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America has anti-trust laws. Companies are not supposed to be allowed to wield undue market power (e.g. be able to set the price of their type of product). Now this is obviously complex. But basically a lot of anti-trust battles led to the de-verticalization of numerous businesses: from film studios which owned theaters, to Standard Oil which owed oil, railroads, refineries, distribution centers, etc.

The idea is to make sure there is market efficiency, e.g. competition, in price throughout, so the consumer doesn't get screwed.

Now the idea of a franchise law like this one is done in a similar vain: it appears to ensure better competition for big car makers to bring their goods to consumers.

The problem is this law is written from a perspective of a couple major car companies that dominate the market.

There has always been an argument that a small player cannot be considered to wield market power, and that thus they should be allowed to be vertical. Apple for a long time avoided any anti-trust issues (while Microsoft didn't) even though it was very much vertical, by being small! Tesla presumably will use the same argument.

Bottom line there are two sides to laws like these: on the one hand, in Tesla's case, they seem anti-competitive. On the other hand they are made to bring about a kind of competition. Clearly the courts will need to resolve this...




Apple is anything but small... they passed Exxon earlier in the year as the world's most valuable company. They ship more computers than nearly any other company (save maybe HP). So when do they start being big enough to be affected by this law?

I also find it interesting that you also compared them to Microsoft, since Microsoft is now opening retail stores.


A monopoly is usually a company which has price making power (on the whole industry) and has established barriers to entry that prevent competitors from entering the market.

The key reason Apple isn't considered a monopoly is that even though they are huge, they don't' have a monopolistic position in their products. For smartphones they have a market share of ~20% worldwide and in the PC market the hold ~5%. Even on the country level, the numbers never get to a level where people would usually scream monopoly.

You could argue that they probably have monopolistic market share on the tablet market but most wouldn't consider that an industry in itself (yet) and they haven't exhibited the characteristics of a monopoly: price setting for the industry and an inability for new players to enter the market. It's actually possible to not be considered a monopoly even with a huge market share if you can prove you don't control the industry.

Apple's normal business model allows them to thrive without being a high volume business; their per device profit margin greatly exceed any competitor, so they can still be hugely profitable with low market share.


He wasn't referring to the present. He was referring to the past.




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