Federal authorities are widely believed to be considering an antitrust inquiry of some kind into Apple’s practices regarding development of apps for the iPhone and iPad. According to a Bloomberg report quoting sources “familiar with the matter,” a complaint about the company was originally filed by Adobe, whose Flash software has been blocked by Apple from running on either device (the WSJ and New York Times and Reuters have similar reports). The Federal Trade Commission and the Justice Department have reportedly met to discuss a possible inquiry into Apple’s conduct, but it isn’t clear whether one will proceed, or which branch of government will take charge of the investigation if one is actually begun.
If true, this marks a dramatic escalation of a battle that has been going on between Apple and the Flash maker for several years. Apple founder and CEO Steve Jobs has repeatedly criticized the company and its technology for being buggy, a resource hog and insufficiently advanced for his liking, and Apple recently changed its developer agreement to specifically block a workaround that Adobe had come up with for getting Flash to run on the iPhone OS. Jobs’ latest salvo was a long letter posted to the Apple website detailing the reasons why the company has no interest in allowing Flash on its devices, a letter that sparked a furious debate among Adobe supporters and Apple fans. Federal authorities are also apparently interested in how the company’s restrictions on apps could benefit its recently previewed iAd application advertising service.
Although it’s impossible to know what the eventual outcome of a federal investigation into Apple’s behavior might be — if in fact one even occurs — here’s a sample of what some observers are saying about the situation. Reuters quotes former Federal Trade Commission policy director David Balto as saying of Apple:
What they’re doing is clearly anticompetitive…They want one superhighway and they’re the tollkeeper on that superhighway.
The Wall Street Journal says one potential trigger for an investigation is a concern that changes to the Apple developer agreement could harm advertisers on those devices, and benefit Apple:
Apple’s new language forbidding apps from transmitting analytical data could prevent ad networks from being able to effectively target ads, potentially giving Apple’s new iAd mobile-advertising service an edge, executives at ad networks say. One wireless-advertising executive said he was contacted a few weeks ago by an official from the FTC who wanted to talk about how the mobile-ad industry works, the Apple developer agreement and how it could affect the executive’s business.
The WSJ also interviewed the former deputy director of the Bureau of Competition at the Federal Trade Commission, Kenneth Glazer, about the chances of an investigation:
Glazer indicated that, as the smart-phone market stands now, regulators could have a difficult time proving monopolistic practices because Apple’s share of that market, though growing, remains below a certain threshold. He said regulators might avoid that problem if Apple begins dominating the iPhone advertising market, although the mobile-ad market in general is so young that many questions remain.
John Gruber, who writes the widely followed Apple blog Daring Fireball and is close to the company, questions a report by one developer that said the controls placed on him by Apple were unreasonable:
This guy isn’t a federal regulator, but he seems to be arguing that he has a right to use Flash, or at least some sort of cross-platform solution, to develop for iPhone OS. Why not write web apps, then?
ZDNet’s editor-in-chief, Larry Dignan, also questions whether regulators needed to get involved in what is essentially a trade dispute between two equal parties:
Apple simply doesn’t have the world domination market share in the iPhone or iPad for regulators to give a hoot…Call me crazy, but I’m not sure I want the Feds playing around with SDKs. It smells like micromanagement to me and that’s dangerous.
Fortune magazine, meanwhile, looks back at the antitrust case against Microsoft, and how it ultimately failed, and what that means for a potential case against Apple:
To win a Sherman Antitrust case against Apple, the government would have to prove both that Apple’s market share constitutes a monopoly — itself not illegal — and that it has abused that monopoly power in ways that damage its competition.
And Nilay Patel, a lawyer who writes for Engadget, notes that even if the FTC or Justice Department does launch an inquiry, the result could take years to unfold:
Assuming the report is true, an inquiry would still just be the very first step — whichever agency is ultimately put in charge would then have to launch a formal investigation and then finally file and win a lawsuit for any changes to occur. That’s a timeframe measured in months, if not years.