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Monopsony is a slippery concept. If I tilt my head just right, we could be discussing the way WalMart purchases products. They sell a product in their store, t

Monopsony is a slippery concept. If I tilt my head just right, we could be discussing the way WalMart purchases products. They sell a product in their store, they decide they want a certain margin, and then they tell suppliers to meet a certain price target if they want their products in WalMart.

ksec 7y ago
You can buy 90% of products in Walmart through other channels. ( 10% are either exclusive or own brand ) And Walmart is not the sole buyer of any of those products. Apple is the sole buyer of All App Store Products, and you cant buy those products anywhere else. Which as far as I understand it, is what the argument Monopsony is trying to make. Buying Power instead of Market Power. Edit: After rereading the article, the start of the article also pointed out, it was the developer that set the price of the App, not Apple. Giving them the power to price their product. Even if Apple were in this "Monopsony", it isn't really evident to me how this had harmed consumer.
- justinclift 7y ago
  There are many stories, including recently, of Apple doing "weird things" to app developers. Such that the app is no longer carried at all, or isn't upgraded (eg rejecting new versions), etc.
thaumasiotes 7y ago
> Monopsony is a slippery concept. How so? If you want to buy X, and there's only one person selling X, then that person is the monopoly seller of X. If you want to sell X, and there's only one person buying X, then that person is the monopsony buyer of X. You can't swap the adjectives around; monopsony buyer is redundant in the same way monopoly seller is. You can think of them as the same word with different agreement forms, much like how "is" in "He is red" is the same word as "am" in "I am purple".
- unishark 7y ago
  I think the problem is in its asymmetric use. Here they are defining the "market" in question as a subset of the actual market for smartphones or software, restricted to only that software in the Apple store. Surprise, Apple dominates their own store. As if customers don't have alternatives, when of course they do. If you swap the logic around it would be like calling Apple a monopoly because they are the only seller of iphones, a contrived market that is actually just a subset of the smartphone market.
simion314 7y ago
Imagine a big city/country with only 2 stores, half of the population uses store A and half store B. Store A and B are happy with the profits and are not competing on the margins, both will take 30% of your products, both will ban your product if they judge they don't like it, maybe store A will block you if you compete with them and store B will block you because some algorithm. So basically you have 2 big pile of shit and you are forced to chose witch one stinks less or looks less disgusting. Also if you think at the clients of store A and B this fake competition costs them more so the only people that benefit are the store owners, free market should always push for competition and consumer good not for making more oney then a nation. If all this crap is legal then laws need to be changed and this would include limitations for Wallmart or physical stores too.
- scarface74 7y ago
  I hope you’re not implying the old wives tale about Apple nit allowing apps that compete with it on the store. If so, there are plenty of existence proofs that that isn’t true.
  - logfromblammo 7y ago
    What applications in the Apple store are able to function as the default SMS app or the default web browser engine? On Android, I can use Signal for SMS and Firefox for browser engine. On my spouse's iPhone, the iOS applications with the same names are severely restricted in their functionality. Blocking ads, scripts, and tracking is significantly more difficult. If you believe these are core OS functions, and therefore not subject to competition, Microsoft has a old story to tell you about Internet Explorer web browser and Windows 95 OS.
    - scarface74 7y ago
      Are they allowed to be default no. Are they allowed on the App Store - yes.
      - rickdeckard 7y ago
mcv 7y ago
Large supermarket chains are absolutely a great example of monopsony power. Producers selling to the supermarket often can't choose their own price. The supermarket can decide the price, and if the producer doesn't like it, he gets to sell nothing at all, even if the actual customers do like the product. And supermarkets absolutely use this power. I've heard of supermarkets deciding to discount certain items against the wishes of the producers, but still letting the producers pay for the discount. Because the supermarket controls the distribution channel, they wield power over both the customer and the producer.
- ShroudedNight 7y ago
  The stories I've heard are worse than this. You establish a contract to sell your product for $x, they don't pay you until you believe the only money you'll ever see is from a lawsuit, then they demand you take $y, where y is significantly less than x, and if you don't like it, you can sue them, at which point they'll boycott all your other products too.
belorn 7y ago
The difference is that walmart actually purchase the products that they sell in their store. They are a reseller. A more accurate comparison is a market hall which permit sellers to set up booths in return for a cut of the revenues. As an example I would look at stores around Olympics games, where the organizers holds enormous power in controlling who get to sell what, the price and the cut. The level of control they assert seems pretty similar to that of apple.
- jfengel 7y ago
  It's not quite true that Walmart purchases products. Walmart's arrangements keep a lot of the risk on the supplier. They charge for warehousing and distribution, and they don't pay for what doesn't get sold. It is, in a lot of ways, like the market model you suggest. Not precisely; it is its own thing (and is popular precisely because it's so innovative in its business model, which lowers prices for its customers). So analogies with Walmart are always going to be problematic, but it's worth noting that their model is very different from the simple retail-reseller model. https://spendmatters.com/2015/09/16/what-the-new-wal-mart-storage-fees-and-payment-terms-mean-for-suppliers/ https://spendmatters.com/2015/09/16/what-the-new-wal-mart-st...
- braythwayt 7y ago
  We're splitting some really fine hairs here. As a customer, I have an account with Apple. When I purchase an app, I pay Apple, and I presume they give 70% of my payment to the developer. As a customer, it feels like a retail store. I give money to the store, but I end up in a warranty relationship with the manufacturer, much like buying something from a store.
cforrester 7y ago
I can remember a time when there were serious complaints about Walmart's influence in the home video market. It used to be very expensive to produce a DVD, and smaller studios couldn't afford to produce both an original widescreen and a cropped ("pan-and-scan") version for 4:3 televisions. For the longest time, Walmart would refuse to carry a title that didn't have a cropped version. It ended up forcing some to choose between losing a significant source of sales and compromising the visual quality of a film's only home video release.
redwall_hp 7y ago
The difference is you don't purchase a Walmart store first. Neogreekisms aside, I personally think the iPhone ecosystem smells like a new kind of monopoly that the people who set down existing antitrust law couldn't have foreseen. Imagine buying a nice desk to work on, and being told you could only buy paper and pens from the manufacturer of the desk. Maybe other vendors could be considered if 30% of their revenue went to the desk manufacturer. Preposterous, right? That's the world be live in and accepted as the norm for smartphones. Not a monopoly on a market scale, but the notion of selling someone a "platform" couldn't have really been foreseen a century ago. It's a similar idea, but it's more monopolism targeted at the market that surrounds the platform. One particularly egregious example: Apple should reasonably be allowed to determine which products they sell on the App Store, but by preventing the installation of arbitrary apps from outside of the store, they've created a monopoly that they use for moral policing and anticompetitive practices. Apple not only disallows nudity-centric apps or apps that control nicotine vaporizers on their store, but effectively has banished them from their phones entirely. Which seems very suspect, and arguably they should not have the right to stop people from using what may be their primary computing platform as they see fit. Then there's the issue of ebooks and music: Apple takes 30% of every in-app purchase, and developers are forbidden from using alternate payment processors to get around that. As such, Amazon can't reasonably sell ebooks in their app (you have to use a web browser and figure out the weird absence of buying capabilities yourself, as a user) since it would soak up the entire margin. Apple, however, competes with Amazon and sells ebooks themselves...which is questionable. Spotify cannot sign people up for their service without giving Apple an ongoing 30% cut of the subscription...meanwhile, Apple competes with them.
- magduf 7y ago
  >Maybe other vendors could be considered if 30% of their revenue went to the desk manufacturer. Preposterous, right? That's the world be live in and accepted as the norm for smartphones. To be fair, on Android, you at least have the ability to sideload apps or use different app stores. Of course, not many people do, but the option is there.
baddox 7y ago
There's nothing slippery about that, because Walmart is already commonly given as a textbook example of monopsony.

