Apple faces antitrust investigation over iOS advertising restrictions
Apple is again said to be at the heart of a new investigation by U.S. regulators, this time over concerns that the electronics maker may be unfairly restricting competitors from serving ads on the iPhone, iPad and iPod touch.
It was discovered this week that Apple, which plans to launch its own iAd service on July 1st for developers looking to monetize apps that run on its iOS-based devices, had modified section 3.3.9 of the iOS developer agreement to state that user data can only be obtained with the consent of the user, and only provided to "an independent advertising service provider whose primary business is serving mobile ads."
The terms specifically restrict the use of advertising services from companies that also develop or distribute their own mobile devices and mobile operating systems, which essentially blacklists Google's industry leading AdMob service and similar offerings from long-time rival Microsoft.
As such, U.S. regulators have "taken an interest in Apple's actions," according to two people familiar with the matter who spoke to the Financial Times, though it's reportedly unclear as of yet whether the investigation will be handled by the Federal Trade Commission or passed off to the Department of Justice.
Word of the probe comes less than a month after antitrust regulators concluded a similar investigation into whether Google was unjustly muscling its way into an overly-dominate position in the mobile ad space with its recent $750 million acquisition AdMob. Somewhat ironically, Apple's announcement shortly thereafter that it would launch its own iAd service helped the search giant's case, serving as evidence that substantial competition in the mobile space lay on the horizon.
On Wednesday, AdMob chief executive Omar Hamoui lashed out at Apple for the changes to its iOS terms via a blog post. "This change threatens to decrease -- or even eliminate -- revenue that helps to support tens of thousands of developers," he wrote. "The terms hurt both large and small developers by severely limiting their choice of how best to make money. And because advertising funds a huge number of free and low cost apps, these terms are bad for consumers as well."
"Let's be clear," he continued. "This change is not in the best interests of users or developers. In the history of technology and innovation, it's clear that competition delivers the best outcome. Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress."
For his part, Apple chief executive Steve Jobs has argued that the changes were made to protect user privacy, and were not meant to be anticompetitive. During an on-stage interview at the Wall Street Journal's recent D8 conference, he singled out Flurry Analytics, which was collecting information about devices through App Store software, unbeknownst to Apple.
Proving that the changes will harm consumers will be key to the government's case, according to experts who spoke to the Financial Times. "It has to affect consumers, not just rival suppliers," said former US Federal Trade Commission chief economist William Comaner. It's unclear whether Apple could be considered to be breaking the law, given that the recent changes only appear to take aim Google and Microsoft, he added.
The probe is the latest in a growing string of investigations for which Apple finds itself a target thanks to the booming success of its mobile device business. It's already among tech companies being investigated by the DoJ over hiring practices that allegedly conspired to prevent competitors from hiring each other's employees.
Similarly, Apple is also under investigation from the US Federal Trade Commission over separate provisions in the iOS developer agreement which limit developers from using tools other than those provided by the company. That inquiry was initiated by a complaint from Adobe Systems, which was thwarted from using its Flash Professional tools to generate iPhone apps for sale in Apple's iTunes App store.
The DoJ is also looking into Apple's negotiating tactics with music labels related to sales and marketing within its ubiquitous iTunes Store.
It was discovered this week that Apple, which plans to launch its own iAd service on July 1st for developers looking to monetize apps that run on its iOS-based devices, had modified section 3.3.9 of the iOS developer agreement to state that user data can only be obtained with the consent of the user, and only provided to "an independent advertising service provider whose primary business is serving mobile ads."
The terms specifically restrict the use of advertising services from companies that also develop or distribute their own mobile devices and mobile operating systems, which essentially blacklists Google's industry leading AdMob service and similar offerings from long-time rival Microsoft.
As such, U.S. regulators have "taken an interest in Apple's actions," according to two people familiar with the matter who spoke to the Financial Times, though it's reportedly unclear as of yet whether the investigation will be handled by the Federal Trade Commission or passed off to the Department of Justice.
Word of the probe comes less than a month after antitrust regulators concluded a similar investigation into whether Google was unjustly muscling its way into an overly-dominate position in the mobile ad space with its recent $750 million acquisition AdMob. Somewhat ironically, Apple's announcement shortly thereafter that it would launch its own iAd service helped the search giant's case, serving as evidence that substantial competition in the mobile space lay on the horizon.
On Wednesday, AdMob chief executive Omar Hamoui lashed out at Apple for the changes to its iOS terms via a blog post. "This change threatens to decrease -- or even eliminate -- revenue that helps to support tens of thousands of developers," he wrote. "The terms hurt both large and small developers by severely limiting their choice of how best to make money. And because advertising funds a huge number of free and low cost apps, these terms are bad for consumers as well."
"Let's be clear," he continued. "This change is not in the best interests of users or developers. In the history of technology and innovation, it's clear that competition delivers the best outcome. Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress."
For his part, Apple chief executive Steve Jobs has argued that the changes were made to protect user privacy, and were not meant to be anticompetitive. During an on-stage interview at the Wall Street Journal's recent D8 conference, he singled out Flurry Analytics, which was collecting information about devices through App Store software, unbeknownst to Apple.
Proving that the changes will harm consumers will be key to the government's case, according to experts who spoke to the Financial Times. "It has to affect consumers, not just rival suppliers," said former US Federal Trade Commission chief economist William Comaner. It's unclear whether Apple could be considered to be breaking the law, given that the recent changes only appear to take aim Google and Microsoft, he added.
