4 ms·

Exercising control over a given market ("video games for Xbox" or "software for iPhones") in which you have a monopoly is not illegal, it's when you use your mo

by dpifke 16y ago

Exercising control over a given market ("video games for Xbox" or "software for iPhones") in which you have a monopoly is not illegal, it's when you use your monopoly to push out competitors in different markets (such as "development tools" or "mobile advertising") that the Sherman Act prohibitions on illegal tying apply. In Eastman Kodak Co. v. Image Technical Services, Inc., the Supreme Court ruled that Kodak had a monopoly on replacement parts for Kodak copiers, and by refusing access to parts and manuals to their competitors, they were illegally tying their parts monopoly to the market for repair service. The Court wrote: "power gained through some natural and legal advantage such as a patent, copyright, or business acumen can give rise to liability if a seller exploits his dominant position in one market to expand his empire into the next" (504 U.S. 451, 480 n.29 (1992)). In the case of video game makers, you may have a case if e.g. Microsoft took active steps to prevent someone like EA from creating their own version of Xbox Live (since the market for games is different than the market for online services), but I don't believe that's the case.

ahoyhere 16y ago
Seems to me there is a big difference between 3.3.1 and the Kodak case. Apple says "this is what you have to do to be in our store," which is very different than refusing to sell people proprietary parts. Is it anti-competitive if Wal-Mart refuses to stock goods from a vendor who doesn't meet their quality requirements? If it were, all businesses would go out of business. Apple isn't competing with Adobe. They are saying that they have quality standards for the ways apps are made. It's as if Wal-Mart said to their (potential) vendors: Company X's factory equipment does not meet our quality standards. We refuse to stock goods made with Company X's factory equipment. So if you use Company X's factory equipment, we will not stock your goods. This is hypothetical, but Wal-Mart does use its extreme leverage to get conformity of all sorts out of its supplies, including (believe it or not) by eliminating questionable agricultural production processes. And, so far as I know, nobody has ever screamed monopoly about that. By comparison, Apple does not keep the parts (XCode) or the instruction manuals (documentation) from their competitors. They are not withholding secrets. They do not lock them out of developing for the platform in compliant ways; they do not block them from cross-compiling to cacheable web app that can also be placed on the iPhone "desktop"; they do not stop them from loading their non-compliant apps directly, outside of the store. They just will not stock their goods, in their store. Now. Are there precedents of desirable retail stores being forced to carry products they don't want to?
- wooster 16y ago
  Imagine if WalMart required vegetable growers to use WalMart brand fertilizer if they wanted their vegetables sold at WalMart. That seems a bit more like the current situation with Apple. It's not at all apparent that there was a quality issue with apps not programmed in Objective-C, and it's certainly not obvious to me (as an ex-Apple employee, Objective-C-coding, iPhone and iPad developer) that Apple would be able to prove in court that the license agreement is about quality rather than competitive interests.
- zmmmmm 16y ago
  > Wal-Mart refuses to stock goods from a vendor who doesn't meet their quality requirements Well, that's just the point. Apple doesn't care about the quality of the application. They already have a screen for that by virtue of their control of the app store. They are refusing apps based on the technology that was used to create them. It could be the most beautiful, performant, amazing application ever written and their developer agreement rules it out.
  - InclinedPlane 16y ago
    Yes, exactly. It's really not much different than an employer trying to maintain the highest quality employees by using race as a hiring decision. Apple already has an extensive quality control process for iPhone apps. If they can't come up with objective criteria that they can test apps against in the approval process then they shouldn't just use prejudicial BS to try to filter out so-called low quality apps. It's anti-competitive and anti-innovative. It's nothing more than a big company throwing around its weight trying to be a bully.
- enjo 16y ago
  Except that Apple owns a monopoly on iPhone application distribution. Just as in the Kodak case where Kodak had a monopoly on parts. In the Wal-Mart case you can hardly argue that Wal-Mart owns a monopoly on consumer good distribution. The key thing here is that there is no way to get a legitimate application (and web-apps hardly need apply) onto the iPhone without going through the Apple channel. It looks and smells like a monpoly (at least as defined in previous supreme court rulings) to me.

by dpifke 16y ago

ahoyhere 16y ago

Seems to me there is a big difference between 3.3.1 and the Kodak case. Apple says "this is what you have to do to be in our store," which is very different than refusing to sell people proprietary parts. Is it anti-competitive if Wal-Mart refuses to stock goods from a vendor who doesn't meet their quality requirements? If it were, all businesses would go out of business. Apple isn't competing with Adobe. They are saying that they have quality standards for the ways apps are made. It's as if Wal-Mart said to their (potential) vendors: Company X's factory equipment does not meet our quality standards. We refuse to stock goods made with Company X's factory equipment. So if you use Company X's factory equipment, we will not stock your goods. This is hypothetical, but Wal-Mart does use its extreme leverage to get conformity of all sorts out of its supplies, including (believe it or not) by eliminating questionable agricultural production processes. And, so far as I know, nobody has ever screamed monopoly about that. By comparison, Apple does not keep the parts (XCode) or the instruction manuals (documentation) from their competitors. They are not withholding secrets. They do not lock them out of developing for the platform in compliant ways; they do not block them from cross-compiling to cacheable web app that can also be placed on the iPhone "desktop"; they do not stop them from loading their non-compliant apps directly, outside of the store. They just will not stock their goods, in their store. Now. Are there precedents of desirable retail stores being forced to carry products they don't want to?

wooster 16y ago
Imagine if WalMart required vegetable growers to use WalMart brand fertilizer if they wanted their vegetables sold at WalMart. That seems a bit more like the current situation with Apple. It's not at all apparent that there was a quality issue with apps not programmed in Objective-C, and it's certainly not obvious to me (as an ex-Apple employee, Objective-C-coding, iPhone and iPad developer) that Apple would be able to prove in court that the license agreement is about quality rather than competitive interests.
zmmmmm 16y ago
> Wal-Mart refuses to stock goods from a vendor who doesn't meet their quality requirements Well, that's just the point. Apple doesn't care about the quality of the application. They already have a screen for that by virtue of their control of the app store. They are refusing apps based on the technology that was used to create them. It could be the most beautiful, performant, amazing application ever written and their developer agreement rules it out.
- InclinedPlane 16y ago
  Yes, exactly. It's really not much different than an employer trying to maintain the highest quality employees by using race as a hiring decision. Apple already has an extensive quality control process for iPhone apps. If they can't come up with objective criteria that they can test apps against in the approval process then they shouldn't just use prejudicial BS to try to filter out so-called low quality apps. It's anti-competitive and anti-innovative. It's nothing more than a big company throwing around its weight trying to be a bully.
enjo 16y ago
Except that Apple owns a monopoly on iPhone application distribution. Just as in the Kodak case where Kodak had a monopoly on parts. In the Wal-Mart case you can hardly argue that Wal-Mart owns a monopoly on consumer good distribution. The key thing here is that there is no way to get a legitimate application (and web-apps hardly need apply) onto the iPhone without going through the Apple channel. It looks and smells like a monpoly (at least as defined in previous supreme court rulings) to me.