France are considering opening up iTunes to other devices. At present iTunes downloads are in Apple's proprietary format. Originally this was important in securing appropriate digital rights management to effectively establish the legal downloads market. Nowadays that isn't an issue as other formats provide the same thing.
The problem is that iPods only play Apple's format or the open mp3 standard. They do not play standards that are supported, for instance, by Microsoft. Other players do this but cannot play using Apple's standard.
The French law will make it legal to utilise software to convert songs from one format to another. This would allow users to purchase songs from iTunes and play them on devices other than iPods or with programs other than iTunes. Thus, the link between Apple's dominant share of music purchases and players would be broken.
There are suggestions that Apple will shut down its iTunes store in France in response to this. It may have to if its agreements with copyright holders cannot be amended. But if it had a choice would this really harm Apple. After all, it would make the iTunes music store more attractive and there are plenty of substitutes for its iPod anyway.
Of course, the alternative to the French approach would be for Apple to open up iPod to alternative formats. This would allow consumers to purchase music from alternative sites. This would also likely make it easier for competition to trancend national boundaries -- something it isn't doing today (see this article for a discussion). From where I sit, that is where the big gains to competition lie.