You're allowed to have a monopoly, you're not allowed to abuse it. If Apple ordered mp3hardware stores to stop selling other brands or Apple would raise it prizes, that would be abuse.
(b) Apple has about 2/3 of the paid music download market and 3/4 of the MP3 player market. They block other MP3 players from talking to iTunes, and other desktop software from talking to the iPod. I think that's probably abuse: they're using iTunes's dominant market position to protect the iPod's dominant market position, and vice versa.
Like the commenter above said, there is nothing illegal with being a monopoly.