Daniel Eran Dilger
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Adobe’s Flash monopoly game against Apple

Daniel Eran Dilger

Quick, name the vendor who claims 96% saturation of the market for dynamic media content. No, not just “market share,” but ubiquitous ownership of the means of distribution of nearly all Internet video, rich Internet apps, and Farmville. Answer: Adobe. Now name the company that is exercising its monopoly position to prevent competition within the market for dynamic web content. Answer: also Adobe.

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So why is Adobe, a shameless proprietary monopolist of the world’s noncommercial web platform (that was intended to be free and open through the use of openly documented standards any vendor can implement on the server or client side), complaining about Apple in antitrust investigations?

The case of the story that wasn’t there

Well it could be that is simply isn’t, and sloppy journalists have just ratcheted a rumor into a snowballing story about an antitrust investigation that simply never occurred.

It certainly wouldn’t make any sense for the DOJ to be investigating whether Apple owns so much of its own “market” for making apps for its smartphone that intervention is needed to make sure Adobe can inject its monopoly status into Apple’s business model in order to profit from work Apple has done, despite Adobe not ever having delivered a Flash player that could even work on Apple’s iPhone models.

Recall that the US government hasn’t seemed to be too worried about the fact that Microsoft still monopolizes the market for PC operating systems a decade after the company was found to be illegally abusing its position, and despite executive’s recent comments that they planned to use the company’s market position to raise prices across the industry for netbooks with the release of Windows 7.

Nor has the DOJ seemed too very concerned about Google’s near total ownership of the world’s paid search and web advertising market. Nor has it stepped in to do much about any other number of competition-threatening situations where one company controls the entire world’s markets for some product or service. So the idea seeded by the New York Post via comments attributed to ghosts seems very suspect.

Microsoft plans to use Windows 7 to raise netbook prices

The case of the monopoly that wasn’t there

Apple doesn’t even have a plurality of market share amongst smartphones, being the third largest platform by unit sales (behind Nokia and RIM). Even if that were to change, and Apple were to become the world’s largest smartphone maker, it would need to ramp up its production massively to gain the kind of market-dominating share that Microsoft and Adobe exercise over PCs and web content (and would have to destroy a number of entrenched competitors while also completely holding back new contenders such as Android and HP-Palm).

This is sort of like worrying that Honda is suddenly going to take over the entire world’s car market just because it is currently making some popular cars. There is rich and varied competition among smartphones, just as there is among automakers.

Even in markets where Apple has dominated sales, it has not done so in a way that prevents rivals from introducing new products to the market. So while the iPod has maintained a 70% or more share of all MP3 players for years, it didn’t (and couldn’t) stop Sony, Microsoft, and a variety of others from bringing alternatives to market and gaining shelf space, even if those rivals were not ultimately successful in selling their products.

The problem with monopoly platforms like Windows and Flash isn’t that they are popular, but that they prevent competition, due to significant barriers of entry that stop competition in its tracks. Apple does not spread its iPhone OS across the entire market; it’s only used in Apple’s own products. That means any other vendor can launch its own competitive product.

Apple also has no control over how smartphones are sold. It does not have bundling deals with the world’s mobile providers that prevent Palm or HTC or LG or anyone else from selling their products. In contrast, no alternative PC operating system vendor could ever manage to poke a hole through the OEM contracts Microsoft uses to prevent competition among PC makers, and even Microsoft is finding it difficult to duplicate (with Silverlight) the position of control Adobe has exercised over the web’s dynamic content. Flash is entrenched, and has been for nearly 15 years now. It is a monopoly.

Flash Wars: Adobe in the History and Future of Flash

What would competition look like?

Whether or not Adobe has actually tried to push regulators to force Apple to use Flash, the company has gone on a PR offensive that accuses Apple of standing in the way of choice and open competition. But really, how does one compete against a monopoly other than to offer an alternative?

Apple knows how to take on monopolies. It resurrected QuickTime in the late 90s (under criminal threats by Microsoft that demanded it take the product off the market to avoid competition with Microsoft’s own media playback ambitions) and then completely annihilated Microsoft’s plot to cover the world in Windows Media. It leveraged the iPod to slay Microsoft’s attempts to kill MP3 and replace it with a monoculture of DRM. It developed iTunes to create a vibrant marketplace that ate its way right into the heart of Microsoft’s Windows monopoly, displacing the company’s own media player. And it defended its new iPod turf against Microsoft’s efforts to tie the Zune to its Windows monopoly.

Apple broke the back of Microsoft’s monopoly (in a way no other vendor had managed to do) by refusing to license Microsoft’s technology and instead delivering an alternative that the market judged to be better. Windows Enthusiasts like to scream this is all a ruse and that Apple is really exercising some voodoo witchcraft through marketing that just fools people into buying its alternative products, but that’s because they can’t handle the painful truth that they’re all just shills for a mediocre monopolist they view as a hero for cheating its way to the top rather than winning in the market.

Apple then repeated the same strategy in introducing the iPhone and completely destroying any remaining interest in Microsoft’s Windows Mobile platform. And over the past decade, Apple has also usurped Microsoft’s position as the leader in PC operating systems by revitalizing Mac sales and stealing all of the most profitable and attractive market segments away from PC makers. Nobody can now talk about Windows Vista/7 without mentioning Mac OS X.

Mac Office, $150 Million, and the Story Nobody Covered
Microsoft’s Plot to Kill QuickTime

Competition with Flash

How would one expect this company to take on Flash? By licensing Adobe’s technology and spreading it? No, by developing alternatives that expose Flash as being unnecessary and unworthy of its current status. Apple’s been doing this expertly since the iPhone was released in 2007. While there are still reasons why people might want to view Flash content, Apple has beaten Adobe’s monopoly position down to a frail competitor that is weak enough to garner pity from people who don’t really understand what’s going on.

That’s competition. Apple didn’t lock Adobe out of the market by colluding with other vendors in a non-competitive pact; it didn’t spread out a broadly licensed platform that robbed Adobe of outlets to market its product. In fact, Adobe still claims Flash support from all of the major smartphone vendors, from Nokia’s Symbian to Microsoft’s upcoming WP7 to Google’s Android 2.2 to RIM’s forthcoming BlackBerry OS 6 to Palm’s webOS.

