Apple's rise to the top of the tech world has been marked just as much by controversy as it has by success in the mobile market. The company's desire for control has made it a target for critics, and potentially for regulators.
Apple attracted the spotlight when it implemented new rules that essentially killed Adobe's iPhone/iPad ambitions by making it clear that apps developed using Adobe's Packager for iPhone tool contained in the newest version Flash Professional would not make it into the App Store. And its dislike for Flash was made abundantly clear when the iPad was unveiled, sans Flash support.
Despite the fact that Apple did receive criticism for its position vis-à-vis Flash, Flash isn't the easiest victim to sympathize with given how unpopular it is in many camps.
But the new Apple policy announced on Monday may be the most problematic yet. This policy deals with Section 3.3.9 of Apple’s developer agreement, which now reads:
You and Your Applications may not collect, use, or disclose to any third party, user or device data without prior user consent, and then only under the following conditions:
- The collection, use or disclosure is necessary in order to provide a service or function that is directly relevant to the use of the Application. For example, without Apple’s prior written consent, You may not use third party analytics software in Your Application to collect and send device data to a third party for aggregation, processing, or analysis.
- The collection, use or disclosure is for the purpose of serving advertising to Your Application; is provided to an independent advertising service provider whose primary business is serving mobile ads (for example, an advertising service provider owned by or affiliated with a developer or distributor of mobile devices, mobile operating systems or development environments other than Apple would not qualify as independent); and the disclosure is limited to UDID, user location data, and other data specifically designated by Apple as available for advertising purposes.
The implication of this language is quite obvious: if you're an iPhone/iPad developer, you cannot monetize your apps using Google-owned mobile advertising network, AdMob.
Unless Apple has a change of heart, AdMob and parent Google join Adobe as the latest companies to be expelled from the Apple ecosystem by emperor decree. AdMob/Google and Adobe are, of course, not small businesses, and they're arguably some of Apple's most capable competitors. Which begs the question: is Apple really this dumb?
While there's a strong argument to be made that Apple should have the right to set the terms developers have to abide by if they want to develop for the iPhone and iPad, Apple isn't creating much plausible deniability here. It is clearly trying to keep specific companies from playing a part in its ecosystem. Even for those of us who think Apple should be allowed to make bad strategic decisions (and eventually pay the price for them), there can be little doubt that Apple is serving up a juicy steak for hungry antitrust regulators, as my colleague wrote in her post yesterday.
Given Apple's 'gloves off' approach to keeping its competitors from participating in the iPhone/iPad economy, it seems that government action is a 'when, not if' matter. Apple's behavior, whether legal or not, meets the established definition of 'anticompetitive', as established by bureacrats, and regulators must certainly recognize that if they don't take action to reign it in, many of the arguments they've made over the years in other antitrust cases will look downright hypocritical and incredulous.
Clearly, Apple doesn't think it can become the next Microsoft. Perhaps it's the result of pure arrogance, or maybe naivety. Or perhaps it's a result of the fact that Apple has played the role of underdog for so long. Whatever the case, Steve Jobs is on the brink of becoming the next Bill Gates -- something he probably won't relish.
It didn't have to be this way. While Apple would have always faced a certain level of scrutiny given its high-profile position in the mobile market, it has enough power and influence within its ecosystem to allow companies like Adobe and Google to compete while still maintaining significant advantages that would have made the 'competition' academic in nature. In short, Apple could have permitted companies like Adobe and Google to have a go at it, but still kept the control it has today.
Interestingly, by competing smarter, Apple probably would have been able to keep regulators at bay. Not only would the company be better off for it, consumers would be better off for it too.
Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.
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9:40AM on 10th June 2010
Apple just bout a mobile advertising company, of course they're going to force people to use that rather than competiting products. That the new product hasn't been released yet is by the by.
Apple is like a small Eastern Block company clamering for power.
10:00AM on 10th June 2010
Hi Patricio,
As the developer of a free app who relies on advertising for revenue, you can imagine I am not too happy about this, not the least about the new level of uncertainty it brings to our business.
But I am wondering whether the critics are not paying the highest compliment to Apple by treating the iPad/iPhone as a public good.
Isn't anticompetitive behavior only illegal or possible when linked to a (near-)monopoly?
In other words, with only a few percent maket share, isn't Apple allowed to write whatever they want in their developer agreement, including banning specific services offered by specific companies?
Just wondering. It is always a pleasure to read your posts.
Thank you,
Benoit
10:29AM on 10th June 2010
I don't think this is dumb. I think this is a great way to manipulate the market for success. I doubt its a long term strategy but it will allow iAds to eat the lions share of its own market and become a stronger competitior in the new mobile ad space - faster.
