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Pending EU legislation may force Apple to open up its platform to rivals like Adobe.
Change in antitrust laws could have serious implications for many other companies as well

The European Union's European Commission, under the guidance of commissioner Neelie Kroes, has had no qualms with slamming U.S firms with massive antitrust fines.  Now it's preparing a massive new initiative which just may have a major effect on some U.S. firms.

The new measure, called the Digital Agenda, raises many points, but one of the most significant is to redefine what companies can be subject to scrutiny over abuse of their market position.  The Agenda looks to change the necessary language from "dominant" to "significant".  Its text, found here, includes the passage:

Since not all pervasive technologies are based on standards the benefits of interoperability risk being lost in such areas. The Commission will examine the feasibility of measures that could lead significant market players to license interoperability information while at the same time promoting innovation and competition.

This proclamation may affect a number of key players in the tech industry by forcing them to open their gates or face massive fines.  

Perhaps the biggest example is Apple, Inc.  Apple is being probed by U.S. government antitrust investigators over its decision to ban Flash from its iPad and iPhone.  The problem is that Apple can easily argue that it does not have a "dominant" position to abuse when it comes to the iPhone.  And even the iPad, the new clear leader in the tablet industry could stake make similar claims -- after all the term "dominance" is loosely defined.

However, there's little doubt that it plays a "significant" role in the tablet and smartphone industries.

Under the new measure, if the language is approved, the EU may gain the power to force Apple to allow Flash onboard.  It may also be able to finally force Apple to allow third-party devices -- like Android smartphones, the Palm Pre, or rival MP3 players – to sync with iTunes.  The EU has long complained about Apple's efforts to block such syncing.

If the measure forces the hands of companies like Apple, they may feel compelled to eventually embrace similar measures in the U.S.  The U.S. is slowly trending towards a policy of stricter antitrust enforcement, following in the EU's line.

Ultimately the issue boils down to whether the market's largest players have a responsibility to "leave the door open" when it comes to interoperability.  This may come at a small expense to firms to publish documentation, which they could likely cover with licensing fees.  However, what they ultimately truly stand to lose is a tool against their competitors.  

By tightly controlling their platforms and various products' ties, companies like Apple can build their brand in the eyes of the consume -- a key part of the so-called "halo effect" which has driven purchasers of one Apple product to pick up more Apple gadgets.  It's remarkably similar to the inside track that Microsoft Word and Microsoft Internet Explorer were given with Windows -- which landed Microsoft in hot water with U.S. antitrust investigators around the turn of the millennia.  Ultimately, such maneuvers don't even need a monopoly -- as Apple's extensive use of them has proven.  They merely require a significant market share to start; hence the EU's claim.

So is interoperability something that should be mandatory?  Or should companies be allowed to close their platforms tightly?  Advocates of a more laissez faire government would certainly argue the latter, but the EU and Kroes seem convinced of the former, a platform that may have a big impact on some of the tech industry's top firms in the U.S. and abroad.



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In other news
By xler8r on 7/2/2010 9:02:50 AM , Rating: -1
The EU has also decided that you may eat only hot dogs on Fridays.
Stay tuned, word has it everyone has a right to receive sauerkraut with every purchase of a Munich bier.




RE: In other news
By AssBall on 7/2/2010 9:15:24 AM , Rating: 2
They already spent all of Microsoft's and Intel's money, so their starting to look around again for more.


RE: In other news
By 3minence on 7/2/2010 9:26:55 AM , Rating: 5
If the EU is going to nail Intel and Microsoft then they should nail Apple concerning it's stuff. If Apple wants to run with the big dogs then they should get treated like a big dog. See how they like it.


RE: In other news
By Fracture on 7/2/2010 12:48:43 PM , Rating: 3
I don't think that anyone will be able to force Apple to adopt flash, since it is merely a business decision by Apple not to include that feature in their product. Government interference in the marketplace for reasons other than safety or health is inefficient and wrong - you can't force someone to add an extra light to a flashlight or a spoiler to a car just because the legislature thinks it's cooler.

There is grounds for allowing competitors on iTunes however since the Right of First Sale is clearly being ignored by Apple. I would normally preach that they can do whatever they want with their software, but the situation is different since the music and media contained (and locked) in iTunes has already been paid for. Customers should be able to use those MP3s or whatever in any way they see fit, not having them relegated to an eternity on iTunes.


