Here’s an interesting dilemma for a potentially dominant technology or communications platform: Early Twentieth Century Supreme Court cases found a “public” (and therefore “government” and therefore subject to regulation) role of company towns and their attempts to enforce “private” laws through company-supported police powers.

What happens if Apple’s shiny new iPad gizmo becomes the de facto town square?  Or put more succinctly: What happens when newspapers, magazines and speech generally – presumably limitless and unfettered in the age of the internet – become practically available only on a receiving device available only (or largely) through Apple?

I suspect that antitrust law would be invoked and could sort this out, but that usually happens way down the pike and well after the market – and its implications and winners and losers – has fairly settled out.

But if the case involving Apple’s rejection of cartoonist Mark Fiore’s iPhone app – at least, its rejection before he won the Pulitzer Prize last week – demonstrates anything, it may be nothing new at all.  After all, Apple never pretended to be anything but discriminatory in its editorial control of its “App Store”.  Apple’s same license language quoted by Chittum in the CJR (“Applications may be rejected if they contain content or materials of any kind … that in Apple’s reasonable judgement may be found objectionable, for example, materials that may be considered obscene, pornographic, or defamatory”) is no more or less restrictive or arbitrarily discriminatory than similar language found in Terms of Service found on the most established websites.  Here, then, from the Terms of Service for the New York Times website:

You acknowledge that any submissions you make to the Service …. may be edited, removed, modified, published, transmitted, and displayed by The New York Times Company and you waive any rights you may have in having the material altered or changed in a manner not agreeable to you” (emphasis added).

And these restrictions don’t even bother qualifying themselves with the gratuitous “reasonable judgement” conceded by Apple.

Could this really be more about control of distribution on the Internet?  Or about … control of the Internet?  Apple’s success in transforming music distribution with its ubiquitous iPod (yes, iPod with an “o”) seemingly resulted from simply building a better design than.  While Apple’s limitations in transforming music distribution seemingly resulted solely from Apple’s inability to cut deals with all music labels.

Why should textual content distribution really be any different?  Last fall, Rupert Murdoch’s News Corporation threatened to limit the availability of its content through Google and other search.

Presumably, the New York Times or CJR could do the same through the iPad, Kindle, Sony Reader or Barnes & Noble Nook.

(Although the telling takeaway from the News Corp. experience may be Google’s proverbial shrug in response.)

In a New York Times story last week about the Pulitzer cartoon incident, cartoonist Fiore waxes philosophic: “Sure, mine [iPad app] might get approved, but what about someone who hasn’t won a Pulitzer and who is maybe making a better political app than mine?  Do you need some media frenzy to get an app approved that has political material?”  Well, not necessarily, and it does seem kind of silly that Steve Jobs would now personally reach out to Fiore.  But then again, why would Apple not want to grant a popular political cartoonist a presence on its popular reading tablet?  And why shouldn’t Apple be able to simply make a business decision that some sort of threshold public interest in the application need be attained to merits Apple’s attention?  The alternative presumably would require that Apple embrace all political speech and all potential demands for its desktop space.

We’ve seen this before in other areas of the law.  An example is the perpetually swinging pendulum of 1st Amendment Establishment Clause governance, where on the one hand government must permit and not inhibit all religious comers, or then affirmatively not allow anybody to do anything.

But back to the original question (or back to our question of original intent?): Why should Apple – a private company with a private commercial product – be required to conform with either view of an “open” forum of speech?

In 2008, New York State enacted legislation which may still be the broadest attempt yet to collect sales taxes from out-of-state vendors, basing its legal argument on the networking, linking and affiliate relationships common to many online vendors and particularly, to Amazon.com.

The states may very well be reacting to Amazon’s own aggressive tactics.  In “Sorry, Shoppers, but Why Can’t Amazon Collect More Tax?” (NY Times, 12/26/09), Randall Stross argued that Amazon exploits a tax technique called “entity isolation” to avoid having to collect sales tax in all but 5 of the 18 or more states in which it (and, importantly, its subsidiaries and affiliates) does business through a physical presence such as a warehouse, distribution center, administrative office, or call center.

Stross’s Times colleagues have lampooned Amazon’s policy argument against having to collect state and local taxes on its estimated $22 billion in sales, an argument which might be distilled to “it’s too complicated”.  Wrote Saul Hansell in the “Bits” Blog 2 years ago (“Amazon Plays Dumb in Internet Sales Tax Debate”, NY Times 2/13/08):

“[I]t is certainly an unwieldy mess of rules. But this is the sort of problem that is handled by technology: there is a finite set of variables — location, goods purchased, amount, date, whatever else — and a set of rules to come up with a tax rate. When you look at all the things Amazon does every day — such as the recommendations it offers about goods to buy, or the way it optimizes its warehouse operations — figuring out sales tax looks like a job for the summer intern.”

Stross quotes Amazon founder Jeff Bezos from a 2000 speech, in which Bezos acknowledged the basic premise of state sales tax collection: “You have to charge sales tax to customers who live in any state where you have a business presence.”  Different states charge different rates of sales tax and apply different interpretations (often, widely different) of what is a “business presence”.  Online retailers, too, vary widely in their compliance or more accurately, their view on whether their businesses are subject.

Amazon has, to this point, argued that its sales business directly operates only in 5 states (Washington State and 4 others where it has distribution centers).  So for example, its division which developed and manufactured the Kindle is in California, but structured as a separate legal entity subsidiary with no sales operation.  In Amazon’s view, this “entity isolation” distinguishes it from, say, the online sales of BarnesandNoble.com.  Barnes & Noble collects tax on sales in California and New York and elsewhere based on the physical presence of its stores in those states.

As mentioned above, New York State has taken exception to this argument and is attempting to force Amazon to collect sales tax.  New York argues, essentially, that Amazon’s claim of no business “presence” in New York State is ludicrous in the totality of the circumstances.  In simple terms, New York points to the massive network of “affiliate” sellers of books and other products operating under the Amazon umbrella, many or most of whom sell exclusively or nearly exclusively through Amazon.

Stross reports that Amazon has filed legal challenges to New York and the issue is therefore unsettled.  What is not unsettled is the aggressively upward trajectory of state efforts to collect revenue from online commerce, wherever it is physically located, based on the incidence and (as clearly in the case of Amazon) the volume of traffic in the particular state.