FTC to investigate Apple over some of its mobile rules

The Federal Trade Commission is planning on taking a long, hard look at some of Apple's business practices. The FTC wants to make sure that the Cupertino based firm is not trying to quash competition in the market for the software used on mobile devices. Before the FTC got to the point of investigating Apple, it had to battle with the Department of Justice over which agency would get the assignment of reviewing complaints by other firms who say they are being locked out of Apple's mobile platform. For example, as we recently reported, Google and its AdMob subsidiary are not allowed to sell ads inside third party apps installed on iOS devices in order not to compete with Apple's own iAd services. In another public dispute, Adobe says it is being shut out from offering its Flash software on Apple's products. While Apple and the FTC both will not comment, the Justice Department is forging ahead with its own investigation of the tech firm's music business. Thanks to the popularity of the iPhone/iPod Touch/iPad, Apple owns 70% of the online music business and controls more of the overall music market than Walmart does. The Department is also gathering evidence on talk that Apple and other computer companies made an informal agreement not to steal each other's employees. If true, that would be illegal. Still, the iPhone manufacturer is not without its fans. "The iPhone was just introduced three years ago, and all of a sudden (Apple is) being accused of being a monopolist? To me, it's absurd," said Gary Shapiro, president of the Consumer Electronics Association, "They don't even have a dominant position in smart phones—that's Blackberry."

The FTC has a head start on examining the mobile ad market as it recently completed an investigation of Google's acquisition of the leader in the industry-AdMob. The rationale for letting the deal go through was the Commission's belief that Apple will become a strong player in mobile advertising. The FTC wrote last month, "Apple not only has extensive relationships with application developers and users, but also is able to offer targeted ads…by leveraging proprietary user data gleaned from users of Apple mobile devices." The FTC added that the company's control over the developer's license agreement (recently changed to lock out Google and AdMob) and its ownership of the iPhone software used to develop mobile ads on its products, "gives Apple the unique ability to define how competition among ad networks on the iPhone will occur and evolve."

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source: WSJ