Since the war between Apple and Google really started to heat up when Apple rejected the Google Voice iPhone app, the threat of Federal Trade Commission (FTC) or Department of Justice investigations has loomed over Cupertino. There has been a lot of talk in industry circles in the last year and a half about Apple’s business practices. While red flag words like uncompetitive and closed have been used freely, there seemed to be no lingering threat of governmental investigation. Boy Genius Report is now reporting that an agreement between the FTC and Department of Justice has been completed that allows the FTC to take the lead in a formal investigation of Apple.
While the details of the agreement or scope of the investigation have yet to be revealed, it can be certain they will investigate three main areas. The first is whether Apple’s ban on third party development tools and compilers is anti-competitive. We may have already seen a brief glimpse of Apple’s response to this aspect of the investigation when they recently revised their developer’s agreement. The second area is whether Apple’s ban on Flash is monopolistic and anti-competitive. This thorn in Apple’s side may finally come back to cause real problems. The last area is Apple’s ban on companies like AdMob from serving ads on the iPhone.
Unlike the 1997 FTC and Department of Justice investigation of Microsoft, Apple has a little bit of leverage. While dominant in mindshare and growing quickly everyday, Apple still has a relatively small share of the personal computer and mobile device market. While we hear about how dominant the iPhone is and how the iPad will crush the PC, Apple can still hide behind small overall market shares when the American government comes calling. There is no fear of Apple being broken up and the most they can really fear is a reprimand, a fine, and a directive to change certain business practices. If given the choice, Apple will probably let AdMob in if it means it can keep Adobe out of the iPhone environment. It might be the only concession needed and one it would grudgingly but willingly make.
What do you think of the investigation? Should governments stay out of a private corporation’s business? Are you happy the American government is looking into Apple’s business practices? Let us know what you think.
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