Your analogy is false on it’s face. It’s not anticompetitive at all to get 50% of a market through excellence. No way a successful mall is ever bothered with an antitrust claim merely for being successful.
And Google doesn’t control 100% of Android, there are alternate app stores available. So your analogy fails at multiple levels.
The Apple Mall succeeded because it’s a better customer experience, why should that be illegal, and why shouldn’t Apple benefit from their foresight and efforts?
The App Store is so big because Apple made it the best App Store. Every attribute of their walled garden contributes to its value, not just for Apple, but for developers and customers.
Apple has about 15% of phone sales. It’s developers make more than half the entire mobile app market revenues. How is Apples behavior hurting them?
> It’s not anticompetitive at all to get 50% of a market
I never said that getting 50% of the market, on its own, is anti-competitive.
Instead, what is anti-competive, is once you have a large amount of market power, such as 50%, it now becomes illegal to use anti-competitive practices to keep out competitors.
> No way a successful mall ..... merely for being successful.
I never said this. Instead, what I am saying is that using large amounts of market power, to keep out competitors, is anti-competitive.
> The App Store is so big because Apple made it the best App Store.
It doesn't matter if you got to 50% of the market through being good. It is still illegal to use large amounts of market power to keep out competitors.
> Apple has about 15% of phone sales.
Apple has 50% of the market in the USA. And the lawsuits are happening in the USA, so thats all that matters.
> How is Apples behavior hurting them?
It is hurting competing app stores from entering the market, because of Apple's actions that make it very difficult for competing app stores to be installed.
> why shouldn’t Apple benefit from their foresight and efforts?
They can benefit. They just shouldn't be allowed to use their large amount of market power to keep out competitors, because that is anti-competitive.
Apple has zero obligation to allow competitive app stores in iOS. It’s never been a feature they promised customers, and it’s not wanted by most app developers. It’s not anticompetitive to refuse to build access to your property for new competitors.
In this case it’s clearly not anticompetitive when forcing them to allow alternate app stores would be both anti-consumer and anti-developer.
> Apple has zero obligation to allow competitive app stores in iOS.
Well, that is a pretty anti-competitive practice. So, actually, it seems like they might have an obligation to do this.
> It’s never been a feature they promised customer
It doesn't matter. It is still anti-competitive. And in the USA anti-competitive practices are illegal in the US, if a company with a large amount of market share is engaging in them.
> It’s not anticompetitive to refuse to build access to your property for new competitors.
It actually is! The courts have already proved this to be the case. Microsoft lost their court case because of a very similar situation.
I would really recommend that you go read up on similar anti competitive case, such as the Microsoft one, to learn the court justifications for this stuff. It is pretty enlightening.
> it’s not wanted by most app developers.
"Customers don't want competition" is not an argument that any court would accept. It is assumed to be true, automatically, that competition is a good thing.
And the judge residing over this case, actually made similar statements, in the preliminary hearing that I listened to, where she talked about how competition is a good thing, as a justification that the courts use.
I have read up on the Microsoft case, and I think I disagree -- it's hard to draw direct comparisons here.
Microsoft Windows had over 90% of the entire personal computer operating system market, which was clearly a de facto monopoly position. The antitrust element was them leveraging that monopoly to give them an ostensibly unfair advantage in the browser market. There was no "gatekeeping" aspect involved; it was about whether bundling application software with the OS to undermine commercial competition was fair.
Apple's case is very different. They have much less than 90% of the mobile phone operating system market, but they control access to 100% of the application market for iOS devices. This isn't about bundling, like Microsoft's case was, nor did Microsoft act as a gatekeeper for Windows. The closest precedents are game consoles, but those don't seem to offer a lot of guidance here in terms of case law -- although Apple's very likely to draw the comparison, e.g., Sony has a "monopoly" on downloadable applications for all PlayStations. Consumers know that limitation when they buy either a PlayStation or an iPhone, and see it as a feature, not a bug. In a lot of ways, the ultimate argument here is whether a device manufacturer can or should be legally forced to treat their devices more like general purpose computing devices than like consoles. And that's not like Microsoft at all. This is a fundamentally different question.
(The sort of ironic footnote in drawing a comparison to the Microsoft case is that while bundling IE with Windows killed Netscape's commercial prospects and it was certainly done with malice aforethought, it was also fundamentally the right call. Applications that achieve such amazing runaway success that their functionality quickly becomes essential to everyone are almost certain to be bundled into either the operating system or a suite that everyone has.)
> The sort of ironic footnote in drawing a comparison to the Microsoft case is that while bundling IE with Windows killed Netscape's commercial prospects and it was certainly done with malice aforethought, it was also fundamentally the right call.
