Should the FCC Force Apple to Stock Competitive Products in Its Own Store?

I'm sure most who follow business news have heard that the FCC is probing Apple's decision to reject Google's (GOOG) internet-calling software and remove certain Google applications from it's app store...

The Federal Communications Commission has launched an inquiry into why Apple Inc. rejected Google Inc.'s Internet-telephony software for the popular iPhone, another sign of the Obama administration's stepped-up scrutiny of competitive practices in the technology industry.

In letters sent late Friday to the two companies and AT&T Inc., the FCC asked why Apple rejected the Google Voice application for the iPhone and removed related applications from its App Store.

This will be ridiculous if it moves forward. Apple (AAPL) just entered the phone space, it might be a little early to say that their iPhone has some sort of insurmountable competitive barrier. Furthermore, I like how the FCC is studying whether it was wrong for Apple to chose which products should be sold in it's own shop. I mean, it's pretty normal that if someone owned their own store, they wouldn't want to place threatening products from their competitors in it. I don't think Starbucks (SBUX) would want to have Dunkin Donuts coffee as an option in its own shops, for instance.

Earlier this year, the non-profit Internet group Free Press asked the FCC to look into why Apple put restrictions on eBay Inc.'s Skype's iPhone application so that it would work on Wi-Fi hotspots, but not over AT&T's 3G wireless network. The agency hasn't launched an inquiry into that case.

The FCC's request for information is part of a broader inquiry on exclusive deals between cellphone carriers and handset manufacturers for popular phones.

Isn't this again pretty fair behavior by anyone who is trying to survive as a business? I mean, when your distribution of phones depends on wireless network owners (this time AT&T (T)) making money, you should have the choice as to what software you want for the phone design that you created and own.

Hopefully this goes nowhere. Now, arguing whether Apple should or should not block certain apps, as a matter of their own choice and benefits, is fair game. But forcing them to incorporate competitive threats into their own design and own store would be to trample over their rights of ownership. This reminds me of the many attacks Microsoft has faced whereby it has been forced to poke holes in it's own products, except even worse given how recently Apple even entred the mobile phone space.

Comments

[apeman:]

So whats to stop AT&T from making rival voice APP's? hey you got the provider use their APP....Sort of reminds me of Microsoft as well.
Technology has a habit of canibalizing products. This will too.

Aug 02 12:45 PM

[isellapple:]

Apple should have the choice whether or not to accept Apps that are submitted to their App store. But can't they at least give developers some guidelines for acceptance?!

Aug 02 02:34 PM

[Michael McD...:]

Will they force Disney stores to carry non-Disney products next? Why not, this could leach over into brick'n mortar stores easily.

I have google voice, well if you want lower quality, but not me, my business requires the best phone connection at the highest quality. That call I'm on may make or break a deal, which is why I tried 3 carriers before choosing AT&T 5 years ago. I don't like having to pay more but I can't afford to compromise. The advantage of google voice is I can use one number an it will ring all my phones if I choose.

It's not AAPLs fault it's the govt. that allowed the cellular carriers to buy each other, now there is almost no competition between them.

Aug 02 02:35 PM

[abcoates:]

The issue isn't so much about whether Apple chooses to have Google Voice in its store, as it is about whether iPhone users have the option of using Google Voice (or other apps) if they want to. As long as iPhone users are unable to install apps except via the Apple Store, Apple risks being forced to sell certain apps even if it doesn't want to.

Aug 02 02:46 PM

[Wil:]

Its seems to me that Google Voice only provides value if a small percentage of a networks users take advantage of it.

If, for instance, everyone were to use it, then network providers would change their pricing structure to compensate and the cost benefit would be a wash. The carrier makes the same profit, the user makes the same calls, except now, Google gets access to your data.

It cost X amount of dollars to run a network, and AT&T is going to get X no matter whether they are charging you per text message or increasing your rate overall. Google is just taking advantage of a mental paradigm shift to gain user share.

Correct me if I am wrong.

Aug 02 03:32 PM

[jack dee:]

Get a grip guys, at some point someone has to pay for all the services, free loading off ATT or anyone else just pushes up standing charges for everyone else.

