Apple and DOJ Hold Early Settlement Talks in iPhone Antitrust Case

[Mrkevinfinnerty]

Where would Apple be now if Microsoft asked for 30% of every iTunes purchase on Windows in 2003?

Fortunately the regulatory scrutiny MS were under meant there was no chance of that.

You win some, you lose some 👍

 

[webkit]

The problem with that logic when applied to Apple is that Apple's terms were competitive enough to build one of the largest market of apps in the world. Developers saw the terms and chose to develop under those terms when Apple had minimal market share. Over time those terms have become less restrictive. Now people want to call those same terms illegal and anticompetitive.

Like it or not, that's essentially how antitrust works. Monopoly companies or companies with monopoly power have different "obligations" and are treated differently because their actions can have a much bigger negative impact and influence on competition, innovation, etc. in markets they do business in.

A "small" company engaging in the exact same conduct doesn't create the same competitive harm because it lacks the market power to substantially affect the market(s). If Apple only had 10% share of the "premium/performance smartphone" market in the U.S., the DOJ wouldn't be going after them. Apple's "same terms" and conduct can be now be "illegal", at least from an antitrust standpoint, because of how their dominance/monopoly power more significantly affect market(s).

 

[BaldiMac]

Like it or not, that's essentially how antitrust works. Monopoly companies or companies with monopoly power have different "obligations" and are treated differently because their actions can have a much bigger negative impact and influence on competition, innovation, etc. in markets they do business in.

A "small" company engaging in the exact same conduct doesn't create the same competitive harm because it lacks the market power to substantially affect the market(s). If Apple only had 10% share of the "premium/performance smartphone" market in the U.S., the DOJ wouldn't be going after them. Apple's "same terms" and conduct can be now be "illegal", at least from an antitrust standpoint, because of how their dominance/monopoly power more significantly affect market(s).

You're speaking in general. I'm speaking about Apple specifically. Competitive terms don't magically become anticompetitive because you get bigger. In the US, you have to prove that terms don't have a legitimate business justification and that they actively prevent competition.

As I pointed out, those terms were extremely competitive. They drew in a huge number of developers even with minimal market share. And they have become less restrictive over time. It's hard to argue that Apple has abused market power when they didn't have any.

Apple has not been found to have a monopoly power in the US. If fact, the court in the Epic case specifically said that Apple is not breaking any federal or state antitrust laws. So you're really putting the cart before the horse.

That said, I do kinda support anti-steering bans. The quibble that I have is that people don't really care about the anti-steering part. They just use it as a proxy battle to avoid platform fees.

 

[mrochester]

The problem is when a company has a significant and desirable part of a market, it can be very difficult for a developer to avoid developing for that segment even though they may realize the company in question is unfairly controlling the market through illegal anticompetitive practices.

And more competitors means no one company holds a significant or desirable part of the market.

 

[webkit]

You're speaking in general. I'm speaking about Apple specifically. Competitive terms don't magically become anticompetitive because you get bigger. In the US, you have to prove that terms don't have a legitimate business justification and that they actively prevent competition.

As I pointed out, those terms were extremely competitive. They drew in a huge number of developers even with minimal market share. And they have become less restrictive over time. It's hard to argue that Apple has abused market power when they didn't have any.

Not "magically" but they can be(come) anticompetitve. That's why there are antitrust investigations, negotiations, and potential trials to determine if a company's terms, conduct, etc. rise to the level of illegal anticompetitive behavior. There are many elements to the DOJ case against Apple including cross-platform issues, device compatibility issues, super apps, etc. that will be addressed.

Apple has not been found to have a monopoly power in the US. If fact, the court in the Epic case specifically said that Apple is not breaking any federal or state antitrust laws.

Not yet perhaps but each case can be different and can apply to different market segments (e.g,, entire cell phone market vs. premium/performance smartphone market), different aspects of those markets, different behaviors a company utilizes in those markets, etc. Court rulings in the past do not mean they will be the same in the future.

So you're really putting the cart before the horse.

I am just trying to point out how antitrust laws can work and how even terms and condition a company has used from day one can become "illegal" if/when they reach a dominant position in a market.

The DOJ feels that Apple's market dominance and control over its ecosystem unfairly disadvantage current and potential competitors and/or raise consumer switching costs. Apple is trying to make the case that their "exclusionary" and other conduct is simply to make Apple products better, safer, etc. Of course, both can be at least partially true as well. No one can say with certainly that Apple is or is not doing anything "illegal" as it relates to the current DOJ antitrust case.

 

[webkit]

And more competitors means no one company holds a significant or desirable part of the market.

That would be the hope although a market can still be "controlled" by one dominant company even though there are many, but much smaller, competitors.

 

[mrochester]

That would be the hope although a market can still be "controlled" by one dominant company even though there are many, but much smaller, competitors.

