

Dear DoJ: You Need To Sue Apple Again - mikecane
http://mikecanex.wordpress.com/2012/04/11/dear-doj-you-need-to-sue-apple-again/

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VengefulCynic
Anti-competitive behavior doesn't become a violation of US law until it
involves the abuse of a monopoly position, involves market collusion, or
breaks some other law. While anti-competitive, Apple doesn't currently
exercise a meaningful monopoly in mobile device operating systems: either one
looks at handsets where they are actually not even the market leader or one
looks at tablets which is hardly a developed market.

Apple's actions with regard to the Agency Model aren't prosecutable because of
any Apple monopoly but because it involves market collusion. Now, if Google
and Apple colluded to prevent eBooks from being sold on mobile OS marketplaces
without a 30% cut, THAT would be prosecutable.

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davidngo
Exactly. Thanks for explaining this.

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pwthornton
This is like arguing that Walmart shouldn't get a cut of book sales. It's
Apple's store. Apple still allows iOS users to purchase and use books from
other stores on their devices.

What's the point of operating a store if you don't get a cut of the sales?

But if you just get rid of the agency model, which the DOJ is trying to do,
this naturally goes away. With a wholesale model, Apple, Amazon and the
publishing companies can all make money on an ebook sale. The agency model
doesn't leave room for two middlemen.

~~~
ajross
The analogy is flawed. Consumers don't get locked into a 2-year contract
forcing them to shop at Walmart exclusively. If they did, and Walmart
required, say, a cut of all DVDs purchased for play on a Walmart-sold TV, I
think that certainly would qualify for restraint of trade. Target could push
their DVD prices all the way to zero and shoppers would still be stuck with
their Walmart contracts.

( _edit for those not reading carefully: Saying that the contract is willful
has nothing to do with the argument. Consumers do not sign contracts with
retailers. So applying logic about retail sales is a flawed analysis. Doing
things like leveraging the illiquidity of platform choice to increase prices
in a way that would be legal for a retailer is not, necessarily, legal for a
platform vendor. Apple has control over the market that Walmart does not.
That's what the whole idea of "restraint of trade" is about._ )

~~~
rbarooah
Nobody gets locked into a 2 year contract forcing them to do anything with
Apple.

iPads are not sold on contract. iPhones come with a contract, but the contract
doesn't force you to keep using the device - just the wireless service.

You can sell the phone and buy a different one to use with the same contract
if you don't like it.

~~~
salem
I am not a lawyer, but to me this seems like they were the market leader in
smartphones at the time and using that monopoly to monopolize another market.

~~~
rbarooah
Being the market leader doesn't give you a monopoly in any market, and
certainly not in a young and growing one.

~~~
salem
Considering that Steve Jobs wanted to "destroy" Android, they were at least
headed in that direction, and at the time, they had the majority of the
smartphone market, i.e. phones where you could actually buy an ebook.

~~~
rbarooah
These things are irrelevant to the definition of a monopoly.

~~~
ajross
And the definition of a monopoly is irrelevant to the DoJ case being
discussed. So it appears everyone is even.

( _edit: crap, just realized I'd been tricked into responding to rbarooah
again. Apologies all._ )

~~~
rbarooah
When was the last time you saw anyone on HN directly insult someone else here
in such a mean and insidious way?

You wrote that edit just to try to hurt and undermine me.

I think this is the first time I've seen anything like it here, and it has a
really unpleasant schoolyard bully vibe to it.

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rbarooah
_Apple is quickly enjoying a dominant position in mobile devices that
Microsoft once enjoyed with desktop computers._

This can't be true while Android is the dominant mobile OS, and Amazon is the
dominant eBook reader.

~~~
gte910h
Android is only dominent looking solely at phones (in the US). iOS is on more
iPads, iPod Touches (and there are HUGE numbers of these), and iPhones than
Android is on phones and tablets (in the US).

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salem
This is the real issue with the Agency model and Apple, it may or may not have
prevented an Amazon monopoly on ebooks, but it did guarentee that nobody but
Apple could make money selling ebooks via iPhone apps.

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megaman821
The real question is, has Apple sold enough tablets to be considered a
monopoly in the marketplace. Even if it is a monopoly, it definitely isn't in
phone (even smart-phone) marketplace, so it is unclear what exactly the DoJ
could do to influence the iPhone's in-app purchase fees.

