Comment by toast0
2 years ago
The FTC is perhaps a biased source, but they say [1]:
> Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power. Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area. Some courts have required much higher percentages. In addition, that leading position must be sustainable over time: if competitive forces or the entry of new firms could discipline the conduct of the leading firm, courts are unlikely to find that the firm has lasting market power.
The US doesn't have antitrust authority for the world, only for the US. iPhone has had 60% market share (or similar) for a long time now, so it's fair to consider that Apple has significant and durable market power in mobile phones.
Is it a complete monopoly? No, but it doesn't need to be.
From a very brief skim of the claims, the clearest one that stands out to me is the one about smartwatches. If Apple does provide better integrations to Apple Watches than 3rd party watches, that's pretty clearly 'tying' which is prohibited when using a market dominant product to create market dominance in a new market (smartwatches). OTOH, it wouldn't have been a big deal if the Microsoft Band had better integrations than other watches on Windows Phone, because tying is allowed without market dominance.
[1] https://www.ftc.gov/advice-guidance/competition-guidance/gui...
People seem to miss the concept of "market power" vs sales numbers. Apple loyalists love to brag about the fact that Apple users spend something like 7x more on Apps and other services than Android users. They don't brag about that so much when anti-trust comes up - on a weighted basis that would suggest Apple has about 95% of market share and should be treated in the same category that late 1990's Microsoft was.
Serious question. Why is it though, despite forming over 40% of the smart phone market in the US, Android users only spends 5% of the money? It can’t simply be about control, otherwise Nokia or BlackBerry should’ve accomplished that in their hay day.
I'm guessing because outside the Apple ecosystem apps are primarily free.
Apple App Store is $99 annually + cost of owning a Mac, compared to a one time $25 Google Play Store (develop on PC or Mac, with the possibility to avoid the Play Store). More people own PCs (even within the developer community) so this leads to more apps in the PC and Android ecosystem. More competition, means lower prices.
I've also heard Apple is much more strict about what they allow on their App store, which further restricts supply and keeps prices high. I don't think this is an accident, Apple intentionally wants high prices on their platform, because it keeps the illusion alive that Apple devices are luxury devices and a status symbol.
2 replies →
Honestly I don't know.
But if was to guess, I would say that Android users fall into two camps primarily. One is high end tech-savvy users who want it because it's more open, powerful and flexible. These people don't buy apps and services because they are "smart" and use their tech knowledge to solve the problems those things are solving cheaper ways (or for free).
Then there are a second group of Android users who simply buy it because it is cheaper, or they just have absolutely no interest / affinity for Apple's branding. These users aren't going to buy things because their primary motivation in the first place was to not spend excessive money on something they don't care about (or they just don't have the money).
I'd also suggest that perhaps the 7x is a bit exaggerated. It's just harder to account for the revenue from Android apps because it's more driven by off-market streams. But I totally believe iOS is much much more. It might just not be 7x.
>that is, the long term ability to raise price or exclude competitors.
Apple doesn't have this power though. If they raised prices they'd lose sales. And they haven't been able to exclude competitors, there is a robust ecosytem of Android manufacturers.
There's a reason the FTC has been losing almost all of their cases recently. They internalized the idea that a large successful company is inherently bad and focus on that rather than any objective legal standard.
> Apple doesn't have this power though. If they raised prices they'd lose sales.
Yes, that's true for every company. So monopolies don't exist?
It isn’t true of monopolists. That’s the whole point of pricing power. You can raise prices higher than they’d be otherwise.
There are lots of inexpensive phones on the market
Apple does seem to have pricing power. They don't sell (new) phones under $400.
That’s a choice though. Pricing power means *no one* sells phones under $400 because the monopolist has the ability to raise overall market prices.
> Apple doesn't have this power though. And they haven't been able to exclude competitors
Where does your mind drift off to when you read the phrase "walled garden"?
Samsung has a similar ecosystem if one wants to buy it. Plenty of people have macs and android phones, or windows computers and iphones.
