Apple under preliminary antitrust investigation over iPhone, triggered by complaint from Adobe
By Nilay Patel 
posted May 4th 2010 11:53AM
posted May 4th 2010 11:53AM
We'd heard a somewhat sketchy report from the New York Post yesterday that the Department of Justice and the Federal Trade Commission were considering launching an antitrust inquiry into Apple and its various iPhone-related practices, and now it's being confirmed by Reuters and the Wall Street Journal, who say the inquiry was triggered by complaints from Apple's competitors and app developers -- specifically Adobe, according to Bloomberg. The DOJ and FTC are currently deciding which agency will take the lead in any inquiry, but if and when it gets underway there are a few issues at play: the first is obviously Apple's decision to block Flash and other middleware from app development, and the second is Apple's new iAd platform, which comes with its own changes to the iPhone developer agreement that could potentially lock out third-party ad and analytics services like AdMob -- itself under regulatory scrutiny due to the Google acquisition -- and Flurry.We'd also imagine regulators will take a close look at Apple's App Store policies in general, but from a distance looks like the focus is on mobile advertising: both Apple and Google have made aggressive moves into the space in recent months, and both have come under regulatory scrutiny. We'll just have to wait and see how this one plays out -- there's still no official word from either agency on what's happening, and the timeline of any potential investigation and lawsuit will be measured in months and years.
Bring em to JUSTICE boys..
@Mrwirez I bet you the residents of cupertino probably just reported hearing a sonic "f@#k" boom emanating from 1 Infinite Loop and De Anza Blvd
@victor kame-hame-ha
@N900
Didn't know about the iAd part...
Proxy wars are all too evident!
@who said what I didn't know they would be investigated for that too! Didn't they just start iAd???
@Mrwirez
Bout time this happened. I went android, but I wouldn't mind switching to an unrestricted iPhone. Let's hope this goes the right way, and they admit their mobile devices are computers and should be open.
@Mrwirez
I agree, Apple is trying to roll with the big boys of development and they have no clue what they are doing.
@victor
They'd have to have known.
As an Apple detractor, I don't care if they proceed with this or not. People will eventually realize how controlling and authoritarian the company is and how that affects their products... or they won't. I understand the basic argument is that developers will only develop for iPhone if they can't develop cross-platform from the beginning, but as a non-programmer I wonder how that's different from the current game console situation. There's no cross-platform SDK for those.
You can't make people want freedom if they're happy with their (they believe) benevolent dictatorship.
@N900
Ok, I know this one's headed to oblivion, but I'll go ahead and say what I think...
There were hundreds of millions of dollars invested in buying admob with the target of making it the mobile equivalent of google's web ad business.
There comes Apple waltzing with its developer agreements, making other ad services totally handicapped on all iDevices.
We know big G has good government ties.
So did we really expect them to sit back and not protect their investment? How hard is it to pull some strings behind the door. This also avoids any sensationalist Google vs Apple tabloid news.
That's what I think. I could be totally wrong, but definitely not impossible.
@Mrwirez
Next stop? iTunes/The entire modern system for selling music. All of it is controlled completely by a small handful of companies, keeping the prices up even on older music.
@Mrwirez
Yea... hand em their iArse!
@Mrwirez
The DOJ has no case. This will go no where. Apple will just argue that Flash will be available on competing platforms, so how exactly is Apple restricting competition? The fact that other platforms will use Flash and Flash compilers could actually help other companies to compete with Apple.
So, this will be dramatic for a couple of days, as Apple makes a response citing their lack of a monopoly and then it will disappear like the FCC inquiry a couple of years ago.
@chispito
"I wonder how that's different from the current game console situation. There's no cross-platform SDK for those."
Yup, but if one were developed (which is not totally inconceivable) and the XBox dev agreement suddenly said "hmm... no, you're going to have to buy a system from us for two grand if you want to play, even though your cross-compiled apps run just fine", people would be pissed.
@Mrwirez
Justice? For what? Setting developer terms? What a joke!
Adobe looks pitiful on this one.
@N900 I don't matter dawg, they're investigating anything seen as anything seen as anti-competitive
@Mrwirez
Honestly I'm glad they're doing this.
I know Apple should have some control over their products, but I mean a totally closed and controlled environment? I mean if a car company were to do something along the lines of what Apple is doing, kinda like only being able to buy replacement parts out of a certified dealer at a ridiculous price, and only being able to install company approved performance parts, the whole world would speak against it, but no it's not like that once you buy it, it's yours.