Adobe’s crying that Apple should be forced by the government to not compete against it is absolutely absurd, and all of the pundits lining up to dish this particularly stupid story have stripped themselves of their own journalistic integrity.

Why Steve Jobs Loves Adobe Flash
Five Tremendous Apple vs. Adobe Flash Myths

  • Ringgo

    Apple has Park Place and Boardwalk, its competitors have everything else…except for the Get Out of Jail Free card.

  • petemonsy

    another brilliant piece … very true.

  • md5sum

    Quick, name the law that states you can’t have a monopoly. Answer: There isn’t one. Now name the law that states that you can’t use that powerful marketing position to create contracts that stifle creativity and interstate commerce. Answer: The Sherman Antitrust Act.

    From that Act, Section 1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

    And if you’ll recall, the suits weren’t for Microsoft holding a vast majority of the desktop market. It wasn’t because they built a web browser. It wasn’t even because they gave it away with their operating system. It was for embedding Internet Explorer into their desktop software in such a manner that it couldn’t be replaced or removed.

    I’ll confess it’s a touchy, tough case, and one that has many days to come. And I’ll cede to the fact that I’m not just crazy about Flash. But Apple has created a contract that prevents Adobe from effectively competing in the application creation market on mobile devices, which in turn does effect interstate commerce. By definition, it fits in the same shoe that Microsoft fit into years ago with Internet Explorer.

    And your mention of Google makes me laugh as well, since the FTC is looking into the same type of antitrust issues with them, since their recent acquisition of AdMob. [http://www.brafton.com/industry-news/ftc-looking-file-antitrust-suit-against-google-$1376222.htm]

    Enjoy butchering my comments!
    ~md5sum~

  • stormj

    @md5sum:

    The only problem with your comment is that you are confusing *investigation* with a *judgment*. The more relevant thing for you to cite would be the policies of the federal agency here to see what they should investigate.

    The failure to make this most basic distinction between the very beginnings of a legal matter’s factual life and its very end are a pandemic on the Internets lately.

  • stormj

    P.S. @md5sum: That’s actually not the only problem with your argument. There are other sections of the Sherman Act that constitute violations, and most states have “Baby Sherman” Acts. One of the toughest is California’s, which basically makes anything otherwise actionable in criminal or civil law an unfair business practice.

    Daniel:

    Apple has had antitrust issues with iTunes; just in the EU. The trouble here is defining what is a market. It’s not easy, especially in tech where the entire market might not exist tomorrow, or where it might be totally redefined in a matter of minutes.

    iTunes pricing is one of those things that has a direct consumer interface. iTunes—literally—is a marketplace. It does not shock me that the app store process is chafing these concerns even though it’s hard to define a market where the iPhone has any kind of monopoly power. It may not be a Sherman Act problem at all; it may simply be a more direct consumer affairs type of issue. I’m not saying I see a problem or that there’s a conviction to be had, but I sure wish our government was more proactive, not less, when it came to consumer protection.

    With respect to the Flash wars, what is so interesting to me is that Adobe is trying to force its way into the iPad/iPhone platform by rabid outrage at the PDK policy while at the same time apparently lining up with Android and Google who are trying to kill it!

    I suspect this different agenda creates huge daylight between Adobe and Google and so I doubt their alliance is that strong. Google, like Microsoft before it, has Partner-Backstabbing-Syndrome and its not limited to side products. There would be no Apple/Google conflict right now if there was a GoogleTV instead of a Google Phone. I wonder what Adobe would think about a Gimp-like app on Google Apps?

  • md5sum

    @stormj

    I’m sorry, I guess I’m missing something here… I thought that what a federal agency should investigate is what appears to be or has been reported to be a crime. Then AFTER the investigation, if a crime has been found to be committed, there’s a judgement. Adobe hasn’t been reported to have committed a crime, nor does it appear that they have. If you’ll recall, Microsoft was found GUILTY (AFTER investigation), and had to change the way that their browser was integrated into their OS.

    If you’re referring to WHICH agency is INVESTIGATING, I don’t really CARE. I’ve very literally seen a case where the police from two cities on opposite sides of a state line refused to touch a criminal who was ON the line. They literally waited for him to move positively from one side to the other because they didn’t want to risk some jurisdictional BS. Quite frankly, I would have rather someone just took the guy down, as his freedom as a criminal is an affront to my American citizenship. I pay the American government, as a whole, through taxes (and sometimes fines) to keep things kosher and legal. I don’t care which strong arm of the law reaches out and slaps someone, so long as they don’t interfere with my freedom in doing so.

  • shadash

    md5sum –

    I think you need to reread your Gilded Age history and the Sherman Antitrust Act. Here is the link to wikipedia:

    http://en.wikipedia.org/wiki/Sherman_Anti_Trust_Act

    Apple is not a monopoly in the smart phone arena. Apple has not formed combinations with other companies to restrain trade. Your comparison to Google and AdMob is specious – Google is approaching a monopoly in online advertising. Apple is not anywhere close to that in smart phones. Same with Microsoft – they got into trouble for bundling their browser to their monopoly operating system. If they had just put IE on the Mac or Linux (but not on Windows), do you think they would have gotten into trouble?

    The only way you could say Apple has a monopoly is if you define the app market as “only confined to the iPhone.” That reminds me of the Psystar case – where those guys tried to argue Apple had a monopoly for “devices running OS X.” The courts struck down that notion pretty quickly.

    Apple most definitely has not “created a contract that prevents Adobe from effectively competing in the application creation market on mobile devices.” That is just not true and I don’t understand how you could have read this article and still argue this. Flash has been announced for every other smart phone OS except for the iPhone. The only thing Apple is preventing is Flash on their own phone. They are doing nothing to stop Flash from being ported to Windows Mobile 7, Android, Blackberry, or Symbian.

  • petemonsy

    Steve Jobs: “People Don’t Read Anymore.” even if they do, they don’t understand much before babbling away…

  • md5sum

    @shadash

    All Microsoft was doing was preventing other browsers on their own operating system. They lost. And Apple has formed a contract with every developer that publishes apps on the App Store, which is one of the THREE (contract, combination, or conspiracy) forms of agreement mentioned in the Sherman Antitrust Act. And I actually copied and pasted my original quote of Section 1 of the Act from that Wikipedia page.