There is no such thing as a free lunch

Aug 02 03:32 PM

[Nate Kling:]

I would have no problem with apple not wanting the google voice application in their store if there were alternative means of installation. However, since apple likes to keep everything under their close watch, this is not possible. They should allow for other methods of installation if they are going to reject any app at all.


On Aug 02 02:46 PM abcoates wrote:

> The issue isn't so much about whether Apple chooses to have Google
> Voice in its store, as it is about whether iPhone users have the
> option of using Google Voice (or other apps) if they want to. As
> long as iPhone users are unable to install apps except via the Apple
> Store, Apple risks being forced to sell certain apps even if it doesn't
> want to.

Aug 02 03:38 PM

[Clovis:]

In a the United States if you make more money than the government thinks is appropriate, they fine you. It is called the progressive tax system. The government forces you to share your success. This assult on Apple reflects the attitude of the present Administration and Congress. Everyone and everything should be keep equal. All the kids should get a trophy and lets don't keep score anyway. I keep asking myself, "who benefits from these attacks on the US economy; on what was our way of life" and I keep getting the same answer.

Aug 02 05:29 PM

[BobD:]

Keep in mind, this is Obama's socialist American; corporate success is a bad thing!

Aug 02 05:37 PM

[Edge_Jeff:]

Comparison between Apple in the respect with Microsofts' anti-trust woes is not correct. Microsoft blocked users from using competitors software on hardware made by OTHER companies, not by Microsoft. Apple owns, and controls both the software, and the hardware. No competing company should have any reasonable expectation of use of that system except under agreement, and Apple should be free to set the rules.

Aug 02 08:15 PM

[Camden:]

I think his points make fine sense with regard to ATT. Also, there is NO question of monopolistic power here. You say yourself that ATT is one of FOUR companies that share 90% of the U.S. market. That certainly sounds like strong compition to me. What's good for consumers in the short run isn't necessarily good for the market or consumers in the long run. Take away the carriers profits and we'll watch the networks deteriorate. ATT is already getting grief for the quality of it's network service (it can't keep up with booming data traffic).

I certainly agree with the concept that a service provider should be able to provide the service it desires to provide as long as there is a public good. The FCC should be able to control the use of the public spectrum (to prevent harm to the public) but not to the point of dictating what content each and every provider must provide.


On Aug 02 12:05 PM Murphy Mac wrote:

> Some of your points make sense with regard to Apple, but not with
> regard to AT&T. AT&T is one of four carriers who control
> approximately 90% of the U.S. market.
>
> A Google Voice app is mostly a threat to AT&T's SMS business,
> as it allows sending and receiving of free SMS messages. Goodbye
> twenty dollars a month for unlimited texting. Indirectly, Google
> Voice as a whole is a threat as people can use their landlines for
> free long distance instead of chewing up cellular minutes.
>
> With that in mind, I'm happy to see the FCC poke a stick at this.
> I doubt anything will come of it. But maybe someone besides Senator
> Herb Kohl will question why the carriers have established twenty
> cents as the cost of an SMS message when industry experts claim the
> actual cost is negligible. That price points to collusion by the
> monopoly carriers.
>
> AT&T might rethink their whole stance: Google Voice could make
> using voice services bearable again, a goal the carriers have not
> lifted a finger to achieve. Voice minutes are hugely profitable,
> especially when the plans require purchasing more minutes than someone
> wants to use. I suspect Google Voice will lead to me using voice
> minutes more often. It would be interesting to know what AT&T
> thinks of that possibility.

Aug 02 08:57 PM

[User 465141:]

What kind of self-proclaimed capitalist are you..? Everyone knows that collusion, cartels, and monopolies are bad for free markets and are illegal for a reason..

This is nothing short of "understood" price fixing agreements between Apple and ATT, a cartel if you will. The goal of which is to maximize joint profits.

Ultimately this is about consumers and consumer choice. Unfortunately ATT not only wants to control the airwaves it also wants to control what they're used for. Ever read 1984...?

Apple, their lapdog, should be ashamed of itself. How ironic is it that the movie Wall-E was about a giant monopoly spinning out of control replacing the Federal government as the power broker in society.

