Outrage of Apple's Company Store

In the late 18th, the 19th, and early 20th centuries, as industrialization spread across America, "company towns" began to be formed, small communities centered around a factory -- towns in which a corporation owned the real estate, built the housing for the workers, and generally ran the local governments. Included among the amenities there were generally "company stores" to provide the workers with foodstuffs, clothing, fabrics, hardware goods, and the like. In time, these stores came to be considered symbols of oppression.

Wikipedia, for example, notes this often was "an arrangement in which employees are paid in commodities or some currency substitute (referred to as scrip), rather than with standard money. This limits employees' ability to choose how to spend their earnings—generally to the benefit of the employer. As an example, scrip might be usable only for the purchase of goods at a "company store" where prices are set artificially high.

"While this system had long existed in many parts of the world, it became widespread in the eighteenth and nineteenth centuries, as industrialization left many poor, unskilled workers without other means to support themselves and their families. The practice has been widely criticized as exploitative and similar in effect to slavery, and has been outlawed in many parts of the world."

Forcing the workers to buy at the company store was the heart of the system.

Something similar has been approached, but until recently been never realized in the new world of data handling.

Imagine, for example, the furor that would arise today were Microsoft to engineer a new Windows operating system that would prevent totally using any word processor other than its own WORD application. In point of fact, critics have asserted that earlier versions of Windows, while not preventing using outside software, did indeed offer certain specific operating advantages to Microsoft's own spreadsheet, display, and word handling programs. And only this year did the European Union force Microsoft to present other internet browsers than its own EXPLORER on an equal footing in the latest version of WIndows.

But Apple, always fiercely defended by its ultra-loyal devoted partisans, has seemingly managed to create its own "company store," successfully selling one data handling device to which it totally controls normal access, the iPhone, and now presumably, the iPad to come.

I write as one who bought the original Macintosh, upgraded through the years, using the computers to manage two medical offices, even wrote two (functional but not totally successful, alas) commercially available programs for it (a physician's California office billing relational data base program---this being surprisingly complex -- and also a teleprompter simulator that simultaneously, while presenting scrolling words under speed control to a laptop user, also showed synchronized slides and videos to the audience), and has generally appreciated Apple's offerings through the years. But I nonetheless look with growing disappointment at the company's restrictions on outside resources, and its censorship or suppression of software it finds objectionable -- sometimes disgracefully on purely competitive business grounds.

Certainly, Apple has the right to sell what it wishes in its own stores, internet-based or in reality. But preventing others from selling software to its products? That's precisely the 21st century update of the "company store." And forbidding outside developers to speak out about their relations with Apple -- is this not Big Brother in action?

When commentators have been critical on this point, Apple devotees have responded: "It's a company, and they can do what they want." And also, "There are contracts for the developers, and they signed them willingly."

Those writers are displaying a woeful misunderstanding or lack of knowledge of the law. There is a reason, for example, why in the splendid film and later television series, THE PAPER CHASE, about a beginning law student, the sternly curmudgeon professor, portrayed by the magnificent John Houseman, thundered: "I teach you to think like a lawyer!" and had, as his subject, the most important first-year law course, Contracts. Because, as every law student rapidly learns, just because both sides have signed a piece of paper with words written on it, a valid contract is not thereby created. There are many, many reasons such paper agreement can be considered invalid---and chief among them being a finding by a judge that its provisions are against "public policy."

So as a former attorney, I think there is a reasonable probability that many if not most, of the provisions of Apple's absurdly restrictive "contract" with developers for its iPhone (and presumably iPad) system would be voided with a court challenge, since they are clearly against certain public policies. Attempting to forbid, by a specific provision, an outside developer from speaking out about relations with Apple, and about the contractual provisions themselves, is certainly a BIG BROTHER, perhaps Fascistic, tactic! Should this muzzling not be against public policy?

Monopoly avoidance is another such public policy, and indeed, one that has led to various forms of legislation in many countries. Microsoft certainly did not have an absolute operating system monopoly in Europe, since the Macintosh OS and various open source operating systems are in widespread use there. Nonetheless the EU concluded there was a sufficient monopoly interest that Windows could no longer be permitted to favor Microsoft's Explorer.

So how then, can Apple's more restrictive closure of its systems for the iPhone and iPad be defended? My guess here to that this "company store" policy can also be voided, because Apple does have a quasi-monopoly, established by its restrictive operating systems, over the hardware universe it has pioneered.

Another legally valid reason for considering a contract invalid i that it is not the result of legitimate "bargaining" between the signatories, in that one side has a significant advantage. This is called a "contract of adhesion," and can thereby be voided. Can any Apple functionary or fan maintain that an iPod, iPhone, iPad developer can bargain, on an equal footing, with Apple?

Dr. A. N. Feldzamen
3 Arrowood Lane
Ithaca, New York 14850-9793
607-257-8080
alfeld@twcny.rr.com