AppStore Management Draws Anti-Competitive Claims

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Apple reaffirmed its intent to control what programs may legitimately run on its iPhone this week when the company revoked ad hoc distribution authority from a developer whose application it previously barred from distribution through the iTunes AppStore.

Last week, when Podcaster received official notice from Apple that the AppStore would not be carrying its application because the company had determined it duplicates the functionality of the Podcast section of iTunes, the developer decided to use Apple’s ad hoc distribution method to get the program into the hands of users who were willing to make a $10 ‘donation’ for the privilege of becoming beta-testers.

Tuesday, Apple revoked Almerica’s access to creating ad hoc licenses for the podcast downloading tool, prompting howls of protest from developers and consumers, many of whom have been skeptical of Apple’s intentions and critical of its business practices involving the AppStore from the very beginning.

Follow me after the jump to learn more about what’s behind the dispute and why Apple could be standing on shaky legal ground.

It’s no stretch to imagine Apple being miffed at Podcaster’s practice of charging money for an ad hoc copy of its application. Ad hoc distribution was originally intended as a method for getting software into the hands of testers and reviewers in advance of its appearing for public distribution in the AppStore. Podcaster’s move to utilize it as an alternative method for revenue-generating distribution would understandably rankle the bean counters in Cupertino, especially since Apple was being cut out of the 30% slice of revenue it would have been owed if the app sold through the AppStore.

But by denying Podcaster access to distribution through the AppStore, as well as controlling the developer’s ability to distribute legitimately outside that channel, Apple appears to be staking ground on the precipice of monopoly control over applications that can be legally run on the iPhone. Phone News writer Christopher Price says, “This puts Apple in a dangerous legal position. Before [Tuesday], Apple had rights to assert that the App Store was only one sales channel, which they had every right to control. Now Apple is asserting rights to control any and all sales channels of software to iPhone owners.”

A Washington, DC-based commercial litigator who asked not to be identified, told Cult of Mac, “Apple seems to be banking on their economic leverage here. It will be the rare developer with deep enough pockets to challenge them in an anti-trust action, which could take years and many hundreds of thousands of dollars to prosecute successfully.”

Another impediment to the anti-competitive legal claims of shunned developers lies in the fact that iPhones can be ‘jailbroken,’ enabling them to accept any application properly designed to run on them, a realm of development and distribution over which Apple has little control beyond its ability to disable the functionality of jailbroken phones using the latest versions of updated firmware.

There’s clearly a robust game of cat and mouse at play between Apple and the third party development community, in what seems to be a wide-open arena of largely untested legal ground. For its part, Apple continues to add bricks to its walled garden, reportedly now issuing notices to rejected developers that include non-disclosure language purporting to put them under threat of legal action for disclosing or discussing publicly the reasons their applications were denied entry to the AppStore.

Noted academic authority Jonathan Zdiarski has officially lodged an open protest with Stanford University complaining that Apple’s control over iPhone application development and distribution “effectively neuters competition and unfairly restricts the free and open exchange of information by developers.” Some have gone so far as to intimate the possibility that Apple’s practices imply an intent to steal ideas from developers.

As the iPhone continues to gain popularity in the lucrative smartphone market and the possibility of striking it rich as an iPhone developer becomes more solidified in the public’s imagination, it is difficult to believe Apple’s control over the route to fame and fortune, and its behavior as the traffic cop on that route, will not come under more and more scrutiny.

10 responses to “AppStore Management Draws Anti-Competitive Claims”

  1. John says:

    Apple is iPhone’s biggest roadblock to success. (< period)

  2. Matt says:

    I’ve had an Apple of some sort all my life. I was raised on Apple II’s, I remember when the first Macs came out, and was tickled pink when Dad came home with a IIci from work. My father was very impressed with Jobs & Woz, and speaking ill of them was verboten in our house.

    That said:

    I have about a year left on my iPhone contract. If Apple does not change their App Store stance, I’ll being going Android for my next phone.

    Apple’s behavior is so contrary to what Woz had in mind when he built the Apple II. He wanted that machine to be open, and he wanted people to tinker. Hence, the easily-opened “hood” (or bonnet, depending on your side of the pond) and oodles of open slots. I can’t help but think Woz is very unhappy about the Draconian system the other Steve has built around the iPhone.

    Think Different, indeed.

  3. DBL says:

    Since Apple does everything it can to prevent jailbreaking, it is wholly irrelevant to this issue at hand.

  4. YodaMac says:

    Yay Apple! Yay ANY COMPANY that defends itself from pirates and hackers.

    After just two weeks of using my original iPhone I knew that I would never want to be without one again. I have come to depend on this “computer-in-my-pocket” so much that I absolutely want Apple to maintain very strict control over who gets to put what on my most valuable accessory.

    No wonder pirates don’t like the App Store. :) Good ridden to them all and good luck to the Google phone users who will get them. They are more than welcome to “develop” for jailbroken iPhones too, since that’s where they really belong – not in the legitimate App Store.

    As an iPhone customer I am strongly depending on Apple to maintain high standards and safety when it comes to allowing 3rd party applications access to my device. If not Apple, then just who exactly?

    And it’s foolish to expect Apple to carry competing hardware/software in it’s very own store (even a virtual one)? Nobody does that! Let’s face it, some developers were just hoping for a free ride on the iPhone’s success. Apple’s success. Geesh.

    p.s. (As a side note – It was my understanding that the whole “ad-hoc” distribution method was intended to allow businesses to distribute their software for the iPhone just to their own employees, and not the general public. Not as a second form of commercial distribution for an un-approved application…)

  5. Dan says:

    While I’m glad that Apple keeps a strict control on what applications are allowed in order to prevent things like spyware and viruses, I’m also rather upset/worried that they are doing such rather odd things with the App store – particularly when they remove apps for doing what Apple does, only better.

    There is another problem – while I know Apple likes to force obsolescence with its hardware (eg, lack of the remote port on Video iPods and after), this is getting ridiculous. No Wired Remote? No charging over firewire? No video without the dock? What next, a proprietary headphone port that will only allow you to use Apple earbuds?

    The refusal to allow the wired remote to work with the iPod Touch is not only annoying, but dangerous too. You see, I like to use my iPod in my car, and would use the remote to skip tracks and fiddle with the volume. Even without the remote, I could still tell what I was doing as it was possible to tell where the buttons were on the click wheel of my iPod Video by touch (although it was not quite as safe). Now, I actually have to control the iPod via the touchscreen – meaning I need to divert full attention – and vision – to the iPod…. To solve this, I ended up attaching my iPod Dock to my car’s dashboard, and using my MacBook Pro’s IR remote to control the iPod safely… Ridiculous.