11:23AM on 10th June 2010
I don't get why people feel this is an "Anti-Competitive" move on Apple's part. You can be sure that if any anti-trust action is taken against Apple's developer agreement policy that A) Apple will receive a lot of support from other companies B) Will either fail, or be met up utter up roar.
Why? Because the likes of Microsoft, Sony, Nintendo etc. impose similar and often far stricter rules on their developers than Apple does to it's.
Getting fed up of all the attention that Apple's policies are getting purely because they are Apple. If people bother to do their research they would see that this is very similar to position many other platform owners have taken.
12:16PM on 10th June 2010
Frankly, the more "protectionist" Apple becomes the happier I am. Look at the mess that is Windows - a mish mash of third party programs. When the Editor of PC Pro writes a column that is headed "Sick and tired of Windows" you know something is seriously wrong. Equally, having previously suffered Windows Mobile OS you encounter the same disjointed problems. This is not a Mac is better than Windows rant. This is about the fact that because Apple control the hardware and most of the software on its platforms everything just works (beautifully). Apple has simply tapped into the market that says 'I don't care about the technical specifications - is it easy to use and does it work?' As someone commented recently, whilst competitors seem desperate to try and reinvent the wheel, Apple just makes the wheel better. This is what makes Apple (Mac / iPhone / iPad) a success...it just works, and if that means preventing any third party "system", in any form, from risking this then that is not a "dumb" decision but an essential business strategy.
3:50PM on 10th June 2010
When did Google allow their search engine to send you to a Yahoo! ad?
When did Apple become a monopoly in the ad business?
When did Apple become a monopoly in the smart phone business?
When did Apple remove Google search from their Macs, iPhones and iPads?
When did Adobe have a mobile Flash plugin available that would even work on the iPhone?
When did Apple remove Flash capability from the Mac?
When did Apple lose the right to dictate how they want to run their business?
Me thinks you know not what you speak of.
4:04PM on 10th June 2010
How much did Google pay you to write this drivel.
This is nothing but a google produced propaganda
because it wants to be the cell phone os business and
also be a ad company. Apple just told Google, it can't
have both. Since Google cries about Web then deal
with your search business and ads placed on it.
Apple advocated FTC to let Google purchase Admob
just to knee cap it. This has to be most brilliant move of century.
Come one Google throw a temper tantrum now.
4:31PM on 10th June 2010
@noname
Brilliant! Apple "knee-capped" Google/Admob. Hilarious! They absolutely did. As you say, this is competition, and Apple/Jobs have been around a lot longer than Google. They know how to play the game. Kudos to Apple!
Millions down the drain, eh Google? Heh.
Tech Reporter at Econsultancy
4:35PM on 10th June 2010
Benoit,
I'm certainly not an antitrust lawyer but the fact that antitrust regulators are already looking at Apple over this move would seem to indicate that they smell something that might be of interest. If Apple keeps at it, it's hard to think they won't take the bait at some point.
Bena,
The point of the post is that Apple is inevitably going to attract regulatory scrutiny, and the more it works to keep its competitors out of an ecosystem that is otherwise open to everyone else, the greater the chance that they'll try to put together a case against Apple. Government meddling is not a recipe for success, but Apple is inviting just that.
Chris,
As I make clear in this post, and my other posts on the subject, I personally don't believe this is "anticompetitive" in the sense that would warrant regulatory action. But what you, I and others think is besides the point.
Antitrust regulators don't operate based on public opinion. They are bureaucrats and have their own agenda.
Graham,
You should see my previous post on the subject. Again, I believe Apple should be allowed to take the path it thinks is best.
This said, I do believe Apple has a much stronger argument for keeping Flash out of the iPhone/iPad ecosystem than it does for preventing some but not all advertising companies from participating in it. There are technical issues with Flash, whereas Apple's latest move is quite clearly designed to target a specific company.
For obvious reasons, this type of behavior will eventually lead to problems, whether it's deserved or not. The market will lose out if Apple is regulated, but it seems hell-bent on teasing the regulators.
5:05PM on 10th June 2010
So it's bad that Apple wants it's developers to use their iAds instead of Google or other advertising companies. Just like it's bad that iTunes only supports Apple products now that the iTunes store is very successful. If it wasn't would we really be hearing all this complaining about Apple being unfair? Where were all of you when most tech companies stopped supporting Apple in the 90's? Did you write to them and tell them that it was unfair not to support Apple anymore? You can include Adobe in that list also. Being a long time Adobe user, they got what they deserve with Flash. They killed superior products to their own just to own Flash and by the time they figured out how to update it, the whole market has evolved to other devices that don't really work well with it. Don't believe me? Just wait until Android 2.2 is standard and see how many people complain that Flash doesn't work as well as it does on their PCs.