    I’m not understanding why everyone keeps saying this bit about Apple and monopoly. This has nothing to do with monopoly. If the tiniest of companies creates agreements described in Section 1 of the Act, then they are breaking the law. It’s like people want to throw out Section 1 because they Apple doesn’t meet Section 2.

    And for those who keep saying that Apple ISN’T a monopoly, I keep hearing snickers from the Apple corner because nobody else has put out a viable tablet yet. And I hear snickers at Google’s “inferiorly sized” application marketplace (50,000 apps). Apple DOES have the biggest App Store. Adobe isn’t in the “tablet” market, or the “operating system” market, or even the “phone app” market… they’re just trying to dip their feet in the MOBILE application market, which is the one place that Apple does hold a monopoly. If you disagree, you should read en.wikipedia.org/wiki/Monopoly

  • petemonsy

    @md5sum
    So is Amazon Kindle a monopoly too ? Does Apple cries unfair and go to DOJ & complain ?
    If the Apple App Store was open to all smart phones & third party mp3 players wouldn’t that make the App store a monopoly ? It is good business for them, in fact more sale for the App store. Wouldn’t it be easier for Apple to just accept Adobe Flash as one of their key features and sell more phones .. why the unpopular decision ?

    Every phone have its software or solutions for syncing.
    If I buy a blackberry, I am sure they do come with their own software, same as an Android or Windows phone.
    Apple is doing very well with the iPhone with the App store. But I still fail to see how it is a monopoly ?

  • shadash

    @md5sum,

    YOU WROTE:
    “All Microsoft was doing was preventing other browsers on their own operating system.”

    You conveniently leave out “their own operating system” was deemed to be a monopoly.

    YOU WROTE:
    “And Apple has formed a contract with every developer that publishes apps on the App Store, which is one of the THREE (contract, combination, or conspiracy) forms of agreement mentioned in the Sherman Antitrust Act.”

    Here is section 1 again:
    “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”

    How do you define the “market” in which the “restraint of trade” occurs in this situation? If the market is only the iPhone or iPad (as you seem to believe) then yes, they are a monopoly and are abusing their position by banning Flash.

    If you take the actual market in this case – which is the entire array of smart phones, not just Apple devices – then Apple has a minority of the smart phone market. It is not possible for Apple to restrain trade in this situation. Adobe can go to the other smart phone vendors and put Flash and Flash apps on their phones – Apple can do nothing to prevent that.

    YOU WROTE:
    “If the tiniest of companies creates agreements described in Section 1 of the Act, then they are breaking the law.”

    The “tiniest of companies” cannot restrain trade, because there are by definition competitors in the marketplace. What situation are you thinking of in which a tiny company (with presumably a tiny market share) can exert enough influence on the market to restrain trade?

    YOU WROTE:
    “And for those who keep saying that Apple ISN’T a monopoly . . . they’re just trying to dip their feet in the MOBILE application market, which is the one place that Apple does hold a monopoly.”

    From the wikipedia entry on “Monopoly”:

    “Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.”

    Does this characterize the “mobile application market?” No. Apple has 180,000 or so apps – is that the entire app market? No. Is the Android marketplace with 50,000 apps a competitor that provides “viable substitute good?” Yes. Are the RIM and Windows marketplaces competitors for Apple? Yes. Has Apple conspired with any other company to prevent those marketplaces from functioning? No. Has Apple threatened developers if they port their apps to competing stores? No. They only thing they have done is defined how they want apps to be written on their (minority) devices. That is nothing like Google in the online ad market or Microsoft in the OS/Internet browser market.

  • md5sum

    @petemonsy

    Did ya’ read the page I linked to? Like the first SENTENCE even? Or even my post? Funny, after your comment about people not reading or understanding anything before they go babbling away. Here, I’ll just do you a favor and go ahead and quote that first line from Wikipedia for you: “In economics, a monopoly (from Greek monos / μονος (alone or single) + polein / πωλειν (to sell)) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.”

    And I’ll quote another one, just for fun: “Monopolists typically produce fewer goods and sell them at a higher price than under perfect competition, resulting in abnormal and sustained profit.”

    Then I’ll go back to my original statement: Why do people keep throwing this monopoly crap in the mix? It’s not what is being investigated. What’s being investigated is their ANTI-COMPETITIVE CONTRACTS that they have drafted between the people developing software on their platform.

    Now, on to your “example”: Amazon Kindle hasn’t made some agreement with authors stating that they “can not publish any work in any language other than American-English, nor can they publish any work in American-English which was translated from another language.” If they did, they’d probably be under the same investigation that Apple is, not because they’re a monopoly, and not because they’re holding a majority market share, but because of ANTI-COMPETITIVE CONTRACTS.

    Apple is FORMING A CONTRACT with ALL of it’s developers stating that they can’t write any apps for the iPhone in any language other than Apple-ese (AKA: C, C++, or Obj-C), nor can they submit apps converted to Apple-ese from another language. THIS contract is under question and investigation. The size of Apple’s business, market share, or influence over the market is not. It is not a MONOPOLY investigation. Not all monopolies are even illegal. Had you read my post, and the page that I linked to, you would understand this. Anti-Competitive Agreements are illegal. All of them.

    I’ll quote myself from my original post: “I’ll confess it’s a touchy, tough case, and one that has many days to come.” Notice I didn’t say “APPLE IS GUILTY” or “APPLE IS NOT GUILTY”. I said it’s a tough case. And I said it’ll be a while before we see an outcome. Hell, it might even be a ground-breaking case. But historically, in similar situations, the companies that have enforced stuff like this (AKA Microsoft with Internet Explorer) have been found to be guilty of anti-competitive behavior, made to pay losses and/or hefty fines, and made to change their business practices. And the world is a better place for it, because now we can happily use Google Chrome, Mozilla FireFox, Apple Safari, Opera, or whatever other concoction/combination of browsers that you might want to use. We (the USERS) get to choose what we want because of these decisions. These decisions STRENGTHEN the economy, by allowing competition in the marketplace where there would otherwise be none.

  • worker201

    @md5sum:
    I’ve just read the Wikipedia article on monopoly, and I still disagree. There’s nothing in that article that could be used to call Apple a monopoly that could not also be used to call every other tech company a monopoly. If Adobe can call Apple a monopoly for not allowing Flash applications on the iPhone, then Apple can call Adobe a monopoly for not allowing Premiere 7.0 on the Mac. In theory, it’s monopolistic of Adobe to not support CS5 on System 7. But that’s clearly bullshit. So I’m confused how useful it is to claim that Apple has a monopoly that is negatively affecting Adobe (but nobody else).

