Apple faces federal antitrust inquiry in light of its anti-Flash stance

Mon, May 3, 2010

Legal, News

According to a recent report in the New York Post, Apple for the first time may find itself on the wrong side of a federal anti-trust investigation. Citing a person familiar with the matter, the paper reports that the Department of Justice and the Federal Trade Commission are currently in negotiations to figure out which regulatory body will initiate an anti-trust inquiry into Apple in the wake of its updated developer agreement which requires developers who write apps for Apple’s mobile products to use Apple’s own development tools.

An inquiry, however, doesn’t mean that Apple is in dire straights just yet, but is rather the first step taken by the government to determine if a full-fledged investigation is necessary. Once a situation is deemed worthy of an investigation, “the agency handling the matter would issue Apple a subpoena seeking information about the policy.”

Following that, a decision would then have to be made about whether or not the case is worth pursuing, and if so, we would then have to wait for a trial to commence and a verdict to be rendered. In other words, Apple doesn’t have anything to be afraid of just yet.

We should, however, point out that marketshare and “control” over a market is an integral part of any anti-trust investigation. Though decidedly unscientific, AdMob’s most recent compilation of data indicates that Apple’s share of the smartphone market here in the US hovers around 39% as Android continues to increase its own share. For as much as Apple would like to see Android disappear, they might actually have a vested interest in keeping it around.

Last week, Apple CEO Steve Jobs outlined a number of reasons explaining why Apple has no plans to support Flash on the iPhone in any capacity. Flash, Jobs wrote, is chock full of reliability, security, and performance issues. Jobs went on to say that Flash has not performed well on any mobile device, that it sucks up battery life, and in what Jobs labeled the most important reason behind Apple’s stance, he explained that Flash, as a proprietary system built on top of the iPhone platform, puts Apple at the mercy of Adobe when it comes to developers churning out apps that take advantage of new features Apple decides to implement on the iPhone.

On the same day that Jobs’ letter was published, Adobe CEO Shantanu Narayen attempted to rebut many of Jobs’ claims in a video interview with the WSJ.

And so now, this tech-based battle of “he said – she said” has attracted the interest of federal regulators. We doubt anything is gonna come of it given the rise and continued success of Android, but it’ll be interesting to see how this all plays out.


, , ,

2 Comments For This Post

  1. CapnVan Says:

    Indeed – *way* too early to be of concern for Apple.

    If nothing else, haven’t most gadget sites, and Adobe themselves, been arguing for several years that the lack of Flash on iPhone OS is a competitive *disadvantage*?

    That would make for an interesting antitrust suit – “They’ve been shooting themselves in the foot, your Honor, and it’s been killing the market!”

  2. medlaw Says:

    Word that Apple is building a competing software to flash is disconcerting. Another angle is whether Apple’s motivation to keep flash off its iPhone and iPad in order to drive sales to its iTunes store. It all boils down to whether iPhone has market power. It shall be interesting to see how the DOJ comes down on this one.

eXTReMe Tracker