ITWire

It was an obvious move from Apple in terms of what users want, I said back in February that a You Tube-compatible flash video player in the Apple TV could be enough to win over a massive slice on the non-tech savvy market. Instead YouTube is switching it's video format to Apple TV-friendly H.264. Still, I thought YouTube's legal wranglings might have scared Apple away. It won't be long before the copyright police try to drag Apple into one of the YouTube lawsuits, but if they were to take on Google and Apple they might find they've bitten off more than they can chew.

The bigger worry for Jobs is creating bad blood with the major content providers currently at war with YouTube, such as Viacom. Striking content deals for the various iTunes stores around the world (like Australia's sub-standard offering) could become even tricker if content providers see Apple in bed with the enemy.

The iTunes store finally faces some serious competition for eyeballs in the form of services such as Joost, although the Apple TV has proven so easy to hack that people are already running Joost on it. Just like the iPod, the Apple TV is merely a vehicle for selling stuff at the iTunes store. Thanks to iTunes' domination of the online content market, Jobs thinks he can dictate terms to the content providers. So far he's pulled it off, such as with the introduction DRM-free music, but will his luck hold out? Getting into bed with YouTube could be going too far.