iPhone rules pose Net neutrality, antitrust concerns

Apple's recent announcement of the iPhone application software development kit is drawing criticism from Net neutrality activists. While the company has previously angered many for its practice of bricking unlocked phones, it is now being accused of anticompetitive behavior.

Could Apple take Comcast's place as the poster child for the Save The Internet movement? Furthermore, by blocking competing Web browser Firefox, could Apple draw Microsoft-like antitrust lawsuits?

Control

Thursday, Apple released its eagerly awaited iPhone software development kit. Putting an end to hopes of user choice, Apple has declared that the only way for users to install applications will be through its App Store via the iPhone or iTunes. If the company doesn't like an application, it will be removed from the store, with no other way for a user to install it.

In a Q and A session with reporters, CEO Steve Jobs was asked if voice applications such as Skype will be permitted. Jobs replied by saying that VoIP (voice over Internet Protocol) will be allowed when the iPhone is using a WiFi connection, but forbidden over AT&T's cellular data network. How this will be enforced remains unclear. At the very least, Apple can blacklist from iTunes any application that doesn't play nice over AT&T's network.

In addition to the anti-VoIP rules, Apple seems to have also set its sights on the Firefox Web browser. Deep in the legal agreement for developers, Apple states:

"No interpreted code may be downloaded and used in an Application except for code that is interpreted and run by Apple's Published APIs and builtin interpreter(s)...An Application may not itself install or launch other executable code by any means, including without limitation through the use of a plug-in architecture, calling other frameworks, other APIs or otherwise."

As a member of the Firefox development teamhas already noted, this is a big deal.

Both the Firefox and Opera Web browsers, which compete with Apple's pre-installed Safari browser, are forbidden as they support hundreds of user-created add-ons. Furthermore, the Web browsers support Javascript, which is a key component of most Web 2.0 content. Javascript is an interpreted programming language, and thus forbidden as per Apple's terms of service.

Also banned from the iPhone: programming languages Ruby, Python, Perl, and Java. Quake, the video game engine ported to practically every platform (including Google's Android), as well as Microsoft's Word, Excel, and .NET are also persona non grata.

Sun announced last week that it is readying a version of Java for the iPhone. Once the restrictive iPhone license was pointed out, Eric Klein, the vice president of Java marketing at Sun, backpedaled somewhat on his own personal blog, writing that "I'll leave those (legal) questions to another forum, but we really do want to deliver a JVM if at all possible." This alone should make for an interesting fight, as Sun is no stranger to filing antitrust complaints.

Net neutrality complaints

Apple's blocking of Skype and other voice applications raises the same Net neutrality issues as Comcast's blocking of BitTorrent. Critics have argued that Comcast does this because the P2P video apps compete with the cable giant's own video programming.

Apple is now engaging in a similar practice, blocking any VoIP application that competes with the voice services offered by AT&T--the company with which Apple signed an exclusive five-year contract.

The company will be unable to borrow Comcast's line, and claim that the restriction is "reasonable network management." After all, watching a couple YouTube videos eats up far more data than a VoIP call.

This is not the first time that a company has attempted to block VoIP traffic to protect its own business model. Madison River Communications, a North Carolina ISP was fined and forced to change its behavior by the FCC when it started blocking VoIP providers like Vonage in 2005.

Paging Congressman Markey

Apple's sexy iPhone has attracted the attention of those in power before. Congressman Ed Markey (D-Mass.) held up an iPhone during a congressional hearing last year, before he sharply criticized the practice of locking such devices to a specific carrier's network.

Just a couple weeks ago, Markey introduced the Wireless Consumer Protection and Community Broadband Empowerment Act of 2008, which would require wireless carriers to sell unlocked phones without contracts for reasonable prices. In introducing the bill, Markey clearly had the iPhone in mind.

Markey's other well-publicized cause is Net neutrality. The congressman spoke at the Comcast/BitTorrent FCC hearing just a couple weeks ago. He has previously held hearings on the subject, and introduced legislation in February to stop ISP data favoritism.

With Apple's recent adoption of Comcast-style filtering, Markey can combine two of his passions: wireless phones rules and Net neutrality regulation.

Antitrust

Microsoft's bundling of Internet Explorer back in the late '90s led to major antitrust lawsuits brought by Department of Justice and 20 different states. While consumers were free to install Netscape and other competing browsers, it was the preferential treatment of its own browser that lead to legal problems for Microsoft.

Apple is now engaged in an even more egregious practice. It bundles the Safari browser with its iPhone, it makes it impossible for consumers to remove the browser, and the company now forbids competing companies from making their browsers available to the millions of iPhone users. Firefox has over 40 percent market share in some European countries, but it forbidden from making a version for the iPhone platform.

If Apple doesn't rapidly backtrack on its anti-Firefox and VoIP rules, I predict that it will soon be looking at investigations from multiple government agencies, both here in the U.S. and EU. The FCC and Congress will most likely look into the Net neutrality complaints, while the European antitrust regulators will probably take a keen interest in the Firefox issues. This would, of course, not be the first time that the Europeans have investigated Apple's iTunes store for dirty tricks.

Disclosure: I worked for Apple as a summer intern in 2005. While I love Markey's positions on Net Neutrality, he did publicly call for my arrest back in 2006. He changed his mind two days later.