It's also worth noting this was never actually ruled to be illegal. The appeals court remanded the question back to the district court for further analysis under the rule of reason, but that never actually happened as the case was eventually settled. Under the rule of reason, Microsoft would have been able to argue that it had legitimate justification for bundling a browser with Windows, and then it would have been up to the DOJ to argue that the anticompetitive effect of the bundling outweighed the justification given. I think Microsoft would have had a relatively strong argument there, as an operating system that shipped without a web browser (or media player, for that matter) would have been, in fact, less useful to the consumer.
That's true, and a good point. I dimly remember thinking at the time that the browser was the wrong focus for this whole endeavor -- if there was anything Microsoft was doing that was legitimately shady, it was relating to some of their OEM agreements, which I (admittedly now fuzzily) recall had some terms in them which were pretty clearly meant to stifle competition with Windows. IIRC, you weren't allowed to ship computers that dual-booted Windows and another OS, for instance; if Windows was pre-installed it had to be the only OS. And if you shipped any computers that had Windows pre-installed, your OEM license was based on the number of total computers you shipped whether or not Windows was installed on all of them, e.g., if you sold 50 computers and only 30 of them had Windows pre-installed, you paid for 50 licenses.
You make some good points, in alot of ways comparisons to the MS of the 90's is tricky. Apple has less market share, but alot more users - and the market is shaped quite differently (only 2 hardware makers, where back then (and even now) there are hundreds of hardware makers for computers). Microsoft also had no means to prevent people from installing outside software on the device, which iOS does - to the tune of over 1 billion users.
There are whole industries built on iOS now, which was also true then, but due to the much more limited hardware landscape and single means of installing software, this now plays differently with competition than just browser bundling.
I don't think whether Apple is using monopoly power is the appropriate focus here; they can be anti-competitive without being a monopoly, and due to the fact that they control >1 billion users and control their hardware, there's a fair question to ask about this anti-competitive behavior.
Not allowing competitors to build a store on your property isn’t anti-competitive. And you clearly don’t understand the Microsoft case, where it had 90% of the operating system market.
Customers want the best possible products, forcing Apple to make their product worse, with worse security, a worse purchase experience, robs customers of an important choice.
Judges do make terrible rulings all the time. Like the Apple e-books case, where trying to ensure a level playing field was deemed “anti-competitive”, leading to Amazon to significantly grow market share and establishing an unassailable monopoly position since the ruling.
> And you clearly don’t understand the Microsoft case, where it had 90% of the operating system market.
Once again, the government does not require a literal monopoly for behavior to be anti-competitive. 50% of a market in the US could absolutely be enough to count as significant market power.
The situations are pretty similar, because your argument about 90% is not what the courts care about. The courts care about market power, not necessarily a literal monopoly.
> Judges do make terrible rulings all the time
I mean, if you don't care about the courts system or the law, then I don't know what to tell you. Your opinion on it doesn't particularly matter, because the courts are the ones in charge of this, and the courts are the ones who make the decision here.
> Like the Apple e-books case
Well, too bad for Apple. The law is the law, and the court system is the court system.
Personally, I only talk about what the courts do. I don't really care about someone's opinion if the courts disagree with them. Because the courts and the judges are the ones that make the decision here. They decide.
And everything that I have said is within this context of what courts and judges have done in the past.
> The situations are pretty similar, because your argument about 90% is not what the courts care about. The courts care about market power, not necessarily a literal monopoly.
To be clear, whether the court cares about monopoly power or not depends on what type of claim you are making.
Section 1 of the Sherman Act deals with conspiracy and unreasonable restraints of trade and may not require establishing any market power at all. Some actions such as price fixing and bid rigging are considered per se illegal regardless of market power. Other actions (such as tying) require an analysis of market power, but not necessarily monopoly power.
Section 2 of the Sherman Act deals with monopolization and claims made under section 2 will require establishing monopoly power (or likelihood of achieving monopoly power, for attempted monopolization claims).
In the context of the Microsoft case, the 90% market share was indeed relevant to the court because several of the claims were brought under section 2, specifically having to do with Microsoft's unlawful attempts to maintain their operating system monopoly.
"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"
This is what I mean by that.
This applies to Section 2 of the Sherman Act, and the link that I posted mentions this. I do not mean what you are trying to say, which is that one section does not require a literal monopoly, and another does.
Instead, I am saying, that explicitly, for Section 2 of the Sherman Act, "monopoly" does not mean a singular firm, and the colloquial definition of that, is incorrect.
Instead, it only requires significant market power.