  • http://www.atsysusa.com atsysusa

    I agree with md5sum – if there is an investigation it would focus on anti-competitive behavior. The problem is that 99.9% of the readers of this journal do not understand real businesses. [Read manufacturing here.] So I will use a very simple example.

    If you are a vendor of electrical components and you want to sell to GM or any other automaker you have to comply with their product specification, including standards compliance. If you are required to submit a certification of compliance that certification has to state how compliance was achieved and what software or test bench was used. GM will tell you what you must use in order to sell your product to them.

    But perhaps that is too abstract – here is something even simpler. The spec says that the mounting bracket must provide bolt holes 15 mm ID. You have a 14 mm drill. Do you think that GM must be compelled to accept your product with 14 mm bolt holes?

    Warning personal rant follows:
    Commenters should learn the difference between ‘there’ and ‘their’; ‘affect’ and ‘effect’; ‘i.e.’, and ‘e.g.’ – you will gain credibility and perhaps pass 8th grade English the next time you have a shot at it.

  • mr_kitty

    @md5sum

    By your interpretation, if amazon made a contract giving them exclusive rights to publish the electronic version of a book, or if CBS signed a contract giving them exclusive rights to broadcast a program in the US, or if Sire records signed an contract giving them exclusive rights to publish Depeche Mode’s greatest hits collection, they’d all be in violation of anti-trust laws.

    But they’re not because one book, one television program and one pop music collection do not constitute a “market” in of themselves. Neither does the iPhone OS App store. It is the only approved market place for the iPhone OS platform, but the iPhone OS platform itself is not a “market” either — if it was, Apple would be in violation for banning Cydia or Icy from the platform via it’s EULAs. But EFF already tried and lost that argument.

  • Ringgo

    @atsysusa
    “Commenters should learn the difference between ‘there’ and ‘their’; ‘affect’ and ‘effect’; ‘i.e.’, and ‘e.g.’ – you will gain credibility and perhaps pass 8th grade English the next time you have a shot at it.”

    What gets me is it’s versus its. All over the place! Sloppy! “Spelling doesn’t really matter!” Says who?

  • MikieV

    @ md5sum

    Lots of interesting points, but you lose me near the end – with:

    “But historically, in similar situations, the companies that have enforced stuff like this (AKA Microsoft with Internet Explorer) have been found to be guilty of anti-competitive behavior, made to pay losses and/or hefty fines, and made to change their business practices. ”

    I still haven’t seen a good example of what Apple has done , i.e. “stuff like this” , which correlates well with the examples cited, i.e. “Microsoft with IE”.

    To my mind, Apple’s app store isn’t the entire market, but it sure seems to be the most profitable one for developers – so far – and that may be where the complaint can get some traction.

    Apple is not blocking access to “the app market”, but is limiting developer’s access to what is currently the most lucrative segment of the “app market”.

    It will be interesting to see if the investigation finds anything worth pursuing, or if it is just considered to be playing hardball. :)

    Daniel – Any chance of you writing about how Palladium and Trusted Computing were boo’d off the stage for PCs, but similar technology has become the norm for smart-phones?

    People were outraged at the thought of their own computers being “Locked down” – after having been open for decades – but other than “jail breakers”, most people don’t seem too concerned with using a device that has been locked down from the get-go.

  • MikieV

    “Commenters should learn the difference between ‘there’ and ‘their’; ‘affect’ and ‘effect’; ‘i.e.’, and ‘e.g.’ – you will gain credibility and perhaps pass 8th grade English the next time you have a shot at it.”

    Oh crap.

    I just used “i.e.” , twice – and now I am not sure if I should have used “e.g.” :)

    Based on the 50/50/90 rule, I probably should have used “e.g.”.

    50/50/90 Rule: If you have a 50/50 chance of making the correct choice, then 90% of the time you will chose wrong.

  • donarb

    This is what Adobe is fighting so fiercely for. Watch at about the 29 second mark (just after bragging that he was glad he didn’t get an iPad). Ooop!

    http://www.youtube.com/watch?v=3hqFTx8rLsg

  • md5sum

    Ok, to address some comments here:

    @mr_kitty

    People make exclusivity contracts all the time, including Apple, Microsoft, Wal-Mart, NetFlix, Movie Gallery, etc. These are cases where the effect is mutually beneficial, and are allowed. In other words *I* wrote a book, and *I* am going to exclusively sell it through Amazon. Amazon can’t MAKE me only sell it through them. Nor can I FORCE Amazon to sell *MY* book. I’m helping Amazon by ALLOWING them to exclusively market my new title, and they’re helping ME make my product more “desirable” through this “exclusivity”. It’s a commonly used MARKETING practice. If in that contract, however, I added the condition that during this exclusivity period, they could ONLY sell MY book, THAT would fall under antitrust, since it is limiting OTHERS. So long as I’m not stopping anyone from being able to purchase my book, and I’m not stopping anyone else from selling THEIR books, I’m doing nothing illegal.

    @MikieV

    I’m not exactly sure, so I’m shooting in the dark here, but I think you’re asking what exactly Apple has done that lines up equivocally with the “Microsoft with IE” thing. Apple has stated in their developer agreement to which any person publishing apps to the App Store must agree, that an application must be written natively in an Apple-approved language. The agreement states that an app cannot be converted to an Apple approved language from another language prior to submission. Their currently approved languages are C, C++, and Objective-C. So, developers who use other languages, such as C# (see: MonoTouch [http://monotouch.net/]) and Flex (see: Adobe CS5 [http://labs.adobe.com/technologies/flashcs5/appsfor_iphone/]) will either have to learn a new language, or not deploy applications to the iPhone. While MonoTouch boasts that it still has apps being accepted through the App Store submission process, the developer agreement actually prohibits it. This prevents these developers from being able to effectively produce content on Apple’s devices, while (for better or worse) they would otherwise be able to publish their content across a multitude of other platforms using the same code base. While it appears through the fact that MonoTouch applications haven’t been targets of nasty letters or App Store rejections that Adobe was the target of this change to the Developer Agreement, it does effectively prevent anyone from submitting any application to the App Store compiled from any source code into a machine code capable of running on the iPhone OS, unless that source code was written in Apple’s specified languages. This prevents a large number of developers from being able to deploy their applications to the largest mobile application market place. This is how it equates, in that Microsoft did the same thing by not allowing browser developers to effectively deploy their products on the largest desktop application marketplace.