RE: In other news
By knutjb on 7/2/2010 1:37:07 PM , Rating: 5
quote:
I don't think that anyone will be able to force Apple to adopt flash, since it is merely a business decision by Apple not to include that feature in their product.
And it was only a business decision by Microsoft to include Explorer for free.
quote:
Government interference in the marketplace for reasons other than safety or health is inefficient and wrong
Unless you tell government they have gone too far with regulation they won't stop and will find ways to justify their actions, i.e. its for the public good even when it doesn't meet safety or health reasons.

That is one of the biggest problems when we think government will do what's best for us, they only do what's best for themselves and holding onto and growing their power and control.

I have been waiting for the EU to hit Apple once the company's value eclipsed MS. They do need another cash cow to siphon from.

I don't care for Apple products because I like to build my own. I think they are a more conniving company than MS but that's their business and I choose to not buy from them, my choice. I don't need or want government to make that choice for me.


RE: In other news
By Lerianis on 7/3/2010 9:48:20 AM , Rating: 4
So, in your mind, this is only about 'siphoning' from successful businesses? They can do that with taxes, they don't need to do that with fines.

No, this is about telling companies when they have gone over the lines that society (as a majority) expect them not to cross, as in the case of Microsoft.


RE: In other news
By knutjb on 7/3/2010 11:44:36 AM , Rating: 1
Why yes it is, the government does need money to run itself but all too often they get greedy and we let them get away with it because it takes a lot of our time to fix and they know it.

Try reading this article without the blinders and pay close attention to the chart; it is from IRS data. It shows a long term direct correlation between tax rates and revenue received. http://www.hoover.org/publications/hoover-digest/a...

Too much randomly applied justice, i.e. waiting to slap them back in line after they make a lot of money rather than dealing with it when it first occurs to cultivate the clear understanding of the rules and that they should not be stretched. Instead the EU lets them get in the habit of stretching the rules then hands out huge fines. Same principle a drug dealer uses, get them hooked on bad habits, then jack up the rates for being hooked because it's hard to change entrenched processes.

The EU aren't the only ones just the most conspicuous for now.


RE: In other news
By Penti on 7/3/2010 2:05:16 PM , Rating: 3
EU doesn't need any of this money, they get all of their from the members tax payers. Which mostly goes back into the member countries in the form off EU subsidies. The budget of EU it self is €106 Billions euros, so what would they care about a billion or so.

EU aren't a form of government that can tax and send the tax services on individual companies. It aren't a government at all. It's up to individual member states to do that :)

And actually you still have to pay and license interoperability information and patents (yes patents applies to software in Europe). They aren't stealing anything. Without the pushing they would have no incentive to open up the DOC and DOCX-formats, no incentive to release detailed specs for interoperability with Exchange server and so on. But maybe you don't want to be able to open up docs in google docs.


RE: In other news
By knutjb on 7/5/2010 5:59:15 PM , Rating: 2
quote:
EU doesn't need any of this money, they get all of their from the members tax payers.
Like Greece, Spain, and Portugal?


RE: In other news
By Penti on 7/5/2010 9:06:31 PM , Rating: 2
Thats just EU members - sovereign countries with their own budgets. As the EU money goes back to them in form off subsidies they'll of course continue to pay. Otherwise they will be fined and forced out of the EU. It's only EU countries that has budget and trade deficits just like US. Not EU itself as it's just a intra-government and supranational organization which they belong to. It's not the Eurozone countries which get any fines the anti-democratic European commission cobbles together.


RE: In other news
By MadMan007 on 7/4/2010 12:48:29 PM , Rating: 1
quote:
they only do what's best for themselves and holding onto and growing their power and control


Nice rhetoric but you do realize that it only works for non-representative governments where individuals can 'hold power' regardless of what the people say. In representative governments the people and the government are ostensibly the same, the real problem with such systems is when public risk and funds becomes private profit.


RE: In other news
By dhoom00101 on 7/2/2010 11:40:14 AM , Rating: 5
tell u what, try a bit more to understand what EU is doing, apple is the one who is telling, that u CANNOT have "sauerkraut" if u will buy apple's bier, but EU is trying to stop it. Apple is good with beer, so ppl will buy their beer n due to their restrictions, "sauerkraut" is not selling well.
Apple is blocking flash, microsoft doesn't ship with flash, but they are not blocking it either, thats the difference.
quote:
The EU has also decided that you may eat only hot dogs on Fridays. Stay tuned, word has it everyone has a right to receive sauerkraut with every purchase of a Munich bier.


"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton














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