Apple Using Open Source While Enforcing Monopoly Rents

One big aim of open source is to eliminate “monopoly rents,” excess profits forced on users by someone controlling a bottleneck to commerce.

The idea has been around for over a century. Much of our anti-trust law stems from railroads applying monopoly rents to their farm belt operations in the 19^th century.

Once suppliers became dependent on railroads for moving goods, the railroads could raise prices at a stroke, sometimes because they were the sole supplier of transport to farmers, and sometimes because they made a deal to do so with another supplier – like John D. Rockefeller's Standard Oil.

Music publishers have long charged that Apple's iTunes is a monopoly of just this type, one that has made theirs a declining industry. The fear is that Apple's App Store will become a similar bottleneck, with 30% of all revenue going to Apple.

What is interesting is the role open source is playing in what The Register calls the greed tax.

Last fall, Apple put the capabilities of open source Readability into its Safari browser. But when Readability tried to make the same technology available through iOS this year, Apple rejected it. 

Readability creator Rich Ziade did not threaten legal action, only a market response.

To be clear, we believe you have every right to push forward such a policy. In our view, it’s your hardware and your channel and you can put forth any policy you like. But to impose this course on any web service or web application that delivers any value outside of iOS will only discourage smaller ventures like ours to invest in iOS apps for our services. As far as Readability is concerned, our response is fairly straight-forward: go the other way… towards the web.

There is, of course, another route for Readability and other open source technologies – the Android platform. Android sales exceeded those of Apple in the fourth quarter of last year. The Android market claims growth of 861% in 2010. It's still well beyond Apple, which (in part thanks to the iPad) had $1.72 billion in App Store revenue last year, an increase of 132% over the previous year and 87.2% of the market.

Those are Microsoft-sized numbers, and while Apple insiders are crowing they're the kind of numbers that tend to get the attention of the Justice Department. The question for open source is whether we should encourage pursuit of that avenue, or whether Readability's market approach is best?

You tell me.