Fred

Aug 02 11:46 PM

[Vincent Fer...:]

I think many of the comments also miss the key issue- rights. You may wish Apple had some of google's apps, heck it might even make sense for Apple that they stock them. But you have no right to force Apple to do it. It's their product, their design, their app store. The same goes fro MSFT. You may wish they didn't block certain competing software products, but you have no right to poke holes in a product someone else built and you (and I, the consumers) simply went and used. You have a right to say what would make you a happier customer, and if they are smart they'll try to accommodate you, but you don't have the right to force change on them. That's the issue.

Aug 02 11:48 PM

[jmmx:]

@ BobD

That statement makes you look like a real fool. Get a grip and leave the ridiculous propaganda points behind.

Aug 02 11:51 PM

[jmmx:]

A lot of good comments here - esp jack dee and Wil.

I am certainly no friend of ATT, and I do think some of their practices verge on monopolistic. I also feel that Apple should reject apps only for security purposes.

But it seems to me inherently unfair that ATT should have to support VOIP on their cell phone network. It really is a case of freeloading. As has been pointed out, ATT has expenses in building a network. I think they should have the option of disallowing Google or Skype usage which circumvents their own services. No matter how much I may think ATT is a rip-off, I still feel this way.

I should add - I think that ATT should have NO say over what apps can be used via Wifi connections, only what can be used over their cell network and only if it can circumvent their own services.

(Disclosures: Long Apple, wife and daughter have ATT but not iPhones, I do not own a cell phone, but I am a huge fan of Skype.)

Aug 03 12:07 AM

[jmmx:]

@ Vincent Fer...

You have thoughtful comments here, but I do not really agree.

Apple is trying to say that when you buy an iPhone, you really never own it, they continue to own it by virtue of the fact that they can control what you can access.

The point of the App Store is to provide a simple, secure method of accessing apps and to facilitate the whole process to the benefit of all. Outside of security, legality, and reasonable contractual issues, they should not be rejecting apps.

They have marketed an "open mobile computing platform" This implies - i.e. forms a kind of contract with the buyer - that the buyer will have access to anything that the creative developer community will devise. Apple should fulfill this promise.

Aug 03 12:18 AM

[peter02l:]

"I like how the FCC is studying whether it was wrong for Apple to chose which products should be sold in it's own shop. I mean, it's pretty normal that if someone owned their own store, they wouldn't want to place threatening products from their competitors in it."

This is the core of the issue? Will Apple be investigated next for what products it allows to be sold at its physical Apple Stores? Does the government have the right to enquire why a certain peripheral maker's product is not sold there?

Aug 03 01:55 AM

[Vincent Fer...:]

jmmx: thanks for the comment, but again, it's their store right? What you are implying is that the government (FCC) has the right to dictate what someone must sell in their own store, or how someone should design their product. If someone doesn't like the iPhone's lock-in, they shouldn't buy one. I actually hate the way iTunes sells me mp3's which I can't use universally. Thus I don't shop from iTunes. But I don't feel I have the right to force iTunes to change their way.

If they aren't following the marketing spin they use, with an "open mobile computing platform", then they are failing at matching their product with the marketing spin. But it doesn't mean we can force them to change their design, we simply must note that maybe part of their marketing is BS and decide if we still want to buy their products. So I think it's in their best interest to keep customers happy and satisfied with the iTunes, but we can't force them. It's their product, their design, their app store. I agree they *should* probably allow google's apps, but it's a dangerous leap to go from what I think they should do and what the government is able to *force* them to do.

Aug 03 05:42 AM

[mollytjm:]

Does anyone remember that Warren Buffett was forced to have Pepsi sold in his Dairy Queen stores...and still is?!! He's a major share holder of Coca Cola. It's wrong, but it can happen.

Aug 03 09:25 AM

[Murphy Mac:]

@ jmmx

Google Voice is not VOIP. The calls are completed by making an outgoing voice call or receiving an incoming voice call. If you're using Google Voice to talk to someone using your mobile phone you are consuming your cellular voice minutes. It's not "freeloading" as you suggest.

SMS is another story. Google Voice can be used to completely bypass AT&T for SMS in the U.S. You don't need the app to do this, but it makes it easier and more convenient with an app.

Aug 03 11:41 AM