February 2008 Archives
This posting began life as a reply to a comment from Bingo Bango Boingo (BBB) to my previous posting. It got too large, and was promoted to a posting in its own right :)
I'm in Australia, and don't physically have an iPhone or access to one, so my information on their operation is necessarily second-hand. That said, in the course of preparing the article, I solicited information from different people who actually used iPhones in the US to find out more information about the 'activation' process.
My information -- confirmed from more than one source -- is that the iPhone will not work at all (with the exception of making emergency calls) without being activated. That is, no WiFi, no iPod-like functionality, nothing. I don't think that such a situation would have a problem getting over the futurity/compulsion hurdle, unless people are purchasing iPhones for expensive paperweights.
If BBB is correct, and the iPhone functions as everything else except a phone, I still think it would get over the futurity/compulsion issue. If people are buying the iPhone and intending not to activate it (and not to bypass the activation), wouldn't they get the same kind of functionality out of an iPod Touch? I don't know enough about the functionality of each to be able to answer this question, I'm not a Mac expert.
Some of the reporting of the article has been less than entirely accurate. News Limited, in their wisdom, have awarded me an honorary doctorate. ("The finding comes from an analysis of the iPhone under Australia's competition laws by Dr Clapperton and fellow QUT law expert Professor Stephen Corones"). I'm not exactly comfortable with them describing me as a 'fellow law expert' with someone as eminent as Professor Corones, either. I am but a 'umble research peon.
The Australian Personal Computer piece is better than most of the coverage, because they actually read the article instead of parroting a story which was distributed on the AAP wire.
Professor Joshua Gans in his blog seems less than impressed with our article. Which is fine, I wasn't expecting everybody to agree with it, but I think he may have missed one of the important points of our article. Professor Gans writes:
The only serious legal issue might come in relation to Third Line Forcing which says that one company cannot sell a product that makes it a condition of sale that the consumer purchase a product from another company. However, Apple need only sell the iPhone through a carrier's retailers and it is likely to be fine. In any case, it can obtain permission from the ACCC for any arrangement it might propose.At page 362-3 of our article, we advance what is, so far as we know, a novel argument that Apple may still engage in third-line forcing regardless of whether the phone is only sold through a carrier's retailers or not.
A very simplistic explanation of third-line forcing is where a company (Apple) won't sell you something that you want (an iPhone) unless you buy something else (which you may or may not want) from somebody else (who you may or may not want to deal with, like AT&T, or Telstra). So if Apple doesn't sell the iPhone, they're off the hook, right? Not necessarily. Third-line forcing usually involves two contracts -- one between the consumer and each supplier. If Telstra sell the iPhone, and it's technologically tied to Telstra's services, there's no contract with Apple, right?
Wrong. There's the EULA for the iPhone software, which is expressly a contract between Apple and the end-user ("The software ... are [sic] licensed, not sold, to you by Apple Inc.").
The TPA deals with third-line forcing in ss 47(6) [supply on condition] and (7) [refusal to supply unless condition agreed to]. The legislation talks in terms of 'supply' of goods or services. A software licence almost certainly falls within the TPA definition of 'services'.
So, if Apple:
- Supply you with services (the licence to use the iPhone software);
- On the condition that you acquire services from somebody else (the carrier that's paying them kickbacks)
And yes, Professor Gans correctly makes the point that Apple could try and obtain permission (technically, an exclusive dealing notification) from the ACCC. Actually obtaining that permission is not a given. I think that the ACCC might well object, which they can do if they are not satisfied that the public benefits of the third-line forcing would outweigh the public detriment, and I think that balance would be weighing against Apple.
Anyhow, I encourage people to read the article and make up their own mind.
Of course, use of the doubleTwist software is subject to an End User Licence Agreement, Terms of Service agreement, and Privacy Policy. If/when you read them, a stench of rank hypocrisy lingers in the air, as does a suspicion that DVD Jon has sold out, and taken on many characteristics of the evil corporations he's waged war against. Amongst other things, the agreements allow the use and collection of personal information for delivering targeted advertising (despite their website describing doubleTwist as having 'no adware'), and prohibits users from circumventing DRM used by doubleTwist -- even though doubleTwist circumvents DRM used by other companies.
Relatively non-controversial parts of these agreements are not excerpted for copyright reasons. Not that DVD Jon seems to give a damn about copyright...
