updated 12:45 am EDT, Wed May 12, 2010
Editorial: Apple at no real risk in short term
As the FTC and other government organizations consider whether or not they want to launch an anti-trust probe into Apple's iPhone OS development rules, the market is left wondering what will come of it. For now, the government has remain tight-lipped about its plans and rumors suggest that Apple might be planning to change its SDK to avoid a court battle. But such a move could be premature, especially considering Apple might have little to worry about.
The crux of the federal government's issue with Apple reportedly revolves around the hardware company's decision to force developers to use its own proprietary development software to build apps for iPhone OS. By doing so, it effectively eliminated the ability for developers to create applications for the iPhone or iPad using third-party cross-compilers, like Adobe's Flash CS5. Reports suggest the FTC believes such practices violate anti-trust regulations.
But determining the regulations that Apple might be infringing is extremely difficult. A key component in anti-trust regulation revolves around the outright control of "trade or commerce." I'm hard-pressed to find one instance where Apple is doing that. Yes, the company is ostensibly forcing developers to choose between developing cross-platform applications or an application designed specifically for the iPhone, but developers at least have that choice. Plus, there are still tools available that would allow those developers to bring the same app to other platforms with some extra work. It might be more costly -- $75,000 compared to a relatively inconsequential amount, according to one developer -- but the choice is there. Apple can't necessarily be held accountable for that price difference.
There is also concern over Apple's decision to ban Flash. But all that concern could be unfounded. Flash is an extremely successful Internet standard that is currently employed by a large percentage of Web-based videos and games. By banning Flash from its platform, a solid argument can be made that Apple is in fact putting its own operation in jeopardy by supporting alternative and unproven standards, rather than those that consumers (and companies) have grown accustomed to.
We also can't forget that the US government has a long history of attempting to take on anti-trust issues and time and again, little comes of it.
For example, Microsoft was embroiled in a legal battle with the US government over anti-trust allegations more than 10 years ago. After a long and drawn out battle, it received a slap on the wrist that, in retrospect, did nothing to limit the company's success in the industry. In fact, the European Union is arguably the only governing body that effectively took a bite out of Microsoft with its recent decision to force the software giant to give European Windows users the option to pick their browser of choice when they boot up Windows.
Apple's troubles are nothing like those experienced by Microsoft. And unlike so many other battles that the U.S. government takes on with companies, it doesn't necessarily have an open-and-shut case against Apple. After all, Steve Jobs and Company are taking a risk by eliminating Flash from the platform and forcing developers to use a single development tool. If it's successful, Apple will undoubtedly enjoy the financial benefits of that move. But if it fails, real trouble could await its platform. And even if Apple was forced to acquiesce to some of the government's demands, it's doubtful that it will affect its bottom line all that much.
Simply put, it's a win-win for Apple. The company can either stay the course and control its platform or lose out in a battle with the U.S. government and address concerns that will have little effect on its business. It's a great position to be in.
Analysis by Don Reisinger