Why is it Apple's fault that Flash isn't on the iPhone? If Adobe really had a working version wouldn't they show it? Waiting for Flash on the iOS would be like waiting for the next version of Duke Nukem. Good luck.
5:37PM on 10th June 2010
These kinds of restrictions are definitely designed to give Apple an edge. However, they are actually far less restrictive than the agreements that network providers (ATT, Verizon, etc.) have placed on the types of software and data analytics that handset providers can put on their phones.
Apple has created a whole new ecosystem of ways to deliver ads (think back 5 years and ask yourself about ads within phone apps - was their ANY meaningful market??), and they are legitimately trying to limit their competitors in a market that they created. Will they succeed? Maybe for a while... or maybe not. But this is not some crazy evil conspiracy. It's business as usual. I agree with the poster above asking if you ever see Yahoo ads in the sidebar of a Google search page... the regulators are definitely going to have to figure out which, if any, of these practices constitutes unfair restraint of trade. Remember, restraining trade is NOT illegal, but UNFAIR restraint is, and that cuts both ways. Could Google live under a regime where they allowed other companies access to their user analytics?
6:47PM on 10th June 2010
GOOD WORK APPLE!!!!!!!
Time to do exactly what Google has always done in their search products and elsewhere. Thos evil bastards need to eat their own $hI#e.
Of course the Apple hating mindless drones will emote all over this like flies to shit.
7:24PM on 10th June 2010
Wondering why nobody ever talks about how many non iPod music devices support the Mac. I would suspect it’s a pretty small number. iPod supports Windows. Does Microsoft Zune support the Mac? No. All this anticompetitive whining about Apple is beyond absurd. The entire tech industry tried to dismiss, if not destroy, Apple for 15 years. Payback’s a bitch.
8:10PM on 10th June 2010
Of course, apple cannot be THIS dumb. Which leaves… err, let's see…
8:17PM on 10th June 2010
How many third party ads do you see in Gmail or Facebook? Google is far closer to a monopoly than Apple. This monopoly talk is FUD/trash talk at best. The only thing Apple monopolizes on is profit.
Tech Reporter at Econsultancy
8:44PM on 10th June 2010
Rogre,
Technical point: all ads on Gmail and Facebook come from third parties (except house ads, of course).
I know...what you meant to imply is that since Google and Facebook don't allow third parties to somehow take over their pages and sell ads against their ad inventory, Apple shouldn't either.
The fallacy in your argument is that Google and Facebook own that inventory, and they're the sole entities who control it.
Apple operates a platform in which third parties are allowed to develop apps which they control the monetization of. Apple is not making iAds a requirement for those developers who want to monetize via ads. Instead, what Apple is doing is crafting its terms to forbid developers from monetizing their apps through ad networks operated by specific companies with whom Apple competes. Other ad networks operated by companies Apple 'likes' are clearly given a pass.
That is what antitrust regulators are no doubt interested in. If Apple kicked out all third party ad networks and required that all developers wanting to monetize via advertising use iAds, it would have a far more legitimate defense.
Bottom line: if you're going to try to make straw man arguments, you first need a straw man.
9:52PM on 10th June 2010
I don’t see that Google has a valid beef, for 2 reasons:
1. Would they allow Apple’s iAds into the Android environment? I’m guessing not, but we may never know that unless Apple was to start developing for Android, which it won’t — and why would it? Oh, yeah, Apple has their OWN ecosystem as Google does, and if developers don’t like using iAd, they can still monetize their apps with in-app ads, just not AdMob. If they don’t like that option, they can leave the Apple platform, because it’s a competitive mobile market.
2. Google can sell through their own mobile platform, and others as well. How is it anti-competitive to be left off of one of many platforms? Are TV networks required to run all ads from all sources? Should the TV networks be forced to run ads from a particular agency just because all the other networks do? No, they can block ads at their discretion. Many of them don’t, because it pays for the programming, and if they blocked too many ads, the content producers would leave the network. Refer back to reason number 1.
10:04PM on 10th June 2010
“… Apple's latest move is quite clearly designed to target a specific company.”
Guess you didn't tune into Google's recent “I/O” conference, where public Apple-bashing by senior Google execs was shouted from the stage. Google even baldly claimed that they did Android to save the world from the Internet being controlled by “one man, one company” despite Apple having single-digit shares in desktops and not even first-place in the subcategory of phones called smartphones. Also despite some inconvenient timing: Google bought Android Inc in 2005, years before anybody knew Apple had a phone up its sleeve.
