The Feds Getting Curious About Apple


Apple may be the media and public’s favorite son, but to the FBI and FTC, Apple is looking more like a red-headed stepchild.

It’s no secret that Apple has seen an incredible turnaround since Steve Jobs took back the CEO chair in more than a decade ago, going from a record-low stock price of $12.75 in June 1997 to its current price around $250. Apple is doing so well, in fact, that the FBI and FTC are collectively looking into at least three anti-trust suits against it.

Is Apple Too Successful?

The FTC has announced that it is looking into allegations that Apple is engaging in anticompetitive practices in the mobile ad space. Omar Hamoui, the CEO of AdMob, a popular mobile ad platform, claimed on his blog that Apple’s new developer terms will force developers to use Apple’s new mobile advertising platform, iAd, and not competitive advertising platforms like AdMob and other offerings. Hamoui went on to say that this constitutes “an artificial [barrier] to competition [that will] hurt users and developers and, in the long run, stall technological progress.”

When reading these allegations, it’s important to remember that AdMob was recently acquired by Google, which makes Android, a mobile OS that is one of the iPhone’s primary competitors. Curiously, the accusation comes only two weeks after the AdMob acquisition was finalized, which makes Hamoui sound less like the expert in mobile advertising that he is and more like a Google mouthpiece.

The criticism is also curious considering the current competitive landscape of the mobile ad industry. For Apple to be anticompetitive, it’s necessary that it have a monopoly which it’s abusing to the detriment of the industry. That Apple even has a monopoly is a hard case to make after today’s announcement that Android-based phones have overtaken iPhones in ad clicks, and that even those two leading platforms still trail significantly to the overall leading platform in ad clicks, Symbian. And Apple doesn’t even have a monopoly over the more general mobile space, with the iPhone holding only a 28 percent market share overall. That the iPhone’s market share is still three times that of Android’s nine percent makes this accusation sound less like a legitimate concern and more like sour grapes.

This most recent announcement comes on the heels of word of two other impending antitrust investigations against Apple. In May, the DOJ and FTC mentioned two other investigations of anticompetitive behavior: one in Apple’s music download business, where it holds 70 percent market share versus Wal-Mart and Amazon’s 12 percent each; and the other over Apple’s recently-announced policy on how iPhone and iPad apps must be built.

FBI Begins Own Investigations

And if that’s not enough to keep Apple busy, the FBI is also looking into the recent bungle that exposed the email addresses of 114,000 iPad owners using a security hole on AT&T’s network. Considering the circumstances, the FBI investigation should land entirely on AT&T’s side of the fence, but the FBI is being understandably tight-lipped about its work, so for now it’s impossible to know for sure. And with the recent leak of an iPhone prototype, Apple probably already has the FBI on speed dial, especially considering the recent rumor that evidence from the case has been taken to an FBI lab. But even if this investigation doesn’t involves Apple at all, it’s still another distraction to the company.

What Will Apple Do?

It’ll be interesting to see how all these investigations play out. With all the big announcements from WWDC, Apple must have anticipated some new legal allegations from anxious competitors. And of course, Apple is no stranger to antitrust litigation, having finished its most recent bout with Psystar only last November. Since Apple has surpassed Microsoft to become the world’s most valuable technology company, there’s no question that Apple has the means to defend itself against these claims, so ultimately, Apple’s decision will boil down to whether the suits are too much of a distraction, whether it thinks it can win, and the company’s general attitude toward being sued.

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