranteed. The labels didn't want any decrypted files leaking into the wild (HA!) and anything which occurred outside of Apple's technology loop was treated like a renegade hacker.
Palm started copying Apple's USB port IDs to allow their devices to sync with iTunes. After some cat and mouse there, even the USB Implementers Forum sided with Apple and told Palm they were in the wrong for copying Apple's USB codes. If Palm or Real or anyone else doesn't like Apple not giving them free access to what they've built, then build something better. Go ahead and try. Nobody did. Apple didn't hack its way into acceptance but a lot of others were trying to hack their way into Apple's system.
Ballmer himself called the iPod a piracy platform. Even then, the number of music stores which worked with players competing with the iPod were numerous. Microsoft's DRM'd WMA format was offered by AOL MusicNow, Yahoo! Music Unlimited, Spiralfrog, MTV URGE, MSN Music, Musicmatch Jukebox, Wal-Mart Music Downloads, Ruckus Network, PassAlong Networks, Rhapsody, iMesh and BearShare. The iTunes Store was far from a monopoly.
The competing Plays For Sure music players were made by Archos, Cingular, Cowon, Creative Labs, Denon, Digitrex, D-Link, Ericsson, Insignia, iriver, Kyocera, Motorola, Nokia, Palm, Pioneer, Philips, Roku, RCA, Samsung, SanDisk, Sonos, Sony and Toshiba. The iPod was severely outnumbered. The competition was huge and didn't fail until 2007 when Microsoft brought out the Zune and left everyone flapping in the breeze... except Apple.
All of these music players could not play non-Microsoft encoding formats by contract, including MP3 initially until a huge backlash forced Microsoft to allow it. There's your antitrust target. A court case forced Microsoft to soften that later, but it was too late by then. Apple was under no obligation to license their ecosystem to other manufacturers just as Microsoft would not license WMA to Apple (don't know if they tried). That's not illegal. And why would they join with these people anyway? Apple just came out of an era where they let other manufacturers determine the success of their products by selectively supporting what worked for them, not Apple. Apple started selling their own software, invented or purchased, to replace what everyone else was failing at and they did pretty well. What is illegal is to disallow competition by force of presence like Microsoft did to the Plays For Sure partners.
Any player that supported "Plays For Sure" could also support AAC if they wanted, there was no restriction that forced them to only play "Plays For Sure" media just like there was no restriction that forced iPods to only play Fairplay media.
The Microsoft Plays For Sure license prohibited makers of portable devices compatible with WMA from using non-Microsoft audio encoding formats. If player manufacturers wanted to get on the Microsoft Gravy Train that was certain to flatten this iPod nonsense, they were not allowed to play AAC files. Even iRiver had to abandon Ogg Vorbis to get Plays For Sure certification. Does that help make you a little mad at Ballmer?
I totally get why everyone believes the iPod and iTunes were made to lock everyone else out. Problem is, all the other manufacturers were doing the same thing and iTunes did not hold the majority position at that time. What killed everyone else was not monopolistic force, it was constant improvement of the iPod product category in ways the competition couldn't follow.
The competitors against the iPod were also competing with each other and they created a clumsy, fragmented presence which looked pretty shitty against the fit and finish of the iPod ecosystem. In the face of almost no viable competition, for years, iPod capabilities and offerings increased several times a year without increasing prices to match.
If you look it up, you'll find Ballmer and the record labels were dreaming to sell time bomb singles for $2.50 apiece once the iPod was swept away. You may have also forgotten that for several years before Apple worked out the deal with the music companies, there were companies selling songs online including the record labels themselves with their own stores.
It's easy to sit back and say Apple engineered this monopolistic presence and that's how they won the war. Facts of history say something different. Apple won the war by making an increasingly superior product which satisfied everyone except whoever posts on Slashdot, and that number is in the many millions.
...no other software was every able to do that
Like what? Really, I don't know. WinAmp? YamiPod? Foobar2K? MediaChest? How are they doing from 2005? Or are you talking more present day things, well out of the time frame of the complaint against Apple? doubleTwist? Fidelia? So, I don't know of a real competitor to iTunes when it comes to meta tagging and arranging music and video. There's always Rdio and Spotify to compete with where it's really going - streaming and the perpetual pay model. Have you tried the Beats Music service? Dr. Dre and his bunch made a really nice system there and Apple purchasing them confirms it.