Apple’s business is anti-competitive?

Apple has seen a resurgence in its business ever since it launched the iPod portable music player. After the iPod generations Apple further cemented its position as a leader with the iPhone lineup. With its resurrecting fortunes, Apple’s laptop and desktop businesses also registered sharp growth helped not in the least by Microsoft’s Windows Vista fiasco. Everything seems to be going in favor of Apple notwithstanding the glitches its iPhone 3G is facing.

With growing popularity comes growing scrutiny and people start reading the fine prints of the license agreements a bit more often than usual. Of late there have been a few people who have gone ahead and termed Apple’s business practices as anti-competitive that can be brought under the anti-trust laws.

Psystar, the maker of the Open Computer desktops, has slammed an anti-trust case against Apple. Apple’s end user license agreement for its Mac OS X operating system makes it illegal to run the operating system on any hardware other than the ones branded by Apple. According to Psystar’s challenge this is tantamount to being anti-competitive. Psystar alleges that Apple keeps huge margins of profit by marking up hardware prices. I am not sure on this one, but I do feel that Apple would have more to gain out of making Mac OS legal on other computer brands. See my post on this.

Apple’s iPhone success was accentuated by the launch of the App Store. The App Store is an online store for applications that can be run on Apple’s iPod and iPhone devices. Through the App Store, independent developers and third-party vendors can sell their applications. Of course there are rules and regulations that they are bound by. Moreover, Apple does take a cut out of the revenue generated by a seller through the App Store. There’s is nothing wrong with that of course. What is wrong is the way Apple is managing the App Store. Apparently updates to iPhone applications from third-party developers are being delayed without any communication to the developers. Also, Apple does not support iPhone/iPod applications that are bought from sources other than the App Store. Now this is anti-competitive. Imagine Microsoft asking users to use products available only from its stores? How can Apple expect this? This act points to the fact that the phenomenal success of Apple has gone to its head.

Apple has also been criticized for its policing of App Store applications. Apple has in the past taken down applications that it has deemed unsuitable. The purpose of the App Store was to make sure that applications being sold are not malicious or offending. But unfortunately Apple violates its own rules. It has taken down harmless applications like Box Office and I Am Rich citing that they do not meet their norms. What these norms were, has not been published. Then Apple went one step ahead and banned an iPhone comic from its store saying that they find it violent and offending in their reasonable opinion. Once more, no details were forthcoming about this reasonable opinion. The banning of this comic doesn’t make much sense as there are a whole lot of movies on the App Store that are really violent. Once more, Apple’s arrogant behavior comes to the forefront. Who is Apple to decide what is suitable for us? The max that Apple can try to control is malicious software. The responsibility of content should lie directly with the publishers or developers of the applications.

Apple’s partner relations have also raised an eye brow or two. One of the reasons for the astronomical success of Microsoft is the cordial way in which it has dealt with its partners. Apple however does not deem that necessary. Their attitude towards their partners is condescending at best. One such instance is illustrated by the fact that newer iPod and iPhone models need “officially licensed” cables. The way Apple enforces this is to install a proprietary authentication chip in the newer iPods and iPhones. With this approach, Apple forces third-party vendors to sign an agreement, in most cases an expensive one, without which their products will not be usable on the portable devices. Arm-twisting techniques are not new and have been employed in the past by the big boys of business. But what Apple is doing is forcing people to tow its line on everything. Needless to say such strategies might rake in the moolah but would surely increase discontent.

As I have illustrated above, even though Apple makes fantastic products, their business practices are no better than the often thrashed Microsoft. So if Microsoft is evil, isn’t Apple also one?