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Will Uncle Sam Get Steve Jobs to Blink?

Apple CEO Steve Jobs CBS

Against the backdrop of a possible antitrust clash with government regulators, will Steve Jobs buckle under pressure to modify his company's developer policy?

That's the new Silicon Valley guessing game.

On Monday, there were reports of a looming antitrust probe into the terms of Apple's iPhone developer kit. Bloomberg subsequently turned up evidence that the investigation came at Adobe's behest. Adobe reportedly complained that Apple had unfairly barred competition by preventing developers from using its developer tools to build applications for iPhones and iPads.

Last week, Jobs issued a long public statement spelling out his thoughts about Adobe's Flash technology. His basic point: Flash still needs a lot of work before it can get to the point where it offers Apple smartphone users the sort of experience they've come to expect on an iPhone. For its part, Adobe has rejected Jobs' argument as self-serving. Its executives point to the new restrictions outlined in Apple's developer policy as evidence of an unfair business practice.

The clause getting so much attention is section 3.3.1, which essentially is the no Adobe Flash clause.

"Applications may only use Documented APIs in the manner prescribed by Apple and must not use or call any private

APIs. Applications must be originally written in Objective-C, C, C++, or JavaScript as executed by the iPhone OS WebKit engine, and only code written in C, C++, and Objective-C may compile and directly link against the Documented APIs (e.g., Applications that link to Documented APIs through an intermediary translation or compatibility layer or tool are prohibited)."

The challenge for Adobe is to convince regulators that Apple violated terms of the Sherman Antitrust case. It won't be easy. Philip Elmer DeWitt correctly reminds readers that trustbusters would need to prove two points: that Apple's market share constitutes a monopoly -- itself not illegal -- and that it has abused that monopoly power in ways that damage its competition."

Whether Jobs's public statement about Flash inadvertently waved a red flag in front of regulators is something we'll likely know in coming weeks. But as a relative latecomer to the smartphone market, Apple still has a smaller share of the pie than Research in Motion (while Google's Android is coming on strong.) Proving the follow-up claim that Apple acted as a predatory monopolist will be doubly hard.

Now comes word that Apple might be able to avoid a clash with antitrust enforcers simply by modifying the terms of its developer agreement, finally face the one entity impervious to his charms or pressure.

However the issue gets resolved, Apple will also have its work cut out wooing developers upset by the recent affair. One of them, Hank Williams, an applications writer who also blogs, observed that Apple's basically arguing that it only seeks to shield customers from encountering bad applications on its App Store. "But," he wrote, "good intentions do not always mean lawful intentions, so even Apple's defenses, silly as I think they are, don't really address legality in the context of restraint of trade."

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