When Does Apple Become Anticompetitive?

jobs_godfatherWhen the Palm Pre/iTunes Syncing fiasco started, especially when Apple (s aapl) blocked the hack Palm was using and people started screaming about Apple’s monopolistic practices, I pretty much shrugged the whole thing off. In Apple’s eyes, iTunes exists for one reason, and one reason only: to sync with iPods and iPhones; Apple is under no obligation to open its software to Palm (s palm) any more than Epson is under any obligation to make their scanner software work with Canon’s (s caj).

With the App Store, it’s a little different. A year ago, Steve Jobs stood on a stage and painted a picture of Apple as benevolent Guardian of Light. The types of software Apple would disallow seemed like a no brainer: porn, malicious apps, bandwidth hogs, etc. Now, I’m starting to think that scene could have been from a remake of the Godfather.

A young software developer nominated by his peers to ask this request is ushered into the Godfather’s study. A tall, unshaven man is sitting behind a desk petting a cat. Two men are off in the shadows.

“Please Godfather,” the young man pleads. “We will do anything to be able to develop for the iPhone. ANYTHING.”

The Godfather sighs, puts the cat down and stands up, brushing cat hairs from his black mock turtleneck. His sons, Phil and Tim, come out of the shadows. He walks over to the trembling developer, places his arm around his shoulders and says, “I will grant you your request. In return, you will let me dip my beak into your enterprise — just a little, say 30 percent. You will also agree to make no apps with that funny business. No nudity. Nothing obscene. We are not the monsters the media paints us to be. We run a family business. However, I must caution: Some day, and that day may never come, I may need to disallow one of your apps.”

A year passes, and the young software developer is now in a basement, chained to a chair under a single, exposed light. Blood is running down his face and the Godfather is wearing a stained apron over his turtleneck and jeans.

“I let you run your own little enterprise, and this is how you repay me? You attack my own business and try to cut into my profits — cut into the alliances I have created with the other Families, the Families that are the transport for our commerce. Why do you disrespect me? There can be no competition to the apps that ship on the iPhone. No apps to download podcasts. No apps to check your mail. No apps to surf the Internet. We already give you those apps.”

I have an issue with Apple disallowing apps because they “duplicate existing functionality” on the iPhone. Granted, there’s a line. As much as I’d love a Gmail app that handled conversation threading, I can see where there’d be confusion with it not being the default mail client. For the most part though, I think if someone searches for, and downloads, an app, there’s not going to be much confusion on what it does.

It seems like we rarely go through a month where there’s not an app rejection worthy of a facepalm. Podcaster got refused because it had functionality Apple hadn’t released yet. Eucalyptus got refused because a reviewer was able to use it to download the Kama Sutra (although you can make a point it duplicated existing functionality since Apple thoughtfully provided a browser I can use to view all types of adult content). Now, Google Voice got refused because AT&T (s att) requested it. With the not-so-subtle attacks against AT&T at WWDC, I’m amazed Apple caved to AT&T and didn’t just start laughing.

Developers are starting to shy away from the platform — it may not be an exodus, but the natives are definitely restless. While he’s much maligned for it, Ballmer was right: it’s all about developers, developers, developers. This is turning into a PR nightmare for Apple, which is hard to imagine, given PR is Apple’s strong point.

I’m also worried if they continue refusing apps because it competes against Apple (or, rather, “duplicates existing functionality”) that may begin to start an antitrust movement. It’s not illegal for a company to be a monopoly; it is illegal to use that monopoly to stifle competition. I fear Apple is getting dangerously close to that point with the heavy hand they have on the App Store.