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Apple Antitrust Inquiry: Feds To Probe Developer Agreement

JOELLE TESSLER   05/ 4/10 04:17 PM ET   AP

Apple Antitrust

WASHINGTON — Federal regulators plan to examine whether Apple Inc. is violating antitrust rules by requiring software developers to use Apple programming tools to create applications for the iPhone and iPad.

Officials at the Justice Department and the Federal Trade Commission are sorting out which agency will examine Apple's new policy, according to a person with knowledge of the inquiry. Apple's policy prevents developers from using outside tools such as Adobe Systems Inc.'s Flash format, which is used in many Web videos, games and interactive graphics, to design apps for Apple's popular devices.

The person with knowledge of the inquiry, who was not authorized to speak publicly, noted that it is in a preliminary stage. The two antitrust agencies regularly scrutinize whether corporate conduct could stifle competition, and not all inquiries result in a formal investigation or action by the government.

Apple declined to comment Tuesday. The Federal Trade Commission and the Justice Department had no comment.

The inquiry was reported earlier by the New York Post.

A key question facing federal regulators is whether Apple hurts competition by forcing software developers to choose between designing apps that can run only on the iPhone and iPad and those that can run on rival devices such as Google Inc.'s Android phones and Research in Motion Ltd.'s BlackBerry.

Apple's new policy, which was announced in April along with changes to the iPhone's operating system, has raised concerns for Adobe, which includes Flash as part of a package of software tools sold to professional designers and Web developers. Although Apple's decision to ban Flash limits what its iPhone and iPad can do, the popularity of the devices has led many software developers to design apps without the format.

Last week, Apple Chief Executive Steve Jobs defended the company's decision in a lengthy Web posting arguing that "letting a third party layer of software come between the platform and the developer ultimately results in substandard apps." Jobs criticized Flash for, among other things, causing performance problems with mobile devices.

Adobe had no comment Tuesday. But last week, the company said in a statement that Apple's "attempt to position this solely as a technology issue is a smoke screen." Instead, Adobe said, Apple was trying to protect a business model that locks developers and consumers into its tools and services.

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AP Technology Writers Barbara Ortutay in New York and Jessica Mintz in Seattle contributed to this report.

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Filed by Bianca Bosker  |