    You bring up an interesting point on the PC vs. SmartPhone outlook on a “locked down” device. Although, personally, I’d probably like to see an article written from a far more objective viewpoint than what I’ve seen in most of the articles I’ve read from this author.

    @atsysusa & @Ringgo

    I’m cracking up at the pet peeve. I can’t stand it myself either. Double negatives annoy me, too.

    @donarb

    Perfect example of why I DON’T really give a crap about Flash, as I’ve stated many times to many people, and several times in comments on this blog. See above short blip on MonoTouch, as that’s the direction I was looking before the changes to the wording of the Agreement. I will note that he says several times in the video that it’s a prototype device running a prototype of Flash for Android. Also, as you can see from the demo videos from Adobe (see: http://labs.adobe.com/technologies/flashcs5/appsfor_iphone/), their apps that were compiled down ran fairly smooth, surprisingly enough, although I’m sure they would have clipped any crashes from videos they put on their own home page.

  • md5sum

    @md5sum

    Don’t enclose URLs in parentheses. The Adobe link should be:
    http://labs.adobe.com/technologies/flashcs5/appsfor_iphone/

  • berult

    Apple is unique. It blows the competition away in terms of technological creativity, platform integration, brand recognition and loyalty, consumer satisfaction, and just about any business criteria you care to mention.

    It lags Competition in terms of classic institutional Media Lobbying. Noisy and consequential in the realm of ‘user experience’, subdued and defenseless in ‘wishful thinking’ Land.

    You wish to prove Apple’s wrongdoing and cut it to size? To build a case against Apple is as easy as it once was to build a case against an intelligent, attractive and independent woman for witchcraft. The Law and its interpretation by Courts and administrative bodies, springs forth through breaches in Power sharing consensus in a given Society, at a given Time, in a given era.

    The big Automakers and Oil Companies joined forces to stifle development of the electric Powertrain for Decades, with Legal impunity. The consensual Technological Power Brokers that be, can just as well misinform, lobby and sue the fluidity out of Apple’s creative equilibrium; after all, trading with the Devil poisons the well for the happy consumer too.

    An Apple like developer of alternative Energy would have altered History. Sad that it could only be apprehended in hindsight.

    A developer of quantum leap, user centric, non binding meta communication tools is altering History in Real Time before our very eyes. For once Foresight pushes back.

    Secular cold comfort for noise, fended off by guiltless poise.

  • mr_kitty

    @md5sum wrote:

    ….”In other words *I* wrote a book, and *I* am going to exclusively sell it through Amazon. Amazon can’t MAKE me only sell it through them. Nor can I FORCE Amazon to sell *MY* book. I’m helping Amazon by ALLOWING them to exclusively market my new title, and they’re helping ME make my product more “desirable” through this “exclusivity”. It’s a commonly used MARKETING practice. If in that contract, however, I added the condition that during this exclusivity period, they could ONLY sell MY book, THAT would fall under antitrust, since it is limiting OTHERS. So long as I’m not stopping anyone from being able to purchase my book, and I’m not stopping anyone else from selling THEIR books, I’m doing nothing illegal.”

    Great! So Amazon wants to publish my book and they’ve agreed to promote it without requiring exclusivity! But hey, Apple will ALSO publish my book if I translate it into this “epub” format…. Great!

    But amazon won’t support epub, they’re requiring that I use the kindle tools to compose and publish.

    Is Amazon being anti-competitive because they won’t allow me to submit this third party format?

    Ultimately, isn’t that what we’re talking about here — whether or not Apple has the right to control the format (and by extension, content) of the applications they sell in their store?

  • Nathan

    @md5sum

    “This prevents a large number of developers from being able to deploy their applications to the largest mobile application market place.”

    By stating that a program must be written in a certain language, is Apple preventing developers from deploying applications? My understanding is that C, C++, and Obj-C are ubiquitous languages that everyone has the ability to learn. Granted, if a programmer has used Flash his/her entire life to write, it would be difficult to switch to a new language, however not impossible; and in no way preventive. Apple is not denying Adobe the ability to make mobile applications, they are only stating the means as to which it can be written. Adobe has access to Apple’s mobile market; they can write their own applications in C, C++, and Obj-C. If Apple was actually preventing Adobe from submitting an application that agreed with the contract, then anti-trust issues may be viable, but unlikely.
    Book publishers and academic journal publishers demand that a literary work be presented in a certain format: APA, MLA, etc.. Apple’s situation is no different. There are no barriers to submitting, only guidelines in which the submission will be considered for acceptance.

    Let us have an example:
    As an entrepreneur, I am going to start a book series that features different artists’ haikus. My guess is that there is a market for books containing only haikus that will well like hotcakes. I will make millions. Now after I’ve made my millions, and my poets have made millions from the royalties, a company called Eboda comes along and tries to submit their short stories into my book series. They are stating that they have a right to my haiku marketplace and cash in on the millions I’ve made my developers (Oops, I mean poets). Do they have the right submit their short stories in my haiku books, despite the several short story book markets that exist?
    Does the government have the right to tell me what Media I am aloud to publish in my haiku book series?

  • http://www.cyclelogicpress.com Neil Anderson

    Well written analysis. Adobe sees their Flash cash cow slowly sinking in the west. And by that pesky Apple they left for dead a decade ago. Oof!

  • gslusher

    @md5sum

    Are you an attorney specializing in antitrust law? You write as if you’re an expert. Perhaps you can give us your legal background–what law school you graduated from, where you are admitted to the bar (state and federal), how long you’ve been practicing antitrust law, etc.

  • mihomeagent

    md5sum: “Apple has created a contract that prevents Adobe from effectively competing in the application creation market on mobile devices.” What mobile devices? If they can’t create on their own compiler Flash that plays on one phone, they can’t effectively compete in the app market for mobile devices? That’s not remotely true. They can compete on the majority of devices. Effectively is another thing—but it’s not Apple that makes their work ineffective.

