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…