US Government considering antitrust action against Apple?

The New York Post reported this morning that the US Justice Department and Federal Trade Commission are deciding which agency should launch an antitrust investigation against Apple. The cause would be the now-infamous Section 3.3.1 of Apple's iPhone Developer Program License Agreement, which banned the use of any cross-platform development tools or programming languages other than those specified by Apple.

The charge against Apple would most likely be that the changes in its license are an illegal restraint of trade. Given that Apple isn't either the dominant supplier of smartphones (that's RIM) or the largest supplier of mobile phones (Apple isn't even in the top five), whichever agency goes after Apple will have to show that the company monopolizes something, and monopolizing its own platform probably won't fly in court.

My suspicion is that the argument will be that Apple has become so important to software developers that its actions have a disproportionate effect on the software industry, even if it doesn't have a conventional monopoly in any market. The goal of any investigation will most likely be to get Apple to open up its development ecosystem and allow alternate languages and cross-development platforms to be used. This investigation could also open the door on how Apple actually evaluates applications, which would be a "peek behind the curtain" that Apple would prefer we not see.

The timing of this leak, during the Gizmodo investigation and weeks before Apple's Worldwide Developers Conference, where the new iPhone is likely to be announced, may be intended by the Government to put pressure on the conpany to reel in its activities or face some potentially embarrassing announcements and disclosures. At the very least, it's likely to stop or slow down Steve Jobs' public missives.

TV Everywhere = restraint of trade?

I just finished reading BusinessWeek's article from a couple of weeks ago on TV Everywhere. It gives the history of TV Everywhere as essentially a deal between the two largest US cable operators, Comcast and Time Warner Cable, to control distribution of video content over the Internet by limiting its availability to existing cable subscribers only. It also documents the difficulties that alternate distributors such as Netflix, Boxee and Sezmi have had in striking deals for cable and movie studio content, and points out that Sezmi has actually had to pay more than the cable operators for some content, even though it still has miniscule market share. It wraps it up with a few quotes from content providers saying that they'd be crazy to do deals with alternate distributors for fear of angering their largest customers, the cable operators.

Anyone who knows anything about U.S. antitrust law would see a host of red flags in the first paragraph of this post. The two largest cable operators colluded to prevent competition from Internet content distributors. Brian Roberts, the head of Comcast, had to be dissuaded from trying to force the individual content providers to shut down their own distribution sites. Alternate distribution services are at a competitive disadvantage because they can't get most of the content available to cable operators and have to pay more than cable operators for the content that they do get. The content providers confirm that they're holding back their content from alternative distribution channels to avoid retaliation by the major cable operators. So we've got collusion, restraint of trade and price fixing.

Time Warner and Comcast don't get out of the collusion charge because they don't directly compete with each other, since they were working together to limit mutual competitors. The cable networks and movie studios are in it up to their ears, and Comcast is trying to buy control of NBC Universal, which will give them even more control over cable programming and, for the first time, motion pictures and over-the-air services as well.

If I were with the U.S. Department of Justice, Federal Trade Commission or one of the companies named in the article like Netflix, Boxee and Sezmi, I'd be salivating over the opportunities for criminal and civil antitrust action. TV Everywhere, initially envisioned as a technique for the cable companies to take over control of video distribution on the Internet, may end up being the "step too far" that ends the cable companies' monopoly over video content distribution to homes.