US Regulators Investigate Apple’s Dominance

The Federal Trade Commission is planning to investigate Apple’s business practices to determine whether the company is damaging the growing mobile application market. The company is facing a number of challenges as concerns are raised about company’s dominance:

  • Apple’s rules for application developers bar Google and other companies from selling advertising within iPhone and iPad applications.
  • The US Justice Department is investigating Apple iTune’s position in the digital music market.

It had to happen eventually. By some measures, Apple has overtaken Microsoft to become the world’s largest IT company so there will inevitably be a sharper focus on it’s activities (those poor lawyers must earn money somehow!)

Unlike Microsoft’s position in the OS market, Apple does not have an obvious monopoly. Yet. The iPhone has around 30% of the smartphone market, second only to Blackberry. However, iTunes retains around 75% of the digital music market. Arguably, Apple also has 100% control over the iPhone/iPad mobile application market and are actively preventing entry to competitors.

Whether Apple is engaging in anti-competitive practices will depend on the size of the market, the proportion controlled by Apple, and a judge’s interpretation of the law. As we’ve seen with previous IT cases, that investigation could take months if not years. Even if Apple are “guilty”, there won’t necessarily be an enforceable punishment.

Personally, I doubt anything will come of the investigation and the market will decide whether Apple are being overly arrogant. In the case of the iPhone, Apple should be aware that people are willing to change their phone and OS every few years. But it’s evident that users love Apple products and are willing to overlook any dubious business discretions.

Do you think Apple’s business practices should be investigated? Will the regulator find anything? Will Apple be forced to change? Please vote on the SitePoint home page or leave your comments below…

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  • https://twitter.com/scotthoff scotthoff

    I personally always groan over these FTC investigations.

    I do think that their blocking of applications that would have been developed with Adobe products is wrong.

    In regards to applications and advertising, it seems that they might/should have a right to dictate what they choose to sell in their stores (iTunes) but I would think they shouldn’t be able to block applications with ads if they are coming from other sources.

    As an iTouch user, are there other sources and/or ways to install these apps? Perhaps, it is practically impossible for the “average” user.

  • eltron

    Oh yeah! Good old’e faith in the market! I think it’s crap you have to use iTunes to do anything with an iPad or iPod.

  • krdr

    Two facts:
    1) No 1 producer of smartphones in world are Nokia, 60%
    2) France forbidden use of iTunes as only way to sync or upload music to iPod.

    • http://www.optimalworks.net/ Craig Buckler

      Phones, yes, but not smartphones. Obviously it depends how you make the distinction, but Nokia’s high-end smartphones are not as popular as the iPhone.

      • EastCoast

        Incorrect, you’re getting mixed up between ownership (in which nokia still have a substantial lead worldwide) versus web consumption on mobile devices (apple owners surf a lot more so take a lead) e.g http://www.gartner.com/it/page.jsp?id=1372013

    • https://twitter.com/scotthoff scotthoff

      When I was in Europe, almost everything was Nokia and that ran off of the android system…

  • moneymark

    Unbelievable. When will the madness stop. Why do we continuously try to punish companies for being successful. They created a phone and designed a platform around it. It is not their fault that other companies have been less successful in copying their ideas. One company comes up with a great idea, it becomes popular, and others whine that they can’t leech profits off of the innovator. meh meh meeh

    • Anonymous

      Have you seen the patents Apple has put through? Apple is going out of their way to halt competition. By patenting multi-touch is ridiculous. And Apple in fact isn’t coming up with the great ideas. At least not all of them. They are simply quicker in producing them and patenting them.

  • Matt

    Before people start arguing for Apple, please read the developer’s agreement. It is almost sad that anyone can even argue for Apple. Simply put Apple is only doing what is in Apple’s best interested, and not for the customer. I am happy to see the FTC finally take initiative to put a stop to Apple’s pandering.

    And before you call me a Apple hater. I am a proud owner of a Mac Book Pro, iPod Touch, and iPhone. (At least once a proud owner).

    • php_daemon

      Matt,

      Apple is not a charity organization, of course they are only doing what is in their best interest. That’s what allows them to create the products that they do.

      Many of SP readers are business people and I can bet none of them wish to be investigated by FTC. So some sympathy is only natural.

      And I share that sympathy.

      • recloh

        The concept of a company doing business has been warped!
        Complex business structures invented to “spread” responsibility thin so nobody feels like they’re stealing or lying.
        WAKE UP PEOPLE! – in europe you have companies, that take care of their workers and create good products and have been doing that for years. In north america the concept of doing business is to milk consumers dry and thinking is “how far can we push before someone takes us to court”

    • Darren884

      Hi most people who will argue for Apple in this manner are Apple fan boys and fan girls, not actual developers. Do not take any arguments serious unless the people arguing are developers.

      • https://twitter.com/scotthoff scotthoff

        I think apple forcing people to use apple development software and not Adobe produced or other software is a bunch of off bull. However, let the market dictate whether or not it is reasonable. In other words, if there is enough demand, developers must suck up their provide to meet the the demand with supply.

    • https://twitter.com/scotthoff scotthoff

      I don’t think that it is that people are arguing for “apple” but arguing for capitalism.

      Of course, I thought it was BS when they targeted Microsoft for the anti-trust thing b/c they put their browser on their machines (even if the browser is/was crap.)

      The point of the system is not to break up whomever comes under attack from cry babies who can’t manage to compete without seeking government help to break people up.

      (I do however, think that claiming that they are the only people that can use two touch screens is quite ridiculous.)

  • http://bitdepth.wordpress.com/ mmj

    Note that the stats in the article about smartphone market share are for the U.S. market only.

    Globally, the biggest player is Symbian OS with 44% of smartphones sold in Q1 2010, followed by RIM (Blackberry) at 19%, then Apple who still have a very impressive 15%, just ahead of Android in a market previously dominated by Symbian.

    http://en.wikipedia.org/wiki/Smartphone

  • Gman

    Dude…I mean really? It’s capitalism…the markets will do what they will, just leave it alone and let people do what they want to do! I don’t use Apple products but I’m against anyone forcing companies to change who they are because someone feels left out.