Because they don't have a monopoly on smartphones. They control their own platform, but as long as there's a reasonably competitive smartphone market out there, it's not illegal.
First, we have the hardware, and as you say, Apple is certainly in a competitive market with its iPhone offering.
Then, for each type of hardware, we have the software that runs on it. Anyone could write software to run on Apple's hardware, but because Apple lock down the phone and run the only app store in town, they have a de facto monopoly on the supply of software to iPhone users.
Finally, we have software development tools. Again, anyone could write tools to help software developers using Apple's hardware. Indeed, according to recent reports connected to this story, many people have, from Adobe's Flash CS5 team to fans of Haskell.
Again, I'm no lawyer, but I would expect that Apple would be perfectly within its rights to lock down the software that can run on its device, but would not be allowed to use that power to unduly influence the secondary market of how that software can be made.
What gets interesting is when/if Apple's dominance continues to grow to the point that the "iPhone software" market is effectively the "smartphone software" market. At that point, the DoJ and/or FTC will almost certainly decide that many of these policies are anticompetitive and initiate some sort of action to remedy the situation.
So in some sense, Apple needs to worry about becoming too successful: it is only because they haven't achieved total dominance that they can get away with being so ruthless.
"Apple responsible for 99.4% of mobile app sales in 2009"
http://arstechnica.com/apple/news/2010/01/apple-responsible-...
... it doesn't take a Phd to acknowledge that the AppStore IS the mobile SW market - thus - i would rather disagree that Apple argument SHOULD be successful in case somebody (or some agency) should bring a legal challenge to the new draconian policies - which are obviously abusing Apple dominance ...
the question for me is more technical = who can bring such a legal challenge? can developers do that? can users do that? or only a govt. agency can ... in which case - considering the influence and connections Apple has with Washington - that might not happen ...
would it be possible for developers to team up in class-action suit based which could then trigger a govt. investigation?
Presumably Adobe are the most likely candidates who also have serious legal firepower.
This is a chicken-egg situation. Apple has Apps, so more people buy iPhones than other phones. with Adobe's dev tools, devs could make apps for more than one platform - that is a threat to apple. When apple shuts this down it is an anticompetitive act against other phone makers. Because if devs could put apps on more than one platform, then other platforms would become more appealing.
The fact that 99.4 cents of every dollar spent "after the hardware purchase" goes to apple platform.. doesn't make it a monopoly.. it merely means that it is the most successful add-on market..
A good example for comparison.. is a bit old, but illustrates this particular point beautifully.
The fact that more companies are interested in producing add-on stuff for a product and that consumers are more interested in BUYING that stuff.. doesn't mean that a company is anti competitive/antitrust regulated/a monopoly..
Volkswagen beetle aftermarket parts spent some 30+ years as the king of aftermarket parts .. everything from "third party" replacement oem style parts (stuff that matched the original but was cheaper for whatever reason) as well as stuff that essentially completely changed the product into something else (dune buggy conversions, engine swaps, totally different interiors, etc)
Was VW a monopoly because for 30 years 4 out of every 5 dollars spent on "aftermarket parts" was spent on Beetle bits? no and no one ever thought to consider or call it one.. it was just a hugely successful model that didn't change every 11 months, and therefore was a fixed point in space for manufacturers to target.. but more importantly CONSUMERS WHERE BUYING.. as opposed to your avg Ford/GM/Chrysler buyer who for the most part do NOT just go out and buy total conversion kits/hopped up engine parts.. there where many manufacturers who made parts for various successful models such as muscle cars over the years, and still do.. they didn't cry about antitrust because VW add-on makers made more money, nor did they cry that VW should change the way they made the beetle so that "beetle engines" would fit in any car (or vice versa)
There is NO ONE who could bring a class-action and win, and there is no way that adobe could sue and win either.
Because "customer choices" when they have real choice, do not make a monopoly, rather removing customer choice creates a monopoly.
but still it seems the aforementioned laymen had the right intuition - as the appstore draconian policies are finally being looked at by regulators ...
"According to a person familiar with the matter, the Department of Justice and Federal Trade Commission are locked in negotiations over which of the watchdogs will begin an antitrust inquiry into Apple's new policy of requiring software developers who devise applications for devices such as the iPhone and iPad to use only Apple's programming tools."
http://www.nypost.com/p/news/business/an_antitrust_app_buvCW...