I'm serious, people should stop sucking up to Apple and see what's going on. I don't have a problem with Apple products, I have a problem with Apple themselves.
@chispito
Yes, okay, but if there's a developer that makes a cross-platform toolkit which makes it easier to create a game for both the consoles (all big three) and PC's, that should be allowable right? I mean, you don't find Nintendo or Sony or Microsoft block CryEngine 3 because it's using more than just the tools the consolemakers themselves provided for developing games.
That's what Apple seems to be doing now, and that should be investigated.
@Mrwirez Man, some people just hate too much. If you don't like Apple. Don't buy their products. You have many choice here (unlike the choice with Windows)...and STFU.
@PanchoVanilla
Bad example. Many times the installation of these performance parts can void the warranty. Hell, even where you drive the vehicle can void the warranty (smaller Hummers can't be driven off road without voiding the warranty). This is the same as jail-breaking your iPhone, it allows you to do what you want, but voids your warranty.
@chispito
Am I missing something? It's seems to me the vast majority of popular games are infact multi-platform and built using various cross compiling tools like the Unreal Engine.
@Mrwirez don't get too excited. the WSJ is reporting the Post as a source, which is not good. also they are using the same "sources" language that reeks of tabloid trash and doesn't always pan out. There's a lot of 'might' and 'maybe' language. And their article reads like they blantantly copied the Post one.
When we see a definite announcement with some real quotes, then folks can start the high fives and fist pumping
@chispito "People will eventually realize how controlling and authoritarian the company is and how that affects their products..."
You are throwing words like authoritarian and dictatorship like they apply in the software world. You have plenty of choice out there, it's not like you are born in Apple's world.
And, btw, the closed system affects their products very well - provides an awesome experience, which is why I buy them.
@Mrwirez
hate to break up the action for a bit... but i just wanted to commend you all for the awesome insightful conversation you have going on. no flaming, trolling, needless stupidity, etc... just intelligent input.
i upranked you all. have a great day =)
@Peter Church ...you mean just like how Microsoft mentioned that there are choices of browsers other than IE on other platforms.
@Peter Church
you still dont get the second part of antritrust.
the part where is does not state monopoly at all.
but being in a dominant position in one market, and with abusive and predatory ways, using the domainant position to eliminate the competition.
and that is exactly what they did with the smartphones: dominant position, see Apple itself glows over the fact that they revolutionized that industry and ll are now following.
or for the music.
and then go publicly on an all out war against adobe.
hmmm, seems to fit very well the above definition, and warrants at least having it looked at.
@victor
The Microsoft case was completely different. Microsoft had something like 93 percent market share at the time. They were a monopoly. Apple has 25 percent market share in the U.S. And despite the big myth about the lawsuit against Microsoft, it really had nothing to do with “bundling” Internet Explorer. Many people forget this, but the primary reason that Microsoft got sued was due to their threats against computer manufacturers, who were trying to install Netscape by default on the Windows desktop. Here's some links if you don't believe me:
http://www.windowsitpro.com/article/news2/pc-makers-were-threatened-by-microsoft-over-ie-4.aspx
http://news.bbc.co.uk/2/hi/business/14653.stm
The following link is actually the court document outlining the civil action against Microsoft. Notice that the opening paragraphs speak mostly about OEMs and not about the bundling of Internet Explorer.
http://www.justice.gov/atr/cases/f200400/200457.pdf
Sorry to ruin your hopes, but there is actually very little chance Apple is going to be sued for antitrust violations. Apple would have to be stifling Flash development and cross compilers ON OTHER PLATFORMS like Android for them to be considered anticompetitive. Since Flash and cross compilers are coming out for other platforms, Apple hasn't actually done anything to kill competition. Without a monopoly, they don't have that power.
@Mrwirez
For what ?
While we're at it, why in the hell is the ftc wasting time on this, meanwhile I, and many people in this country, can only get 1 freaking cable provider in their area ? Nothing anti competitive about that huh.
@Mrwirez
If they launching an antitrust inquiry into Apple... they blew it.
@dmgabe
http://en.wikipedia.org/wiki/Magnuson%E2%80%93Moss_Warranty_Act
@Mrwirez You guys realize that every gaming console (as in, every single one) has a proprietary SDK, licensing fees, and a strict approval process, right? Adobe's only pissed because they can't make money off of something that isn't theirs.
@skyblaze
Insightful?? Are you serious?? Most of the people up above think government interference in the corporate world usually turns out positively.