Absolutely, but far less likely if there is more competition.

 

[Unregistered 4U]

The Microsoft case was absolutely about Microsoft being a monopoly (with Windows) and how that monopoly power and engaging in anticompetitive behavior unfairly impacted markets Microsoft did business in. Them being a "monopoly" was the first key element of the case.

Have you ever reviewed the document filed by the DOJ? There was a point in time when I hadn’t reviewed the document filed by the DOJ. But, one day, I reviewed the document filed by the DOJ. It was mistreatment of OEM’s. Now, you can go review the document filed by the DOJ if you like, but if you don’t, that’s not on me. 🙂

It's about Apple’s dominance in the broader "performance smartphone market" and them allegedly using that dominance in ways that unfairly disadvantage current and potential competitors and/or raise consumer switching costs. A potential hypothetical McDonald’s analogy would be more about McDonald’s dominance in the "premium fast-food burger market" and how they unfairly use that dominance/control in markets they do business in.

Apple's activities/actions, if proven, can absolutely be violating antitrust laws. We're still in the relatively early "allegations" and "negotiations" stages at this point. The DOJ investigated and negotiated with Microsoft for many years before the case ended up going to trial.

The broader “then defines a narrow market” 🙂 Apple’s actions, making devices and services that people want to buy and use, can absolutely be proven. It’s just those actions are not currently illegal and are unlikely to become illegal anytime soon.

 

[BaldiMac]

Not "magically" but they can be(come) anticompetitve. That's why there are antitrust investigations, negotiations, and potential trials to determine if a company's terms, conduct, etc. rise to the level of illegal anticompetitive behavior. There are many elements to the DOJ case against Apple including cross-platform issues, device compatibility issues, super apps, etc. that will be addressed.

No. You completely missed the point. Competitive terms aren't anticompetitive. By definition.

Not yet perhaps but each case can be different and can apply to different market segments (e.g,, entire cell phone market vs. premium/performance smartphone market), different aspects of those markets, different behaviors a company utilizes in those markets, etc.

Lots of things "can" happen. You implied that Apple was "unfairly controlling the market through illegal anticompetitive practices." Which market? Which practices?

Court rulings in the past do not mean they will be the same in the future.

And yet, the Epic ruling is direct legal precedent.

 

[Unregistered 4U]

A "small" company engaging in the exact same conduct doesn't create the same competitive harm because it lacks the market power to substantially affect the market(s).

A “small” company working with another “small” company to fix prices is still illegal. It doesn’t suddenly become illegal just because the companies are larger. Otherwise, the government’s (like the DMA in the EU) is allowing things it considers illegal and only taking action well after the point when that action would have been most effective. There are a few specific things that large companies are more able to do than small companies. Buying out their competition then shutting them down, cutting exclusive deals with partners or retailers that cut out the competition. BUT, if a small company came upon a windfall and were to do those things, they’re still illegal.

It’s not “how big they are” it’s “what did they do to restrict competition”. Creating their own processors and building their own devices doesn’t restrict competition. Running their own app store that’s incompatible with 80% of the phones out there is doesn’t restrict competition (in fact, puts them at a competitive disadvantage). Operating retail stores that primarily only sell their own products doesn’t restrict competition (in fact, again, puts them at a competitive disadvantage). Making cool things that people want to buy doesn’t restrict competition. Even the government hasn’t brought forth any evidence that shows, definitively, that steps have been taken to prevent me, as a private citizen, from starting up a business and begin working on my own smartphone platform, OS and dev tools. No one has. Me not being able to make something worth buying isn’t Apple being anticompetitive, that’s me not competing well enough. 🙂

 

[webkit]

Have you ever reviewed the document filed by the DOJ? There was a point in time when I hadn’t reviewed the document filed by the DOJ. But, one day, I reviewed the document filed by the DOJ. It was mistreatment of OEM’s. Now, you can go review the document filed by the DOJ if you like, but if you don’t, that’s not on me. 🙂

I'm not sure what you are talking about. The DOJ complaint referenced and addressed Microsoft's (alleged) monopoly/monopoly power numerous times. Microsoft's (alleged) dominant/monopoly position was key to why the DOJ was able to bring an antitrust case against them.

Complaint : U.S. V. Microsoft Corp.

www.justice.gov

 

[webkit]

No. You completely missed the point. Competitive terms aren't anticompetitive. By definition.

What one may consider "competitive" terms can be(come) "anticompetitive" and illegal as a company achieves certain market power/dominance and influence.

Lots of things "can" happen. You implied that Apple was "unfairly controlling the market through illegal anticompetitive practices." Which market? Which practices?