  • cadillac88

    Daniel – great article. I think Apple has gotten big enough that the idea they might be somehow restraining trade or competition is fast becoming plausible to some. If Adobe did file a complaint they would do that just to see the headlines “Apple under investigation for Anti-Trust”. This would help undermine Apples reputation if nothing else. There are plenty that so want to believe Apple is evil that they ignore the obvoius and instead look for ways to bend the facts to suit their beliefs. Like the legal experts we are reading here. The obvious being that Apple is calling the shots for their platform, not the competition’s. It makes it tougher for Adobe when platform owners do that. And in fact all mobile platform owners can do the same thing Apple is doing. That could shut Adobe’s xplatform tools completely out and there is really nothing that could be done about it. None of that would be anti-competitive in any way. The one that really needs to get that is Adobe. But you’ll need to explain it using 19th century analogies as they are rooted further back in time then anyone imagined.

  • JohnWatkins

    I’ve read about 11-year-old children and previously computer illiterate artists who have authored iPhone apps (in fact I’m learning Objectiv-C and Cocoa myself at the moment.) Its amazing to me that computer science professionals find it so offensive, archaic, and daunting.

    What’s really funny is that I see just from my meager experience (Basic and Fortran 30 years ago and C about 10 years ago) that writing with Objective-C and Cocoa are clearly the smartest, most sustainable, and highest quality route to create quality applications for the platform.

    Its not that big of a deal.

  • Zeta2099

    Wait, wait why are you feeding the troll? Come on… I mean he says that “Apple has created a contract that prevents Adobe from effectively competing in the application creation market on mobile devices.”

    I’m happy that someone thinks that apple iPhone is “the market” of mobile devices… feels nice even if it’s just a dream >.< , but going back to the reality… if we have some memory i think apple only represents like 30% of the market?

    Please someone help me there, I don't remember at all the correct number, well maybe with the tablets? Maybe in that "market" apple really is a monopoly? But with the iPhone? Give me a break… that is being delusional, funny thing again is that the "Judge dredd" here thinking as jury – executor, decided that apple has already the super duper capacity of blocking someone to work in the "market of mobile devices" Again… how much of the mobile devices "market" apple "owns"

    It's very simple to discredit this argument because apple is not the "market" is part of it… so if apple doesn't want to work with someone in their share of it… what is the problem? Loss for apple not for the Adobe fans out there (oh crap i mentioned the dreaded mob) XD

    So yeah Apple is mean, no wait a minute is EVIL, just because in its share of the market doesn't use Flash, yep you hear it here first. Apple is the worst company out there…

  • http://blog.techflaws.org Techflaws.org

    Another good article, Dan. Have you already read and laughed at this?

  • md5sum

    @berult — Eloquent, but really… wtf?

    @mr_kitty

    They’re not just requiring a different FORMAT, they’re requiring a complete reauthoring. Adobe CS5 will compile Flash down to a format compatible with the iPhoneOS and it’s processor architecture. It then runs as a NATIVE app without an interpreter. The comparison would be for you to have to rewrite your book from scratch in a completely different language, then package it and submit it.

    @Nathan

    Can you twist the situation some more please? Let’s just turn it into something more like you buy books and you think that this is some evil plot to make you have to buy books that you don’t want to read. There, I twisted it more for you. Now you won’t have to be creative at all! As an AUTHOR you can write whatever you want, but as a PUBLISHER you can’t refuse to accept an author’s work because he writes with a pencil and not with a Bic brand ink pen.

    @gslusher

    No thanks, I’ll decline to produce my credentials at this time.

    @mihomeagent

    Apple did negate their work, to the point that NATIVELY functioning applications written with a PEN that Apple doesn’t like the color of get rejected from the App Store.

    @JohnWatkins

    I’m happy for you learning to program. You’ll fit right in, seeing that you can’t spell. Maybe you’ll make some more spam apps that serve no purpose and crash frequently for the App Store that Apple will happily accept because they were written in an approved language.

    @Zeta2099

    Wow, you went right back to the monopoly thing, didn’t you? Can you please, please, please for the love of all things pure and holy READ before you start making smarmy remarks? KTHXBAI!

  • Player-16

    @mr_kitty:
    ‘Is Amazon being anti-competitive because they won’t allow me to submit this third party format?’
    According to ‘md5sum’ ad nauseam diatribe, it is. He sounds like a person that knows the contract exist; but does not read them. [Yeah, I went there!] When he said “Apple has created a contract that prevents Adobe from effectively competing in the application creation market on mobile devices, which in turn does effect interstate commerce” without being specific, then I knew he was grouping Apple’s App store with every other app store in existence: and I was right. No matter how simple you and others made the story, Apple was out to block Adobe from loading flash on every hand set in existence; even to the point that he confused ‘atsysusa’ who is in agreement with him but introduced a story which made sense but was against ‘md5sum’. If you write an app ‘under contract’ you MUST abide by ‘that contract’ or face rejection. That is not being unfair. Yes Apple ‘has’ formed a contract, back in 2008, and transferred it and slightly modified it to include the iPad. They just started pushing 3.3.1 back in March with SDK 3 before SDK 4 came out. Now Apple is stressing their point that if you contract with us, you must abide by our posted rules that we set out or you will be informed otherwise. If Apple detects ANY 3rd party assisted writing that they don’t like, whether from Ogg, Adobe, MS, etc. and it does not come up to standard, REJECT.
    I’ll make a story. You’re under contract to drive an ‘Applied-1’ truck in uniform. (You sneak your father on board to drive; he’s better). Soon, someone sees 2 heads in the cabin. Reported. Come to the office. Under contract, YOU are to drive the truck and NO passengers. You complain ‘That’s not fair! I’m being singled out!’ and you’re fired. There’s a acquisition then a hearing. How far will this go?
    Wiki is a good reference for an understanding but it’s a rubbery figure. I would also reference somewhere else also.

  • md5sum

    @JohnWatkins

    I would like to apologize. While it may have been amusing, my statement was very much out of line, and that’s not the reason that I comment here. I applaud you for learning something new, and wish you the best of luck at it. At a very minimum you’re at least attempting something that likely few who post here have.

  • gctwnl

    Though I understand Apple’s goals here (preventing mediocre intermediate levels to kill iPhone OS innovation, a thing that is another clear example of their “user experience” focus, which explains almost everything they do), I do have some uneasy feelings about all of this, especially because it damages the App Store as a market place more than structly necessary.

