Apple to Dodge Antitrust Bullet, Report Says

Apple may attempt to avoid an antitrust probe into its trade practices by revising some of the terms of its developer agreement, according to reports. It’s not clear which parts of the agreement would be revised, but government regulators are said to be interested in provisions in Apple’s iAd advertising program, as well as Apple’s decision to reject apps built with cross-platform applications such as the Adobe Flash Professional CS5, according to The Wall Street Journal .

News that Apple may revise its terms to fend off regulators follows the New York Post’s report that officials from the U.S. Department of Justice and the Federal Trade Commission may launch an antitrust investigation into Apple’s mobile business practices within days.

iAds

Apple’s new mobile advertising platform for iPhone and iPad applications, iAd, is reportedly under scrutiny after recent changes to Apple’s developer agreement,according to The Wall Street Journal. The revisions forbid Apple developers from sharing data collected from users (iPhone and iPad owners) with third parties.

This policy, some argue, could make it impossible for third-party advertisers to target advertising to consumers, thereby giving Apple’s iAd program a potential competitive advantage. For example, an iPhone game developer could use a third-party advertising platform (other than iAds) to subsidize a game with ads. But without access to end-user data from Apple about who that game user is an advertiser stands to make significantly less ad revenue because it can’t tailor ads specifically for that individual’s geographic location, for example.

Adobe Flash CS5

Perhaps the biggest focus of a potential antitrust investigation into Apple’s practices would focus on the company’s decision to reject applications for the iTunes App Store that are developed with cross-platform development software. This means that developers working on porting their apps to multiple mobile platforms such as Android, Blackberry, iPhone OS and Windows Phone 7 must create one version of the app using cross-platform tools, and then create iPhone apps in the iPhone OS’ native computer language, Objective-C. This could be seen as anti-competitive behavior if smaller developers are choosing to write iPhone apps over developing for other platforms, because of burdensome upfront expenses such as the time and labor needed to create two versions of the same application.

Apple CEO Steve Jobs recently explained Apple’s decision to forbid the use of cross-platform development tools in his now famous open letter, “Thoughts on Flash .” In the letter, Jobs argues that cross-platform development software “results in sub-standard apps and hinders the enhancement and progress of the platform.” Adobe CEO Shantanu Narayen fired back in an interview with The Wall Street Journal calling Apple’s decision “cumbersome” for developers.

Whether Apple will truly reverse its developer agreement remains to be seen. Apple believes it has good reason for its decisions, and the company may be reluctant to back down after Jobs’ public defense of its policies.

Connect with Ian Paul on Twitter (@ianpaul ).