A Possible Apple Antitrust Inquiry? Nothing to See Here…
Recent changes to Apple’s (AAPL) iPhone developer agreement, specifically those prohibiting the use of cross-compilers like Adobe’s Packager for iPhone, may result in some unwanted regulatory scrutiny for Apple. The New York Post claims the Department of Justice and the Federal Trade Commission are considering an inquiry to determine whether Apple is unfairly controlling development of iPhone and iPad apps. The concern here is that Apple’s new policy might stifle competition by preventing developers from using tools that could easily make their apps available on multiple platforms, not just the iPhone alone. Devs who want to write apps for the iPhone must write them originally for the platform in Objective-C, C, C++, or JavaScript as executed by the iPhone OS WebKit engine. They can’t, for example, build a Flash-based app and run it through Adobe’s Packager, which outputs the code in an iPhone-friendly format.
Why might that constitute an unfair business practice in the eyes of the government? Adobe and other critics claim that it turns the iPhone OS into a walled garden, tethering developers to Apple’s platform and making it difficult for them to target others.
Is that a viable antitrust argument? If either the DOJ or FTC does launch an inquiry — and it’s not at all clear that they will — does Apple have anything to worry about? That depends on the answers to two questions, Harry First, the Charles L. Denison Professor of Law at New York University School of Law, told me.
“The first question that needs to be answered is ‘does Apple have monopoly power in this market,’” First explained. “Is the iPhone platform really that dominant? The second is whether these new restrictions of Apple’s so hurt competing platforms that they could be considered maintenance of monopoly power. If Apple’s new SDK agreement effectively forces developers to write only for the iPhone platform, can that be proven to adversely affect inter-platform competition?”
Given thriving competition in the smartphone market and the number of cross-platform apps already available, the answers to both those questions would seem to be no. Add to this, Apple’s pro-competitive justifications for its behavior as laid out by CEO Steve Jobs last week (“a third party layer of software come between the platform and the developer [and] ultimately results in sub-standard apps.”), and there doesn’t appear to be much here — if anything.