Premium/performance smartphone market in the U.S. The alleged anticompetitive behavior is related to iPhone and third party products/services e.g., unfair restrictions, exclusionary conduct, etc. regarding messaging apps, smartwatches, digital pay/wallets, cloud gaming and streaming, supper apps, app stores, browser engines, access to APIs, etc. I don't recall everything the DOJ is alleging or focusing on.

And yet, the Epic ruling is direct legal precedent.

As I recall, the Epic case was mainly about Apple's App Store rules and payment system while the DOJ case is much broader and alleges Apple has monopoly/monopoly power in the U.S. premium/performance smartphone market and unfairly uses its control over iOS, APIs, hardware access, app store rules, messaging, pay/wallets, smartwatches, etc. to disadvantage current or future competition, raise consumer switching costs, etc.

 

[webkit]

A “small” company working with another “small” company to fix prices is still illegal. It doesn’t suddenly become illegal just because the companies are larger. Otherwise, the government’s (like the DMA in the EU) is allowing things it considers illegal and only taking action well after the point when that action would have been most effective. There are a few specific things that large companies are more able to do than small companies. Buying out their competition then shutting them down, cutting exclusive deals with partners or retailers that cut out the competition. BUT, if a small company came upon a windfall and were to do those things, they’re still illegal.

Some activities can be "illegal" even with smaller companies but some activities can become "illegal" based on the market control a particular company has. A dominant/monopoly company can be breaking antitrust laws if they are using that dominance unfairly disadvantage current and potential competitors, raise consumer switching costs, etc. especially when used to maintain or increase its dominance. To use pricing as an example, a "small" company might be allowed to offer very low prices to attract customers, while a "dominant/monopoly" company that has significant influence and control of a market could face legal issues if it offers very low prices to disadvantage or drive competitors out of business, discourage new competition, etc.

It’s not “how big they are” it’s “what did they do to restrict competition”. Creating their own processors and building their own devices doesn’t restrict competition. Running their own app store that’s incompatible with 80% of the phones out there is doesn’t restrict competition (in fact, puts them at a competitive disadvantage). Operating retail stores that primarily only sell their own products doesn’t restrict competition (in fact, again, puts them at a competitive disadvantage). Making cool things that people want to buy doesn’t restrict competition. Even the government hasn’t brought forth any evidence that shows, definitively, that steps have been taken to prevent me, as a private citizen, from starting up a business and begin working on my own smartphone platform, OS and dev tools. No one has. Me not being able to make something worth buying isn’t Apple being anticompetitive, that’s me not competing well enough. 🙂

It's both. It's the monopoly/monopoly power/dominance combined with anticompetitive behavior.

 

[I7guy]

Some activities can be "illegal" even with smaller companies but some activities can become "illegal" based on the market control a particular company has. A dominant/monopoly company can be breaking antitrust laws if they are using that dominance unfairly disadvantage current and potential competitors, raise consumer switching costs, etc. especially when used to maintain or increase its dominance. To use pricing as an example, a "small" company might be allowed to offer very low prices to attract customers, while a "dominant/monopoly" company that has significant influence and control of a market could face legal issues if it offers very low prices to disadvantage or drive competitors out of business, discourage new competition, etc.




It's both. It's the monopoly/monopoly power/dominance combined with anticompetitive behavior.

Maybe I’m missing something but the doj has to prove something, if they can’t this is all word salad as it relates to Apple.

 

[Unregistered 4U]

I'm not sure what you are talking about. The DOJ complaint referenced and addressed Microsoft's (alleged) monopoly/monopoly power numerous times. Microsoft's (alleged) dominant/monopoly position was key to why the DOJ was able to bring an antitrust case against them.

Complaint : U.S. V. Microsoft Corp.

www.justice.gov

GOOD! Now examine the findings of fact 😉

U.S. V. Microsoft: Court's Findings Of Fact

www.justice.gov

For EVERY reference of “monopoly” you’ll see a definition of some illegal act they were actually doing WITH that monopoly, including a wild array of actions being taken against retailers, OEM’s and partners. If Apple had done even one of those things that Microsoft was found to be doing, the government might have a case. As it is, the only thing Apple’s guilty of is making products that people want to buy and responding to market conditions effectively (like when the market was moving to larger screens when Apple was still making small screens). Competing isn’t anti-competitive. 🙂

 

[Unregistered 4U]

Maybe I’m missing something but the doj has to prove something, if they can’t this is all word salad as it relates to Apple.

If the government is making the same case the poster is making, then it’s pretty clear why there’s this negotiation instead of the case moving forward. 🙂

“Your honor, while the precedent has been set that there’s no market where Apple holds a monopoly and, even in the market definition we’re using in this case, there have been no actions taken by Apple that would give them an advantage over any other company that would enter the market… you know they COULD right? Like just because they’ve done nothing illegal, like… it’s probably totally illegal just because? No, we don’t have a case, but… c’mooon, right? C’MOOOOOOON!”

