I speculate they needed a DRM-capable container in case the rightsholders demanded DRM when iTunes started selling lossless audio files.

ALAC did show up at the same time as the first AirPort Express in 2004, and it is the format used to transport audio over AirPlay (first called AirTunes). That may have been the original impetus.

I was under the impression it was an AAC project that didn't get adoption outside the Apple ecosystem, not that it was Apple created. Do you know whether Apple was the submitter to ISO?

It sounds like when you say "an AAC project", you're thinking of MPEG-4 ALS [1], which was the codec chosen by MPEG for lossless audio in the mid-2000s and last updated in 2009. Despite ALS being blessed by MPEG, it never achieved much acceptance in the market. Its most direct ancestor was LPAC [2], developed at the Technical University of Berlin; but ALS included improvements from NTT Communication Science Laboratories and RealNetworks [3].

Apple developed Apple Lossless ("ALAC"), a different, unrelated [4] format, which was fairly similar to FLAC, but different in some minor ways (paraphrasing the FLAC dev's own words [4]).

[1] https://en.wikipedia.org/wiki/Audio_Lossless_Coding [2] https://en.wikipedia.org/wiki/Lossless_predictive_audio_comp... [3] http://elvera.nue.tu-berlin.de/files/0737Liebchen2005.pdf [4] https://hydrogenaud.io/index.php/topic,32111.msg279843.html#...