Certainly other companies can't be in Apple's walled garden, but in antitrust exclude means exclude from the market. Apple hasn't done that, there's a vibrant market in phones, computers, tablets, smartwatches, etc.
> iPhone has had 60% market share (or similar) for a long time now, so it's fair to consider that Apple has significant and durable market power in mobile phones.
It has market power, but it's not significantly larger than its competition. It's not 60% for iPhone, and 10% split up amongst 4 other competitors. It's 60% vs 40%... and probably more like 58% vs 42% [1].
Does 8% truly make Apple "dominant" to the point that integrating their software with watches in a better manner is illegal? I find that wildly difficult to believe.
> that is, the long term ability to raise price or exclude competitors.
Apple has been able to raise its own prices, but it hasn't been wildly out of line with competitors.
And Apple both makes phones and the software on them. They might be excluding or making competitors to their software have a harder time, but excluding? Not really - they have only excluded other large companies who have distinctly decided to run afoul of their guidelines (specifically, Epic).
1. https://explodingtopics.com/blog/iphone-android-users
In a 60/40 market, probably both parties have significant market power and qualify to have their market powers checked.
And I think that's a great idea, but I think there has been no sign the DoJ plans to do that.
1 reply →
> It's not 60% for iPhone, and 10% split up amongst 4 other competitors
That is basically what it is though. Google is not the 40%, it's Google, Samsung, LG, Motorola, etc. Yes Google Play Store is on 40% of those devices, but they can ship with other stores and some do.
1. It is not Apple iPhone vs Samsung, LG, Pixel Android. But Apple iOS vs Android.
2. The 60% of Apple iPhone / iOS Market "usage" share ( incase people want to be pedantic and refer it as shipping market share ), commands over 70% if not 80% of purchasing power in Apps or other sub market sector. That is a huge difference in market power.
I've seen this quoted multiple times now and I do not think it is the slam dunk people think it is. A literal monopoly is 100% market share, of course that is not required for antitrust law to apply. But the people who quote this intend to imply that 60% market share is sufficient to declare Apple a monopolist in violation of antitrust law, and that does not actually follow from a careful reading of this quote.
I will reply with a separate quote from the DOJ discussing what thresholds of market share are likely to be considered monopoly power:
> In determining whether a competitor possesses monopoly power in a relevant market, courts typically begin by looking at the firm's market share.(18) Although the courts "have not yet identified a precise level at which monopoly power will be inferred,"(19) they have demanded a dominant market share. Discussions of the requisite market share for monopoly power commonly begin with Judge Hand's statement in United States v. Aluminum Co. of America that a market share of ninety percent "is enough to constitute a monopoly; it is doubtful whether sixty or sixty-four percent would be enough; and certainly thirty-three per cent is not."(20) The Supreme Court quickly endorsed Judge Hand's approach in American Tobacco Co. v. United States.(21) Following Alcoa and American Tobacco, courts typically have required a dominant market share before inferring the existence of monopoly power. The Fifth Circuit observed that "monopolization is rarely found when the defendant's share of the relevant market is below 70%."(22) Similarly, the Tenth Circuit noted that to establish "monopoly power, lower courts generally require a minimum market share of between 70% and 80%."(23) Likewise, the Third Circuit stated that "a share significantly larger than 55% has been required to establish prima facie market power"(24) and held that a market share between seventy-five percent and eighty percent of sales is "more than adequate to establish a prima facie case of power."(25)
https://www.justice.gov/archives/atr/competition-and-monopol...
My reading of this is that below 50% is very unlikely to be considered monopoly power while above 70-80% is very likely. 60% appears to sit somewhere in between where it is possible but not likely. Historically, I have not seen any major cases where monopoly power was found at the market share level that Apple currently holds.
It is worth noting that the DOJ in their filing does not seem very confident in being able to prove that Apple's 60% of the smartphone market constitutes monopoly power either. They have instead opted to define a narrower market of "performance smartphones" where Apple apparently holds 70% market share, putting it above the thresholds quoted above. Whether this artificially narrowed market definition will be accepted by the courts will likely determine the outcome of this case.