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Feds Eye Apple for Antitrust Probe

New terms in Apple's developers contract raises questions of anticompetitive tactics.

By Jared Newman, PC World
May 03, 2010 11:51 AM ET

PC World - Apple may soon face antitrust pressure from either the Federal Trade Commission or the Department of Justice over its decision to block Flash and other cross-platform development tools from the App Store, a move that Apple says is best for consumers.

A federal antitrust probe of Apple is days away, an unnamed source has told the New York Post. The U.S. Federal Trade Commission and the Department of Justice are just trying to decide which agency will lead the inquiry, according to the report. Neither agency, nor Apple, commented for the Post's story.

Apple changed its iPhone developers agreement last month to prohibit the use of cross-platform development tools, such as Flash. The change precludes iPhone app developers from making one universal app that can be ported to a variety of mobile App Stores. The iPhone's popularity could make developers reluctant to work on other platforms instead, so a federal inquiry would look at whether Apple's behavior is anticompetitive.

So add this to the list of conspiracy theories for why Apple chief executive Steve Jobs bashed Flash in an open letter last week. Fake Steve Jobs says the letter was a ploy to derail the tech industry's fixation on the Gizmodo iPhone saga, but maybe Apple got wind of the government's antitrust interest and felt the need to put up an early defense.

In the the letter, Jobs defends the change in iPhone development policy as "the most important reason" behind Apple's anti-Flash stance. He said that when a third-party tool such as Flash comes between developers and the platform, it results in inferior apps. Apple loses control over the ability to introduce new features to developers, who are at the whim of third-party tools.

In other words, Apple says banning cross-platform development is in the interest of consumers. Sounds to me like an argument tailor-made for antitrust regulators.

Keep in mind that the FTC's and DOJ's interest is in the earliest possible stages. Even if either agency launches an inquiry, that only means Apple would be subpoenaed for more information. The feds would then have to decide whether an investigation is necessary.

Originally published on www.pcworld.com. Click here to read the original story.

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