So it kinda looks like somebody's swallowed the Google marketing BS hook, line and sinker.
(2005 was also the same year that Adobe fired all the Flash Lite people; you can see that Google & Apple both skate to where the puck will be and then look to move it to the net while Adobe has been all about sitting on the bench with its laces comfortably untied — maximizing current-quarter profits while putting the bare minimum into R&D or new products.)
Google's intellectually and insultingly dishonest Anti-Apple rhetoric is the perfect counterpoint to your argument. Google actually is trying today to leverage its monopoly in online search-based ads by moving into the mobile app space; if there's even a whiff of “bundling” or “tying” mobile ads to AdWords, Google could likely cross the line of the law. (Just to be clear: IANAL.) The FTC and Justice might still care about anti-competitive illegal actions under Obama. (Bush pretty much cancelled the court decision against Microsoft by refusing to contest Microsoft's appeal.)
Apple, trying to leverage its single-digit share of desktops and small share but first-mover advantage in phones, risks bad PR in the short term, with great PR in the longer term if they actually deliver value in these areas that Google (and Adobe, re: Flash) are saying are so important.
10:11PM on 10th June 2010
Patricio said: "That is what antitrust regulators are no doubt interested in."
How could the Feds be interested in a platform with ~15% U.S. market share, and way less in the overall cell phone market? Would we be talking about this if the iPhone had 5% market share? No. Either Apple is a monopoly or they aren't. Last I heard all the Google fanboys were making noise that Android had taken the largest piece of the smart phone market. So which is it?
All the anti-trust talk is just that: talk. If MSFT could get away with ~90% of the PC market with Windows, walk all over Netscape by including IE on every PC sold, and found guilty of 412 findings of fact by U.S. District Judge Thomas P. Jackson, yet nothing was done(!), then I highly doubt Apple is shaking in their boots.
Google/Admob need to lighten up. If this were chess, then they just got "check"ed. They made a move and didn't think it through. It was a bad business decision. Period. Besides, if Android is so great it will stand on its own and be profitable.
My guess is that Google is afraid it won't be.
Tech Reporter at Econsultancy
12:39AM on 11th June 2010
RexRay,
There's nothing in the Android terms of service that would prevent an Apple-owned ad network from serving up ads for Android apps. In fact, Google has invited Apple to participate in the Android ad ecosystem. So much for your first point.
As to your second point, while I personally agree with the notion that Apple should be able to do what it wants here, your television network example is not analogous. Television networks sell directly to advertisers against their own inventory. In the iPhone/iPad market, developers can monetize the inventory created by their apps so long as the means of monetization complies with Apple's terms. The parties, and relationships, are not the same. Apple is not necessarily selling the ads, and it doesn't own the inventory.
The real issue here, of course, is that Apple is clearly implementing terms that single out specific companies so that they cannot offer their advertising services to app developers in the Apple ecosystem. As I wrote above, Apple's would have a much more credible defense if, for instance, it required all developers wishing to monetize via ads to use iAds and excluded all third party ad networks.
Walt,
Teasing the competition in public is not a violation of antitrust law. Taking certain kinds of action to thwart the competition, in certain cases, potentially is.
As for Google, you must certainly be aware of the fact that Google is increasingly under the microscope for potential antitrust violations in the U.S. and Europe, so it's not as if Google doesn't face troubles of its own. I've pointed out Google's hypocrisy in this area and if you read my previous posts on Google, you'd see that I'm pretty critical of what a lot of Google does. You're playing the "you're drinking the Google kool-aid" card with the wrong blogger.
Blad,
Well they are. And that seems to be the point you're missing: Apple's behavior is increasingly inviting trouble. As an individual, I don't believe Apple has done anything that warrants regulation, but in the real world what you and I think means nothing.
As for your comment about market share, you're not looking at this from a legal perspective. Regulators have to define what constitutes the "market" and it's not only quite technical, but horribly subjective and ripe for abuse. Once you understand that absolute market share numbers mean very little in antitrust litigation, you'll see why Apple is playing with fire.
Final point: Apple might very well prevail in antitrust litigation, but no company really truly wins an antitrust case. Antitrust regulation has been, in my opinion, turned into little more than a tool for bureaucrats to flex their muscles, promote their agendas, and pick winners and losers. That's why I believe companies should try to avoid antitrust scrutiny at all costs.
4:10AM on 25th June 2010
I like turtles :3