This is mostly copy-pasta from the Facebook discussion, but seems just as relevant here. I spent enough time digging around on this that I feel justified cross-posting it. I haven't read all 1000+ posts here, so some of this may have already been touched on.
The AppStore is not a monopoly, it's a product. A product can't have a monopoly. A company can have a monopoly in a market. A market consists of products.
So, I'm just going to guess that when people say "the AppStore" is a monopoly, they mean that "Apple has a monopoly on iPhone application sales portals". Apple is the firm. iPhone application sales portals is the market.
In other words, people believe it is illegal, or at least inappropriate, that Apple has a monopoly over the user experience of their own product.
Scoping the relevant market that narrowly seems a bit silly to me.
Beyond being silly, it doesn't seem to have a lot of legal strength. For one, there's nothing about having a monopoly that demands legal intervention. Monopolies can be legally achieved, even through what might be considered aggressive business practices-- there are just some lines that can't be crossed.
One test of an illegal monopoly is whether a company abuses its monopoly power in one market to achieve monopoly power in another. What market would Apple have to have abused to achieve an illegal monopoly in iOS application sales portals? It seems the chokepoint is iOS, so the market would need to be mobile operating systems. But we seem to agree that Apple doesn't have a monopoly in mobile operating systems, so they don't have monopoly power to abuse.
One test for a monopoly, generally, is whether customers will change products if prices are raised. Not every customer, but the marginal customer-- the ones closest to leaving already. There are plenty of customers willing to accept higher prices because they think Apple provides additional value to them so the question addresses customers at the boundary. If Apple raised the prices on the App Store, would anyone leave to go to Android? The answer is certainly yes-- we see people declaring so in these forums all the time. So, the economic test for a monopoly fails.
And, in fact, Apple doesn't charge any more than other similarly positioned application sales portals on other platforms.
Finally, it is really worth reading an overview of the Psystar case. It feels like you could just do a search and replace on MacOS and understand why there's no Apple monopoly in the AppStore:
appleinsider.com
Some relevant points from the ruling, as taken from the article:
Legality aside, is it desirable for Apple to hold full control over their platform? I don't see why not. If you put these arbitrary partitions between hardware, OS and tools, you make it impossible to innovate across those levels in more holistic ways-- and that is precisely the kind of innovation that Apple is known for.
There are two predominant system models out there-- iOS, which is closed and integrated from hardware to services, and Android which is open and disconnected with different companies providing different parts of the experience. This is quite similar to the Wintel/MacOS distiction. In fact, we tend to see this pattern recur in a number of different markets. And there's nothing to prevent other models and market entrants-- such as Linux coming in to further disrupt thinking in the OS market.
It is a competition of system views. Why would we want to extinguish that form of competition and force a single model on everyone?
The AppStore is not a monopoly, it's a product. A product can't have a monopoly. A company can have a monopoly in a market. A market consists of products.
So, I'm just going to guess that when people say "the AppStore" is a monopoly, they mean that "Apple has a monopoly on iPhone application sales portals". Apple is the firm. iPhone application sales portals is the market.
In other words, people believe it is illegal, or at least inappropriate, that Apple has a monopoly over the user experience of their own product.
Scoping the relevant market that narrowly seems a bit silly to me.
Beyond being silly, it doesn't seem to have a lot of legal strength. For one, there's nothing about having a monopoly that demands legal intervention. Monopolies can be legally achieved, even through what might be considered aggressive business practices-- there are just some lines that can't be crossed.
One test of an illegal monopoly is whether a company abuses its monopoly power in one market to achieve monopoly power in another. What market would Apple have to have abused to achieve an illegal monopoly in iOS application sales portals? It seems the chokepoint is iOS, so the market would need to be mobile operating systems. But we seem to agree that Apple doesn't have a monopoly in mobile operating systems, so they don't have monopoly power to abuse.
One test for a monopoly, generally, is whether customers will change products if prices are raised. Not every customer, but the marginal customer-- the ones closest to leaving already. There are plenty of customers willing to accept higher prices because they think Apple provides additional value to them so the question addresses customers at the boundary. If Apple raised the prices on the App Store, would anyone leave to go to Android? The answer is certainly yes-- we see people declaring so in these forums all the time. So, the economic test for a monopoly fails.
And, in fact, Apple doesn't charge any more than other similarly positioned application sales portals on other platforms.
Finally, it is really worth reading an overview of the Psystar case. It feels like you could just do a search and replace on MacOS and understand why there's no Apple monopoly in the AppStore:
Judge grants Apple's motion to dismiss Psystar's counterclaims | AppleInsider
A California judge on Tuesday granted Apple's motion to dismiss counterclaims on the part of unauthorized Mac clone maker Psystar, who charged the Mac maker with violating antitrust laws through its vigorous attempts to block third parties from selling rival Mac OS X-based computers.
appleinsider.com
Some relevant points from the ruling, as taken from the article:
- Apple responded to Psystar's argument by asserting that the company's definition of a market comprised of a single brand of a product is neither legally nor factually plausible. Judge Alsup agreed
- "The counterclaim itself explains that Mac OS performs the same functions as other operating systems," he wrote. "The counterclaim admits that market studies indicate that, although Apple computers with Mac OS enjoy strong brand recognition and loyalty, they are not wholly lacking in competition."
- "vigorous advertising is a sign of competition, not a lack thereof. If Mac OS simply had no reasonable substitute, Apple's vigorous advertising would be wasted money. The advertising campaigns suggest a need to enhance brand recognition and lure consumers from a competitor."
- Apple makes it clear in courting its customers that they'll be locked into using the Mac OS only on Apple systems. "Apple asks its customers to purchase Mac OS knowing that it is to be used only with Apple computers," he wrote. "It is certainly entitled to do so."
Legality aside, is it desirable for Apple to hold full control over their platform? I don't see why not. If you put these arbitrary partitions between hardware, OS and tools, you make it impossible to innovate across those levels in more holistic ways-- and that is precisely the kind of innovation that Apple is known for.
There are two predominant system models out there-- iOS, which is closed and integrated from hardware to services, and Android which is open and disconnected with different companies providing different parts of the experience. This is quite similar to the Wintel/MacOS distiction. In fact, we tend to see this pattern recur in a number of different markets. And there's nothing to prevent other models and market entrants-- such as Linux coming in to further disrupt thinking in the OS market.
It is a competition of system views. Why would we want to extinguish that form of competition and force a single model on everyone?
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