I think Palm knew good and well this would happen. It might be a trap for an antitrust lawsuit/investigation against apple for uncompetitive practices (which this seems to be a clear-cut case of).
I find the comparison between iTunes and Windows says more about the complainant than it does about Apple. Microsoft's monopoly prevented the development of competing technologies and enabled Microsoft to shut down entire sectors of the industry. Having the market's favorite music player doesn't prevent Amazon from selling music or Last.fm from streaming music or Microsoft from distributing Zunes.
Fixed that for you.