Recently Apple announced its newest iPhone, iPod Touch, and iPad operating system and software development kit. With the new development kit, however, comes new developer restrictions. The restriction that is causing the most controversy relates to what programming language the developer must use to develop the application. In this article, the writer alludes to the fact that Adobe is getting ready to sue Apple over these restrictions. So how does this restriction affect Adobe and what cause of action could it possibly have?
I’ll start with the technical aspects of issue. Companies like Apple and Google, when creating operating systems, create library calls that developers can use to access the underlying system hardware. They act as an intermediary between the hardware and the applications. For example, they can provide library calls that allow a developer to access the GPS, accelerometer or keyboard. The languages that are used for iPhone development are C, C++, and Objective C. These languages are not the most simple languages to use and all have a very steep learning curve. This is where Adobe and some others come in. Adobe created a type of application called Flash that is used in many web applications, including YouTube. Flash applications are developed using Action Script, a programming language that is much less technical to use than the C type languages. Adobe has added a feature to their Flash development suite that allows a developer to create a Flash application in Action Script and export it to an iPhone application. This dramatically lowers the learning curve necessary for people to develop iPhone applications. The new restriction by Apple will prevent applications developed using tools like Adobe’s from being submitted to Apple’s App Store. In its defense, Apple’s CEO Steve Jobs pointed to this article to explain the business and technical reasons why it added the new restrictions. The arguments center around the quality of applications created this way and the effect that these applications would have on Apple’s ability to add new features.
So now we know how this restriction affects Adobe, but what legal action could it have against Apple? I don’t really see any. Commenters on the article seem to believe that there will be some sort of antitrust action. From what I know of antitrust law, I don’t think Adobe has much of a claim. The first determination that needs to be made when looking at an antitrust claim is what is the relevant market. The market that Adobe’s application is trying to compete in is the mobile application development environment (tools that developers use to create new applications). Apple doesn’t even come close to having a monopoly in that market. If Adobe’s plan is suing Apple for antitrust violations, it has a rough road ahead because Apple’s monopoly doesn’t affect its business.
But Adobe doesn’t have to be the one to bring suit. Antitrust claims can be brought by the U.S. Government via the Department of Justice or the Federal Trade Commission. While Apple may not have a monopoly of development environments, Apple may have a monopoly over the mobile application store market. According to engadget, Apple’s App Store accounts for 99.4% of all mobile application sales. If I recall correctly, that represents a monopoly in all U.S. jurisdictions. However, having a monopoly is not per se illegal if it is obtained by using good business acumen. The illegality comes in when a company with a monopoly uses it as leverage to expand its monopoly or to prevent competition.
Do these restrictions either expand Apple’s App Store monopoly or prevent competition? They most definitely do both, and the article Steve Jobs pointed to as a defense of his new restrictions admits as much. Imagine that you are a mobile device developer. You have to determine what mobile platform you want to write your application for. Apple’s platform constitutes 99.4% of all sales so the smart money is on you developing your application for Apple. When the application is finished, you have a choice: you can re-write your application for other platforms or you can begin work on another Apple application. Your time would probably be better spent creating another Apple application because it has most of the market. However, if you could write your application in one language that runs on multiple platforms, to the exclusion of Apple, and then export that application to Apple’s platform using an automated tool, you could put your one application, written in one language, in multiple market places with minimal effort. Apple’s restrictions serve to leverage its monopoly to reduce both the developer and application pools for other mobile platforms.
The U.S. Government could bring an antitrust claim against Apple. Previously, I have discussed other antitrust issues with regards to Apple’s App Store and its Developer Agreement. Adobe’s complaining might be enough of an incentive for the DOJ or FTC to take action, most likely trying to force Apple to open up its App Store and eliminate the developer restrictions. Will this happen? I don’t know, but I do know that the Government is in the best position to take on Apple and its anti-competitive practices. Apple’s closed system was never a big deal when it only controlled a small percentage of the market, but now that it has a monopoly over mobile application sales, it cannot continue to act in the same way. Apple’s closed system allowed it to control exactly how its devices were created and helped it to achieve the success it now enjoys. But now that success may end up costing it the control that it holds so dear. Like a great philosopher once said, “Hold on loosely, but don’t let go. If you cling too tight babe, you’re gonna lose control.” Truer words have never been spoken.