Monopoly Comes to the App Store (and We're Not Talking About a Board Game)

Apple's next "magical" and "revolutionary" product? An iLegalDefenseTeam. According to the New York Post, the Department of Justice and Federal Trade Commission are negotiating over which of the two agencies will launch an antitrust inquiry against the company, now the third-largest in America (by market capitalization). A decision could be made within days, but at this point, it's just a rumor—neither the government nor Apple is confirming or denying anything. And even if true, an inquiry won't necessarily result in legal action—it's just a preliminary investigation to determine whether any laws have been broken.

Still, it's bad news for Apple. The reputation of the tight-lipped Cupertino firm has done a 180 in the last couple of years, going from snazzy, innovative upstart to tech bully. Its public badmouthing of Adobe and its Gestapo-like tactics against the finders of a next-generation iPhone are only the latest black marks on the company's record. App developers, music executives, Google engineers, and even a Pulitzer-winning cartoonist have all had opportunities to grumble about Apple's hardline policies at one point or another.

The issue under consideration by government lawyers is a fairly arcane and technical one: does Apple have the right to dictate how outside developers write programs for the App Store? Apple thinks so. A new rule announced in early April mandated that "applications must be originally written" in some variation of the C programming language or JavaScript. That sounds innocuous enough, but in practice this rule kills off a number of "cross-platform compilers," which turn one type of code into another. A lot of programmers like cross-platform compilers because it means they can write a program once, in a language they're familiar with, and then run it on iPhones, Androids, and Palm Pres. Indeed, at one point the newest version of Adobe's Creative Suite prominently featured a cross-platform compiler that translates Flash scripts into iPhone apps. (It was eventually killed due to Apple's new restrictions.)

Apple says that apps built in this way are terrible. As Steve Jobs puts it, cross-platform compilers "produce sub-standard apps and hinder the progress of the platform." Perhaps. But angry developers speculate that the new rule is less about ensuring quality and more about demolishing competition. With more than 85 million iPhones, iPod Touches, and iPads in use, Apple now has a huge base of locked-in consumers. Android, Palm, and other smart-phone makers have far, far fewer, and BlackBerry, though it may have a lot of users, doesn't take the app market very seriously. If a programmer has limited resources and can choose only one platform, the choice is simple—going with Apple provides access to way more credit cards. But if a decent cross-platform compiler takes hold, much of that locked-in advantage disappears. Apple wants to "tie developers down to their platform, and restrict their options to make it difficult for developers to target other platforms," says an Adobe product manager.

It's all very reminiscent of the government's successful antitrust suit against Microsoft in the late 1990s. Back then, the government argued that Microsoft's huge user base was a barrier to potential competitors; moreover, the company used its monopoly power to squash competitors, like Netscape. Now Apple is surely hoping that government lawyers don't read too much into the parallels between Microsoft v. Netscape and Apple v. Adobe. Maybe a few free iPads will help sway the decision.