Business Law

Apples Anti Trust Suit Over Adobe Flash

 
  • Techno-giant Apple may face antitrust probes by federal agencies
  • Federal antitrust laws protect consumers and businesses from unfair practices

 

Many of us have heard or read the term "antitrust laws" in the news but we don't understand what they are, why we have them, and how they work. Two possible investigations of techno-giant Apple give us good examples of just that.

Apple's Problems

Apple unveiled its own advertising network, called iAd, which is scheduled to online on July 1, 2010. Through iAd, developers - the people who make all those really neat "apps" for Apples's gadgets, such as iPads, iPhones - can make money by coupling advertisements with their apps.

In early June 2010, there were reports that Apple, in connection with the release of iAd, changed its developer agreement which, essentially, bars Apple's biggest competitors, like Google from running ads on Apple's popular gadgets.

In May 2010, Apple came under fire when it was discovered that it requires developers to use only Apple's programming tools and software when creating apps for Apple's gadgets. In particular, Apple doesn't allow Adobe products like "Flash" to be used when making apps. In fact, Apple makes it impossible to use Flash at all on gadgets like the iPhone and iPad.

Antitrust Laws at Work

There are three main federal antitrust laws: Sherman Antitrust Act, Clayton Act, and Federal Trade Commission Act. The key to these laws is "competition." The laws work to ensure there's fair competition in the market so consumers have choices and aren't forced to overpay for the things they buy. The idea is this: When businesses compete for your dollar, prices drop and the quality of goods and services go up.

Apples potential problems make good examples. Apple's policy making it nearly impossible for rivals to advertise on Apple's gadgets may unfairly restrict competition. After all, if Google and Microsoft can't advertise on the millions of iPhones, iPads, and iTouches in use around the world, consumers may not think of those companies for future purchases and those companies may lose millions in revenue.

As for the Adobe controversy, while there may be some concern over an unfair decrease in Adobe's presence in favor of Apple's own tools and applications, the main concern is consumer impact. Because developers can't use inexpensive and easy-to-use tools and software to create apps, it may take them longer and cost them more money to create an app. Those added costs are then passed on to consumers. You pay more for an app.

Both the US Department of Justice (DOJ) and US Federal Trade Commission (FTC) are responsible for enforcing the federal antitrust laws. As of early July 2010, neither agency has decided if a formal investigation of Apple will take place.

Help Yourself and Other Consumers

Most antitrust investigations begin with complaints by consumers or businesses. In fact, there are reports Adobe's complaint sparked some of Apple's recent antitrust problems. If you think a business is violating federal antitrust laws, file a complaint with the DOJ or FTC.

Questions for Your Attorney

  • Is it illegal for two local businesses to agree to sell their products or services at prices well below those of a third local business?
  • Can I file an antitrust suit or do I have to let the government handle my complaint?
  • Can I get into legal trouble if I report my employer's antitrust activities?
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