Yes, life isn't fair, but still.
It's short for MPegaudio layer 3. MPEG is short for "Moving Pictures Experts Group."
As for the media, Apple has 75%+ of the digital audio player market. Microsoft is in the uncomfortable position of trying to break into a market dominated by someone else, who has learned from the screwings that they have received from M$ in the past. That makes for an interesting story - especially given the fact that the iPod's popularity has killed off at *least* three good-sized companies who were competing with it (and failing).