    E.g. (;-) Apple can yank any app on a seconds notice from the App Store for reasons that can change by the minute. For a business trying to make money on that market place, that is a huge operational risk that cannot be hedged.

    With respect to the new developer stuff in the agreement, there might be other options, i.e. (;-) why could Apple not have stated that any app development tool must be able to support iPhone OS innovations within a time frame of (say) 6 months and concurrently demand from iPhone apps that they are not designed such that they damage the user experience of the platform as a whole (e.g. by killing battery life or delivering a different GUI-concept)?

    Instead of demanding building apps with Apple’s tools, why could they not have excluded anything that is damaging for innovation and user experience?

  • obiwan

    @mr_kitty

    “Ultimately, isn’t that what we’re talking about here — whether or not Apple has the right to control the format (and by extension, content) of the applications they sell in their store?”

    No, it is not about the format. It is about the PROCESS you have to employ, to create the accepted format. As an analogy: if Amazon would (for example) accept .doc files as book format, but would only allow files created with MS Word. No .doc files created with OpenOffice or Pages.
    I dont know if this would be anti-competitive behaviour, but in the long run it would drive authors away from publishing their stuff on Amazon.

    @JohnWatkins

    “Its amazing to me that computer science professionals find it so offensive, archaic, and daunting.”

    There is nothing wrong with C/C++/ObjC and XCode, it is about the unneccessary limitation.
    When starting a project, developers (beyond 11 year old kids :) usually make decisions about which tools,languages,IDEs,libraries,environment,CVSs,platforms,etc.. to use, to get the job done.
    Many things factor into these decisions: available options, expierience, cost, time, requirements, quality, funtionallity, and so on. Sure you can write any Program in C or even in Assembler without using any 3rd party libraries, but it might not be the smartest and most efficient choice in most cases.
    I dont see, how artifically limiting developers options will benefit anyone.

  • petemonsy
  • http://mrbitch.tumblr.com/ mrBitch

    @ Nathan, RE: ” .. Apple is not denying Adobe the ability to make mobile applications .. ”

    This is a good point, and Apple has already approved Adobe’s iPad app : “Ideas” :
    http://blogs.adobe.com/jnack/2010/04/draw_share_with_adobe_ideas_for_ipad.html

    Most interesting is the comments section FTA (where Adobe’s John Nack is asked if they used their Flash-to-iPhone converter) :

    FTA :
    James Fritz — 10:22 AM on April 9, 2010 :
    ” .. Do you know if this application was created using the Flash or apples development tools?”

    Adobe’s response :
    [The latter. The Flash packager stuff has never been positioned as being a great fit for every kind of project. –J.]

  • Player-16

    @Zeta2099: How could I have been such a fool. It was at post 27 when I started writing. Now he’s gone off the deep end.

  • pa

    @md5sum,

    Which market are you talking about?

    I am trying to respond to these:

    “Apple DOES have the biggest App Store. Adobe isn’t in the “tablet” market, or the “operating system” market, or even the “phone app” market… they’re just trying to dip their feet in the MOBILE application market, which is the one place that Apple does hold a monopoly.”

    “But Apple has created a contract that prevents Adobe from effectively competing in the application creation market on mobile devices, which in turn does effect [sic] interstate commerce. By definition, it fits in the same shoe that Microsoft fit into years ago with Internet Explorer.”

    Are we talking about the “MOBILE application market” or “application creation market”?

    You can’t cite numbers from one and then apply the law to the other.

    First of all, Apple control neither market.

    Mobile application market: Most (practically all) of the apps on the App Store are not made by Apple. Apple’s share of the App market is tiny. Unless, of course, you are referring to the App distribution market. But here, Apple is not preventing an Android developer from selling apps from anywhere except the Apple app store.

    Application creation market: Apple’s tools are only specific to Apple’s platform just as Google’s is to Googles. Apple does not make cross platform development tools. So it does not even compete with Adobe in cross platform development tools. And since Apple is not trying to prevent anyone to make development tools (either specific or cross-platform) for any other platform (of which there are many) than it’s own, then I don’t see how the Sherman law can apply?

    Please be specific about the issues here and don’t try to mix up “markets” and then try to explain whether section 1 or section 2 applies, and whether or not market share is relevant. It seems to me it would be rather trivial for Apple to show that no part of Sherman Antitrust Act applies to Apple’s business practices.

    The Microsoft IE issue was entirely different. Microsoft was shipping IE with every copy of the OS as a default browser and then using this market penetration in conjunction with making parts of the web proprietary in an attempt to then extort licensing fees for its proprietary forced on the web. Microsoft is in the license fee collection business. Recall that recently they signed a contract with HTC to do just that – with more to follow, I am sure.

    Apple on the other hand supports open standards and is not about singly controlling web standards and extracting licensing fees from others. Apple is in the device-making business.

  • pa

    @gctwnl,

    “Instead of demanding building apps with Apple’s tools, why could they not have excluded anything that is damaging for innovation and user experience?”

    Because that is a much, much bigger can of worms.

  • http://berendschotanus.com Berend Schotanus

    :-)
    Daniel: well said!

  • ChuckO

    md5sum is a troll. Please don’t feed the troll.

    What’s up with these Glen Beck fan troll’s showing up here? I mean Jasus what a farking douche!

  • kerryb

    As I see it and I may be completely wrong, Apple is preventing the use of Flash as a tool to write apps for it’s mobile devices not preventing Adobe from developing another tool that can be used to create apps for these devices. Apple claims that Flash wrecks havoc on these devices and they can prove this with hard evidence and tests. Why should the law force Apple to allow Flash on its devices when Apple can prove it will harm it’s business ultimately? Apple in return could do nothing to get Adobe to write its software in Cocoa and not Carbon for all those years. Apple could claim that customers wanted a superior Photoshop experience left the Mac platform and headed to Windows where Adobe products performed best due to Adobe intentions.

  • even

    Wrong. Daniel is wrong, Wikipedia is wrong, and previous commenters are mostly wrong. A monopoly is not what you think it is. Microsoft doesn’t have a monopoly in PC operating systems or in anything else (and never did have), neither does Adobe have a monopoly in dynamic media content or in anything else, nor does Apple have a monopoly in MP3 players or smartphones or online music stores or app stores or anything else.

    A monopoly is created by the government, when a company is made, by force of law, the exclusive provider of a product or service.