~~~
gte910h
I think once a lawsuit counts the number of iPod Touches and iPads or the
total in app purchasing revenue, or total purchasing revenu of the iOS vs
Android platforms, they may still try.

It's unfortunately still very lopsided.

~~~
rbarooah
A monopoly is more than just having the largest market share. There has to be
no viable competition. With Google and Amazon in the game that's clearly
untenable.

~~~
gte910h
It's not just straight away monopolies as defined by economics that the
government sues under the anti-trust act. It is a company or series of
interlocked companies such that "they materially reduced competition or tended
to create a monopoly in trade"

So if they make an add network targeting say, shopping on their devices, they
may get targeted for anti-trust suits since they have the far and away
majority of control of mobile shoppers: [http://gigaom.com/apple/study-apples-
iphone-ipad-account-for...](http://gigaom.com/apple/study-apples-iphone-ipad-
account-for-90-percent-of-mobile-purchases/)

The fact that iPad and iPhone apps store sales are considerably larger than
Android sales is inching closer to the point where the govt can sue about
that: [http://www.wired.com/gadgetlab/2011/12/ios-revenues-vs-
andro...](http://www.wired.com/gadgetlab/2011/12/ios-revenues-vs-android/)

If there is a dip in android sales for a given year (say, due to maleware
problems, version upgrades, etc), then you're quite close to the level where
they could get a court to not throw the case out at the summary judgement
point. Once you can get a case past there, many people will settle to avoid
the costs of a case or the dangers of actually losing (which could be braking
up the company).

I think that the figures are still too far off on percentage of app store
revenue, but don't be mistaken: Just because there is not an actual monopoly
doesn't mean the gov't has no teeth to do anything to apple.

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rbarooah
This blog has a strangely contradictory nature. The tagline is "Nature does
not like or grant monopolies. Monopolies Fail", and yet the piece is all about
how government needs to intervene.

~~~
davidngo
Absolutely agree. If the conditions set forth by Apple don't please you, stop
being their customers or developing for their platform. Simple as that.

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sosuke
"By contrast, all eBook apps from competing eBook stores — such as those from
Amazon, Kobo, Barnes & Noble, and others — cannot offer an identical shopping
experience. They are disallowed by Apple. Apple has demanded from each of its
iBookstore competitors a 30% cut of any purchases made using Apple APIs for
what is called “in-app purchasing.”"

Saying that Apple doesn't allow those publishers to sell books at all and then
in the next sentence saying they do allow it doesn't help your argument.

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davidngo
Am I missing something? Nobody is forced to purchase an Apple device. Nobody
is forced to earn all of their revenue through Apple's devices. Nobody is
forced to use their iBooks app either. How is this a monopoly? If you don't
like their conditions, don't start your business or purchase books on their
platform.

~~~
huggyface
_Nobody is forced to purchase an Apple device._

Actually a lot of people are forced to buy Apple devices. See Apple's
educational efforts as a good example of that.

 _Am I missing something?_

Yes, you are -- Apple is big enough, and dominant enough, that even without a
monopoly they can exert significant control over the rest of the market. How
often do we hear on here -- strangely by people gloating on Apple's behalf --
that they have locked up complete supply chains, starving competitors? When
Apple forced their book pricing model, it forced prices up at Amazon as well.
When Apple limits or taxes competitors on the iOS platform, users who usually
have no idea of this behavior will naturally migrate to Apple's solution
because it provides just that much easier usability (geez why can't I buy that
book I want in the Kindle app...oh well, here it is in the App Store). They
are using their influence and control of that high-margin device that you paid
for to build dominance in their other products. Not illegal or even immoral,
but it eventually impacts everyone.

~~~
davidngo
I'm honestly curious what instances you're referring to where people were
FORCED to buy Apple devices. So if they didn't buy these apple devices what
would happen? They would be put in jail?

Also, exerting significant control over the rest of the market of smartphones
still doesn't mean Apple has forced you to buy their products. Just means they
are the leader in their particular market. you don't have to buy ANY
smartphone or start a business based upon smartphones. Not sure how this is a
violation of anybody's rights.