The probe is the latest in a growing string of investigations for which Apple finds itself a target thanks to the booming success of its mobile device business. It's already among tech companies being investigated by the DoJ over hiring practices that allegedly conspired to prevent competitors from hiring each other's employees.
Similarly, Apple is also under investigation from the US Federal Trade Commission over separate provisions in the iOS developer agreement which limit developers from using tools other than those provided by the company. That inquiry was initiated by a complaint from Adobe Systems, which was thwarted from using its Flash Professional tools to generate iPhone apps for sale in Apple's iTunes App store.
The DoJ is also looking into Apple's negotiating tactics with music labels related to sales and marketing within its ubiquitous iTunes Store.
Comments
Hey Apple, open = good, closed = bad.
I just hope Google don't fire back and block google maps from the iPhone or something as equally retarded as Apple banning google ads.
So Apple are now Microsoft from ten years ago, and their pathetic war with Google goes up another gear. I wish they'd just grow up and stop acting like spoilt little children.
Hey Apple, open = good, closed = bad.
I just hope Google don't fire back and block google maps from the iPhone or something as equally retarded as Apple banning google ads.
While Apple & Google are fighting it out and distracted, Microsoft may rise to the top again.
So Apple are now Microsoft from ten years ago, and their pathetic war with Google goes up another gear. I wish they'd just grow up and stop acting like spoilt little children.
Hey Apple, open = good, closed = bad.
I just hope Google don't fire back and block google maps from the iPhone or something as equally retarded as Apple banning google ads.
If I were Apple, I wouldn't leave the door of my house open for the burglar either.
While Apple & Google are fighting it out and distracted, Microsoft may rise to the top again.
Not under their current management, they won't.
Nintendo owns by far the majority of the video game market (console and handheld) and dictates what goes on their platform. Where is the investigation of them?
I just hope Google don't fire back and block google maps from the iPhone or something as equally retarded as Apple banning google ads.
I doubt they'd be able to. Apple would probably have signed agreements with Google securing such services. They worked together for a lot of the iPhone's original Maps app. Its a key iPhone application. I doubt Apple would have left such things to the good-will of the time.
So Apple are now Microsoft from ten years ago, and their pathetic war with Google goes up another gear. I wish they'd just grow up and stop acting like spoilt little children.
Hey Apple, open = good, closed = bad.
I just hope Google don't fire back and block google maps from the iPhone or something as equally retarded as Apple banning google ads.
It's a bit more complicated than open vs. closed. As for Google Maps, the only thing that differentiates it is StreetView. Other maps are more up to date.
Besides, Apple could really drop the nuke and remove Google search. As it is now other OS makers (and carriers) either have signed a deal with Yahoo and Bing or own a search engine like MS.
If I were Apple, I wouldn't leave the door of my house open for the burglar either.
Agree. Although I understand both sides of the theoretical arguement, it's not like the app's is all the ads on the iPhone. One can call it restrictive( to developers), but anti-competative, hmmm no. Too many other options(android, nokia, RIM... Ummm what's that other one in Seattle?) for developers and users.... IMO.
I doubt they'd be able to. Apple would probably have signed agreements with Google securing such services. They worked together for a lot of the iPhone's original Maps app. Its a key iPhone application. I doubt Apple would have left such things to the good-will of the time.
Plus I can't imagine it will be too long now until google maps is scrapped on the iPhone in favour of an Apple home grown map service. I'm surprised it wasn't revealed this week.
In other news, the FTC is looking into a complaint by Best Buy that Target will not allow billboards of Target's competitors to be placed in Target's parking lots and poster ads inside its store. Best Buy's director of marketing stated: "Target is setting artificial barriers to competition that hurts customers and product manufactures and, in the long run, stalls retail progress." Alhough Target built the parking lot and store for its own business, Best Buy believes it should have the right to use Target's property to promote Best Buy's business.
Unfortunately it isn't that clear-cut as someone else owns this "Target" and its almost as if Target didn't ask the owner of the property if they wanted Best Buy blocked. Does Target have the right to restrict such things if they don't own the property? What if the owner may want those ads displayed?
In this case, I'd say you're right. We don't own iOS. We licence it and Apple owns it. Therefore your analogy holds as the software platform IS Apple's and they do have the rights to restrict competitors from advertising on their OS. Does this create anti-competitive results? Maybe, but that doesn't circumvent Apple's rights does it?
It's Apple's playground, and if they tell everyone to get off, they have to get off. They didn't have to "open" the platform to applications to begin with. Do you think it would be illegal for them to close the AppStore? Of course not. Why? Because it's their playground, it's their platform, it's their rules. They're not a monopoly, so if the consumer doesn't like it, they have plenty of other options. If Apple wants to close the platform to 1) apps, 2) ads, 3) books, 4) whatever, it's their business. The Feds might have a case when Apple enjoys an 80% market share, before then, to put it in legalese, they can suck eggs.
I just hope Google don't fire back and block google maps from the iPhone or something as equally retarded as Apple banning google ads.
Apple is not banning google ads, just preventing them from collecting to much info on device etc.
While Apple & Google are fighting it out and distracted, Microsoft may rise to the top again.
Not unless Balmer gets replaced by someone who cares about something other than balance sheets.
So Apple are now Microsoft from ten years ago, and their pathetic war with Google goes up another gear. I wish they'd just grow up and stop acting like spoilt little children.
Hey Apple, open = good, closed = bad.
I just hope Google don't fire back and block google maps from the iPhone or something as equally retarded as Apple banning google ads.
I think you were a little too eager to troll this time around. Your information is false.
I think you were a little too eager to troll this time around. Your information is false.
He's always eager to troll..... not just this time around.