> will require establishing monopoly power
"Monopoly power" can absolutely exist in the case of a company having 50% of the market. This is what that government statement means.
> Whether monopoly power will be found in this situation will be up to a court
Yes... But it is very much not true that a court requires a literal monopoly in order for them to find behaviors to be anti-competitive. All that needs to happen is for a company to have significant market power.
So it is not a literal monopoly. Instead, it it having significant market power. And in the US, as of last month, if you are keeping up with the most recent data regarding market share, Apple has about 50% of the US market.
> iPhones currently have around 45%
Your data is about 6 months out of date. it is now around 50%. It is very much a defendable argument, that has a reasonable chance of standing up in court, that Apple, who has about half the market, in what is effectively a 2 player duopoly, could have significant market power.
That is a pretty reasonable argument, that has a real, non-negligible, possibility of standing up in court.
> Yes... But it is very much not true that a court requires a literal monopoly in order for them to find behaviors to be anti-competitive. All that needs to happen is for a company to have significant market power.
If by literal monopoly you mean a single firm that controls 100% of the market, then we don't disagree, as I never suggested that was required. However, proving a section 2 monopolization claim does require proving the existence of monopoly power.
A company is considered to have monopoly power when it has a significant degree of market power. A literal monopoly is not required, however courts have typically not found monopoly power when market share is below 50% either.
> And in the US, as of last month, if you are keeping up with the most recent data regarding market share, Apple has about 50% of the US market.
Can you cite a specific source? I've seen all sorts of different numbers but some seem to be based on web browser usage or device shipments which is not quite the same as active users.
> That is a pretty reasonable argument, that has a real, non-negligible, possibility of standing up in court.
While I certainly think it's possible, the case becomes a lot easier if the company has 90% market share (as Microsoft did) compared to 50% market share.
In other words, I find the comparison to the Microsoft case lacking because with 90% market share it was more or less accepted by both sides that Microsoft held monopoly power in the operating system market, whereas in this situation it's much more debatable. To quote from my previous link:
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)
It is also important to consider the share levels that have been held insufficient to allow courts to conclude that a defendant possesses monopoly power. The Eleventh Circuit held that a "market share at or less than 50% is inadequate as a matter of law to constitute monopoly power."(26) The Seventh Circuit observed that "[f]ifty percent is below any accepted benchmark for inferring monopoly power from market share."(27) A treatise agrees, contending that "it would be rare indeed to find that a firm with half of a market could individually control price over any significant period."(28)
In other words, 50% is near the bottom of the range, and is going to be hotly contested.
And it seems like all of the “similar” cases where companies are sued for antitrust that are often cited on HN are when two or more companies collide with each other.
There is a reason why HN lawyers get all hand wavy when asked to come up with similar examples.
> Not allowing competitors to build a store on your property isn’t anti-competitive.
The difference is that in the real world, there is more property.
In the digital world, there isn't, unless you count Android -- and the problem with that is you run into the "Well why don't the company men just leave the company town, then?" It's the "let them eat cake!" argument and it doesn't go over well.
> Yet and still console makers have been doing just this for 30 years.
It is well accepted in anti-competition law, that the size of the market and market share matters greatly in determining whether certain behavior is illegal.
The larger the market share that a company has, and the larger the market, the more likely the anti-competitive behavior is to be illegal.
So, in the case of consoles, consoles have a smaller market and market share than Apple does.
Apple is now a 2 trillion dollar company, and has about 50% of the phone market share, in the US, as of last month.
They have significantly more control over a significantly larger market than consoles. Thus their behavior is much worse and much more likely to be illegal than that of consoles.
> Which is more likely, companies have been breaking the law for years or HNs understanding of the law is flawed?
Whats more likely is that you have not read any actual court cases or judicial decisions on the matter, to be frank.
The stuff that I states is pretty well accepted among the experts.
And yet and still you haven’t posted a single bit of case law. The other times I have asked HN lawyers posted examples where companies were sued for anti trust because they colluded with competitors.
And it seems like none of the “experts” have won anymore cases in court where one company that didn’t have overwhelming share was convicted of anti trust than anyone posting on HN.
And Google doesn’t control 100% of Android, there are alternate app stores available. So your analogy fails at multiple levels.
The Apple Mall succeeded because it’s a better customer experience, why should that be illegal, and why shouldn’t Apple benefit from their foresight and efforts?
The App Store is so big because Apple made it the best App Store. Every attribute of their walled garden contributes to its value, not just for Apple, but for developers and customers.
Apple has about 15% of phone sales. It’s developers make more than half the entire mobile app market revenues. How is Apples behavior hurting them?