    The Post Office has a monopoly. The Federal Reserve has a monopoly. Every company but the post office is prohibited from offering regular mail service in the US. Every company but the 24-branch federal reserve bank is prohibited from creating paper money in the US.

    Apple, Adobe, Microsoft, cannot acquire a monopoly without help from the state, because only the state is powerful enough to compel would-be competitors from entering into competition with the privileged company.

    Daniel writes “Apple broke the back of Microsoft’s monopoly”, which only goes to show that Apple was able to compete with Microsoft because Microsoft did not in fact have a monopoly. Lashing out at pundits and journalists for being sloppy and lacking integrity is fine, but Daniel’s criticism would carry more weight if like most who were taught only the government’s side of the story during their government school years, he wasn’t so confused on how the economy actually works. For a competing view which might rid you of some of these prejudices, check out Walter Block’s Defending the Undefendable.

    [A monopoly is simply control of a market by a single party. Yes, it might be created by the people (to set up a municipal utility where competition would not make any sense, or a national post office where the security interests of the country outweigh the need for a competitive market), but it can also be created by business activity where one entity ends up controlling a given market.

    This does not require government action to create, as is obvious to anyone who isn’t blinded by the anti-government radicals who suddenly realized that government was evil once there was a black man running the government.

    Having a monopoly isn’t usually illegal unless you use your position to prevent competition from existing. There may be cases where the government needs to takes action to prevent abuse or fraud in markets, which is the purpose of government, and why it was invented by people.

    Having a monopoly does not mean you are incapable of losing it. Trying to prevent competition means you are abusing your position, it does not means will necessarily prevail. What absurdity. – Dan]

  • tundraboy

    I hate to pile on to md5sum but here I go anyway.

    His main assertion that the Apple contract with developers restricting the dev platforms for iPhone app development is patently illegal. I’d say no, it is not a cut-and-dried case of restraint of trade. The type of contracts that are hands down restraint of trade are the ones that say “if you sell an app for the iPhone, then you can’t port and sell the same app to another smartphone platform without threat of sanctions from us.” Or worse, if you write apps for the iPhone then you can’t write apps for any other smartphone. This is what Microsoft did. They threatened to punish any PC maker who preloads, much less features a browser other than IE.

    Apple is just saying “if you wish to write apps for the iPhone then you have to use these dev platforms.” The contract never mentions anything about what a developer actions outside of the iPhone playground. In fact Apple has been very careful about steering clear of any such contracts or agreements.

    But yes, even with the above, Apple’s dev contract is still not in the clear. The case law however has been pretty clear that if an agreement like the one in question has clear technical and product quality justifications then they are valid. This is what Microsoft tried to pull with IE vs Mosaic and the judge didn’t buy it.

    Apple though has laid out a very compelling technical/product quality case on why third party dev platforms are bad for their devices. If needed, they can even point out to the laggard development cycles of Adobe’s Mac suites as evidence. Furthermore, the courts are very, very reluctant to second guess (and rightly so!) companies, especially companies on the technological leading edge, on their technological and product design decisions. They just don’t have any competence on this. So they will never tell Apple “well, redesign your devices so that apps built using Adobe’s dev platform will not pose any technological drawbacks for your products.” That is basically what you are saying if you insist that iPhone apps be open season for any dev platform.

    So, Adobe’s task is simple but well nigh impossible: Prove that Apple’s reasons for restrictions on development platforms is bogus not just today but in the future as well.

    Buying a smartphone and apps for it is not the same as buying a house and furniture for it. A nice house is still a nice house even if you fill it with crappy powdered-wood furniture. A smartphone’s perceived and actual quality, on the other hand, goes down if you load it with crappy apps. That’s why it is ridiculous for a homebuilder to lay out restrictions on what furniture the home buyer can put in her new house, but it is perfectly reasonable for a smartphone maker, who wishes to protect its reputation for quality, to set technical/quality restrictions on the apps that they sell in their app store.

    Here’s another analogy for those who can’t have enough analogies. Suppose Adobe is allowed free license to interject its dev platform between Apple and its iPhone customers. Imagine the owners of a commercial race track trying to build a state of the art speedway. They basically have control over the design and specification of the race track and build what they believe to be the best racing venue ever. But for some reason, there’s a section of track over which they have no control. Some other party gets to decide what type of surface and banking to put on that section. Furthermore they can do the work at their own pace. That is what Adobe wants to be able to do on Apple’s race track.

  • gctwnl

    @even:

    There are government-supplied monopolies (by law, or ‘de jure’) and monopolies that exist without government backing. An example would be Microsoft’s Office monopoly, which exists in practice (de facto). Saying that something is not a monopoly because Apple could break it (thus showing there was competition) is a *bit* like saying a table does not exist because it can be broken. More importantly, it is not 0 or 1, a monopoly can be less than 100% and still effectively be a monopoly.

    @pa:

    You are probably right. Hard to define.

  • tundraboy

    @even “A monopoly is created by the government, when a company is made, by force of law, the exclusive provider of a product or service.”

    Jesus Christ, at least make sure you are knowledgeable about a topic before you start spouting off. You just embarrass yourself. Where did you get that silly definition of what a monopoly is? Not all monopolies are created by government.

    Also, to remove some of the confusion, based on the context, when Daniel and other posters here say ‘monopoly’ they really mean a firm with overwhelming market power, or an overwhelmingly dominant firm. It’s just a mouthful to say so we use the short cut ‘monopoly’.

  • ChuckO

    When this inevitably ends up a “win” for Apple I wish Adobe would be forced to pay the costs of the Gov’t investigation and Apple’s legal bill. This whole thing is complete and total codswallop.

  • ChuckO

    @tundraboy 46, I hate to hassle you over a clearly sincere attempt to educate md5sum but the guys a troll and your wasting your time responding to an obviously desperate attempt to discredit Apple. I guarantee he just hates Job’s because Steve promotes the “NYTimes” and is too liberal.

    Look at this absurd statement he makes in his initial post:

    “But Apple has created a contract that prevents Adobe from effectively competing in the application creation market on mobile devices”

    Somehow Apple is not only keeping Apps created with Adobe’s product off the iPhone but also all other platforms? Ridiculous. Then he goes off somehow connecting this to the Constitution and an impact to his personal freedom like all Glen Beck fans.