Competition watchdogs take a closer look at Apple's rules on iPhone apps

Apple's iPhone has come under scrutiny from the US competition authorities, amid complaints that the tech giant is building a monopoly by unfairly locking out software rivals and advertisers.

Regulators are expected to launch an investigation following a complaint from Adobe, the software company whose video-on-the-internet platform Flash has never been allowed on iPhones and other mobile devices from Apple.

By calling in the Federal Trade Commission and the Department of Justice, Adobe is escalating a feud that kicked off last month when Apple changed the terms of its agreements with the developers of iPhone apps.

Apple banned developers from using third-party software, such as Adobe's, and said they could only use Apple's standards for creating apps. Apps are the downloadable games and other features that have made the iPhone a wildly successful smartphone since its launch in 2007. A similar ban applies to apps for the new iPad, which Apple said this week had passed 1 million sales in its first month.

Adobe's software allows developers to create apps that work on many smartphones, not just Apple devices.

Another controversial change to Apple's licensing agreement banned developers from transmitting data to third parties, which could make it difficult for them to sign up to advertising networks from which they can earn money. Apple also launched its own advertising network, iAd, on the day it changed the terms.

The FTC and the Justice Department are conferring on which of the two should follow up on Adobe's complaint and on the wider issues associated with the licensing agreement change. Their work is said to be at a preliminary stage. The FTC is already investigating the mobile advertising market in relation to Google's purchase of AdMob, a big advertising network. The likelihood of action depends on how regulators define the market, since the smartphone market is a small part of the phone market and mobile advertising is a small part of the online advertising market.

All iPhone apps must be pre-approved by Apple and have to be sold through its App Store.

Adobe's chief executive has expressed his fury that Apple is trying to lock developers into using its technological tools. In an interview with The Wall Street Journal last month, Shantanu Narayen said he and Apple's chief executive, Steve Jobs, have "different views of the world". He said: "The world is emerging where there are multiple devices that people are using to access the internet and our customers continue to tell us they would love to have a way in which they can get their content, their brand across multiple devices."

Mr Jobs responded with a long essay attacking Flash.