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Apple, AT&T at the Point of No Return

Boy, try to take a day off and you find that major companies like Apple and AT&T have become so unhinged at their own actions and regulatory attention that they put on a public display almost guaranteed to turn into a long-running Corporate Keystone Cops.

It was only last week when Apple turned down the iPhone version of Google Voice, shortly after which the Federal Trade Commission took an interest. This was hardly surprising, given that the FTC was already looking at the interlocking directorships of Apple's and Google's boards. And then things started getting interesting:

  1. The spokesperson explicitly saying, "AT&T does not manage or approve applications for the App Store. We have received the letter and will, of course, respond to it." It doesn't mention whispering sweet nothings into Apple's ear, which does manage and approve applications for the App Store -- and also fails to mention that, when it came to SlingPlayer for the iPhone, it sure did seem to have a lot of influence. The tone, however, is unmistaken: "Go blame Apple."
  2. As my colleague Michael Hickins mentioned, Google Voice developer Sean Kovacs posted a note from the Apple iTunes Store support group that said "at the request of AT&T GV was removed from the App store." In other words, "Go blame AT&T."
Now the real fun starts. Each company is on the record as having blamed the other for axing Google Voice, before they filed their responses to the FTC. Oh, this is comedy aplenty happening before our eyes.
  • The FTC will clearly have heard of both as well as AT&T's role in the SlingPlayer incident.
  • AT&T will have to try weaseling out of its statement that it doesn't have anything to do with approving iPhone apps, because the FTC will have no reason to let them slide and every reason to look as though it is diligently pursuing the problem and its mandate.
  • In its response to the FTC, Apple will have to either say that its support team is being told to unfairly blame AT&T, or it will have to stick with the "we were only following orders" excuse and admit to what might be seen as anti-competitive practices.
In short, each company will have to keep pointing its finger at the other, indulging in a six-year-old's blame game. (So sorry for ever having accused them of acting in an adolescent manner.)

I also agree with Michael that the ramifications of this will be stunning, and could result in any of the following:

  • a forced end to exclusive deals between handset manufacturers and wireless carriers
  • a forced end to vendor-owned marketplaces for smartphone applications (Did someone say opportunity for Amazon?)
  • Apple and AT&T parting ways, at least on an exclusive basis
  • Apple needing more than one carrier, which will mean less leverage for it to get the same degree of revenue sharing, which will mean lower margins on the iPhone
  • a market opportunity opening for either the Palm Pre, Android-based phones, or handsets running the mobile version of Windows 7
From an uninvolved amusement standpoint, watching the telecom market doesn't get much better than this.

Can somebody pass the popcorn?

Keystone Cops image, public domain.

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