At the launch of the App Store, Apple noted the ability for developers to distribute software outside of the App Store. Essentially, Apple allows developers to issue software based on the iPhone’s serial number. This allows a company to issue an application to iPhones, without the application being on the App Store.
More importantly, it gave Apple an out to bypass anti-competitive business practices. If a developer doesn’t want to sell their software on the App Store, they can still sell it to customers directly. This was put to the test last week when Podcaster, an application barred from sale on the App Store, began being sold directly to customers.
Apple today shut down Podcaster’s developer once again. Essentially, Apple removed the developer’s ability to deploy software onto client (customer) devices. Prior to today, Podcaster was banned from the App Store, due to Apple’s assertion that it competes with iTunes, and that they do not have to allow iTunes competitors to be offered on the App Store.
This puts Apple in a dangerous legal position. Before today, Apple had rights to assert that the App Store was only one sales channel, which they had every right to control. Now Apple is asserting rights to control any and all sales channels of software to iPhone and iPod touch owners. Apple appears to be betting on the legal precedent of time; it would take years, and hundreds of thousands of dollars, to challenge such an anti-competitive business practice.
Apple now joins the ranks of BREW carriers as imposing a fully walled garden. The “walled garden” refers to an ecosystem where one company or group has complete control over what software can be run on a user’s device. A groundswell of legal and consumer opposition to walled gardens prompted Verizon (the largest BREW carrier in America) to announce late last year that it would no longer prohibit any valid application from their store.
The key legal opposition to walled gardens surrounds the nature of anti-competitive business practices. Essentially, consumer advocates (including PhoneNews.com), argue that the manufacturer/carrier is instituting an overbearing monopoly over the device’s ecosystem, such that no external organization could bypass the barriers to entry. Mac clone maker Psystar has argued this similarly in a recent counter-suit against Apple.
Today’s events come on the eve of both looming Apple product announcements, as well as the announcement of the T-Mobile G1 (also known as the HTC Dream). The G1 is the first production Google Android phone, and will be announced alongside Google’s own equivalent to the App Store. Google promises developers that they will not block any functional software from being sold or offered to customers.
Apple has declined numerous opportunities for comment.