Technology

Antitrust Probe into Apple iPhone & iPad Apps "Makes Little Sense"

| by Reason Foundation

By Tim Cavanaugh

The Justice Department and the Federal Trade Commission are in the preliminary stages of an antitrust investigation of Apple Inc. regarding app development for the iPhone.

The two agencies divide up antitrust prosecutions. The Wall Street Journal's Thomas Catan and Yukari Iwatani Kane report:

People familiar with the matter said the latest interest from regulators was triggered by complaints from Apple competitors and application developers over the terms of company's agreement with iPhone and iPad app developers...

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Apple recently revised the terms to forbid developers from using software tools other than Apple's tools to build their programs. It also banned apps from transmitting certain technical iPhone data to third parties.

Adobe Systems Inc., whose software can't be used by developers under the revised agreement, has recently escalated a public-relations war over the issue. An Adobe spokeswoman declined to comment.

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.

As an Apple apostate since the late 1990s and a strong believer in the limitations of the company's cult, I am confident that in ten years CEO John Sculley III will be announcing a new plan to take Apple's share of the smartphone market from 3 percent to 3.1 percent. In the meantime, the antitrust investigation makes very little sense. Apple has a dominant position in smartphone apps, but it only controls about a fourth of the smartphone market. The playing field for app developers could not be more level, nor could developers realistically expect to enjoy more options; competitive devices are available with Verizon, T-Mobile, Sprint, and other carriers, all of which have been scientifically proven to be (slightly) less evil than iPhone carrier AT&T.

You might make the case that developing an app for the Droid is a lot less attractive than developing one for the iPhone. But that's a result of Apple's immense first-mover advantage and the widely recognized excellence of its product. This raises the same question that arises when people complain (every damn day) about all the outrages Facebook has perpetrated against them, or warn that the Google Books agreement will turn Planet Earth into an info-dictatorship: At what point does something you invented become everybody's property?

There is a precedent for this question in a generally accepted area of government-mandated monopolies: patent and copyright law. Assuming for the sake of argument that antitrust laws should exist in the first place, shouldn't there at least be a reasonable period of exploitation for the inventor? The iPhone has yet to celebrate its third birthday. Even if it had 100 percent of the app market, why should Apple not be free to call the shots in app development?

Related: Last year, Apple kiboshed the Google Voice deal, missing a chance to fix the iPhone's biggest weakness: its subpar performance as an actual phone. (Allowing inventors tight control of a product, after all, entails the possibility that they'll screw it up.) Peter Suderman looked at the Federal Communications Commission's hysterical reaction.