Let's be honest, the self-proclaimed experts on Engadget have no insight into antitrust / patent law etc etc
@Peter Church
There is one unique difference. Microsoft allows you do develop windows apps anyway that you can. People even bring up the video game consoles being 'locked down.' But companies develop or utilize various engines for creating those games (Unreal for example). Apple just punked Unreal, Unity, and Adboe along with a whole bunch of others with the redoric... you didn't write it from scratch using your own objective-c or c. BULLSHIT, Apple is targeting Adobe with its press releases, but you are telling me your average developer can write a 3D engine from scratch better than if they had Unreal or Unity?
That is where that piece of antitrust comes into play.
@Peter Church
The problem is that Apple DOES have a controlling share of the smart phone market, and they are using that position to shut out the competition.
That is precisely what anti-trust laws are meant to prevent...
@Charlik I seriously doubt both Reuters AND WSJ would publish this without getting confirmation :)
If the inquiry is focused on determining if Apple is violating the Anti-trust law in a strict sense ( attempting to gain a monopoly position in the market ) it will not come to much at all. If , however, they focus on various fair trade regulations it might become interesting.I'm pretty sure it's only a matter of time before the European commission will starts its own investigation regarding these issues.
@Peter Church
"To be considered anti-competitive, Apple would have to be restricting Flash development on other platforms through the sheer weigh of their monopoly power, which they don't have."
Not true. I refer you to this /. post, which I feel explains the issue of anticompetitive practices perfectly.
http://apple.slashdot.org/comments.pl?sid=1639392&cid=32076936
@Mrwirez
This would make a lot of sense if the iPhone was the only cellphone available on the US market. It's not. Grow up.
@tikigawd
"they are using that position to shut out the competition."
Who do you consider Apple's competition? You're not making much sense. Apple is shutting out Google? Palm? RIM? Microsoft? Those companies are Apple's competitors. How exactly is Apple shutting those guys out? The last time I checked, they all have smartphones either on the market or coming to the market. Apple is restricting what they will allow on THEIR platform, NOT another company's platform.
I think you guys misunderstand the concept of Antitrust.
@Robotica You realize, you can play Madden 2010 on all platforms though.. each system is "permitted" to use EA-Sports.
@Missing Matter It explains nothing. It just points out that there are other anti-competitive practices.
My internal web development team at my company has already began converting anything we were using on the web that was Flash to CSS/Javascript – it's actually not that bad.
@Peter Church Those are their competitors in the smart phone market, but they also have competitors now in the mobile ad business, which they are most certainly shutting out.
@BigJayDogg3 If you read that, it only strengthens my point. It doesn't prevent companies from voiding warranties, only that they describe the actions that can and will. If you read most warranty cards, you will see that there are statements that are written to allow for the max amount of different interpretations covering the broadest number of circumstances possible. The Act was nothing more than a thinly veiled attempt to appease voter while doing nothing to actually prevent the big corporations from doing what they pleased.
@victor Nah, Apple knew this was coming. I imagine they wagered they could win. I, however, do not think they can win, now that they are the #1 cell phone provider in this country. There is absolutely no difference between Apple's policies now and Microsoft's policies (that got them in trouble) with IE back in the day.
Well, there is one difference -- Apple's policies are far more restrictive.
@chispito
So why was MS sued back in the late 90's. Consumers didn't care back then either.
@mr88
iAd hasn't even been released yet, so we'll see how that plays out. There are already rumors that Apple might change their policies with that. Of course, all of this is officially still a big fat rumor.
@Mrwirez Yeah, and EA develops for the iPhone as well. No one is excluded from the App Store, you just have to use Apple's SDK.
@chispito This is a slightly different scenario than game consoles. With game consoles, you can still code with an engine and push it to multiple platforms (Unreal).
@Peter Church
That's true, you're right it hasn't been released yet. I guess it will depend on what the final terms are regarding iAd, but there is definitely the potential for that to have anti-trust implications.
While I don't necessarily support what they're doing with the developer terms for applications, I don't really think it has much merit as far as being anti-trust, but we'll see.
@Mrwirez
Hey I'm mApple mmkay? I don't answer to justice mmkay? Justice answers to me and I suck her lady tits mmkay? That's what Jobs' thinking right now lol. But honestly, they are given the benefit of the doubt til proven guilty. Just be smart and open that system of yours up Apple but again they have the rights to shut people out if they want to. This system of double standards got to go. Open Source FTW (Just don't write stealth hacking codes and present it as an app or we'll kill you)
@tikigawd
I don't think 25% of a subset of all phones qualifies as "dominant". Apple has about 5% share of all phones sold in the U.S. and 25% of smartphones.