 

[Unregistered 4U]

Some activities can be "illegal" even with smaller companies but some activities can become "illegal" based on the market control a particular company has. A dominant/monopoly company can be breaking antitrust laws if they are using that dominance unfairly disadvantage current and potential competitors, raise consumer switching costs, etc. especially when used to maintain or increase its dominance. To use pricing as an example, a "small" company might be allowed to offer very low prices to attract customers, while a "dominant/monopoly" company that has significant influence and control of a market could face legal issues if it offers very low prices to disadvantage or drive competitors out of business, discourage new competition, etc.

Ok, this has never been shown in any court of law in the US, but if that’s what you believe, so be it! BTW, a “small” company offering an artificially low price (below the cost of materials) to attract customers (reducing competition) is dumping and it’s just as illegal for a small company to do as it is for a large company to do.

It's both. It's the monopoly/monopoly power/dominance combined with anticompetitive behavior.

It’s not, but ok. 🙂

 

[webkit]

Maybe I’m missing something but the doj has to prove something, if they can’t this is all word salad as it relates to Apple.

You're just figuring that out now? Like any case, the plaintiff is ultimately responsible for proving their allegations (and/or coming to some sort of agreements/settlements).

I try to make that even clearer by often using words like alleged and putting quotes around words like "illegal", "anticompetitive", "monopoly", etc.

 

[webkit]

GOOD! Now examine the findings of fact 😉

U.S. V. Microsoft: Court's Findings Of Fact

www.justice.gov

For EVERY reference of “monopoly” you’ll see a definition of some illegal act they were actually doing WITH that monopoly, including a wild array of actions being taken against retailers, OEM’s and partners. If Apple had done even one of those things that Microsoft was found to be doing, the government might have a case. As it is, the only thing Apple’s guilty of is making products that people want to buy and responding to market conditions effectively (like when the market was moving to larger screens when Apple was still making small screens). Competing isn’t anti-competitive. 🙂

As I've stated several times on here, antitrust cases like this are about "monopoly" or "monopoly power" COMBINED WITH "anticompetitive behavior."

 

[I7guy]

You're just figuring that out now?

No. This was obvious from the get-go. I’m saying this “now”.

Like any case, the plaintiff is ultimately responsible for proving their allegations (and/or coming to some sort of agreements/settlements).

I try to make that even clearer by often using words like alleged and putting quotes around words like "illegal", "anticompetitive", "monopoly", etc.

Apple is a little different. They have no history of these alleged infractions. No precedent. And the “performance smartphone market”. That’s a hoot.

 

[webkit]

If the government is making the same case the poster is making, then it’s pretty clear why there’s this negotiation instead of the case moving forward.

Instead of? Huh? It's quite common to have both. For example, there were plenty of negotiations in the Microsoft case in the 1990s yet the case moved forward and eventually went to trial.

 

[webkit]

Ok, this has never been shown in any court of law in the US, but if that’s what you believe, so be it! BTW, a “small” company offering an artificially low price (below the cost of materials) to attract customers (reducing competition) is dumping and it’s just as illegal for a small company to do as it is for a large company to do.


It’s not, but ok. 🙂

What has never been shown? Small companies offering very low prices but never being prosecuted for antitrust violations? That's quite common. Again, antitrust cases like the Apple case, the Microsoft case, the Google case, etc. are about "monopoly" or "monopoly power" COMBINED WITH "anticompetitive behavior."

 

[webkit]

Apple is a little different. They have no history of these alleged infractions. No precedent. And the “performance smartphone market”. That’s a hoot.

Apple isn't really that different, and they do have history of allegations against them for various conduct including some of the things being alleged here.

 

[I7guy]

Apple isn't really that different, and they do have history of allegations against them for various conduct including some of the things being alleged here.

Let me rephrase that. There are little recent findings in a court of law. (Let’s leave out the ebook) as we keep going around in the same circles, allegations are just that. Accusations are easy to throw around.

 

[webkit]

Let me rephrase that. There are little recent findings in a court of law. (Let’s leave out the ebook) as we keep going around in the same circles, allegations are just that. Accusations are easy to throw around.

Of course allegations are just allegations just as there were initially just allegations against Microsoft, allegations against Google, etc. We're still early into this case process.

Having said that, even if Apple (or any company) hasn't been charged with particular conduct doesn't automatically mean they aren't/weren't engaging in illegal conduct. If someone is driving 85 mph in a 55 mph zone, they are committing an illegal act even if they never get pulled over, charged, etc.

Regardless of past similar cases, a new case can still have merit and be "successful" as market definitions can vary (and change), legal theories can vary, evidence and allegations can be different and broader, etc.

Time will tell how this all plays out.