ksec 7y ago

You can buy 90% of products in Walmart through other channels. ( 10% are either exclusive or own brand ) And Walmart is not the sole buyer of any of those products. Apple is the sole buyer of All App Store Products, and you cant buy those products anywhere else. Which as far as I understand it, is what the argument Monopsony is trying to make. Buying Power instead of Market Power. Edit: After rereading the article, the start of the article also pointed out, it was the developer that set the price of the App, not Apple. Giving them the power to price their product. Even if Apple were in this "Monopsony", it isn't really evident to me how this had harmed consumer.

justinclift 7y ago
There are many stories, including recently, of Apple doing "weird things" to app developers. Such that the app is no longer carried at all, or isn't upgraded (eg rejecting new versions), etc.

thaumasiotes 7y ago

> Monopsony is a slippery concept. How so? If you want to buy X, and there's only one person selling X, then that person is the monopoly seller of X. If you want to sell X, and there's only one person buying X, then that person is the monopsony buyer of X. You can't swap the adjectives around; monopsony buyer is redundant in the same way monopoly seller is. You can think of them as the same word with different agreement forms, much like how "is" in "He is red" is the same word as "am" in "I am purple".

unishark 7y ago
I think the problem is in its asymmetric use. Here they are defining the "market" in question as a subset of the actual market for smartphones or software, restricted to only that software in the Apple store. Surprise, Apple dominates their own store. As if customers don't have alternatives, when of course they do. If you swap the logic around it would be like calling Apple a monopoly because they are the only seller of iphones, a contrived market that is actually just a subset of the smartphone market.

simion314 7y ago

Imagine a big city/country with only 2 stores, half of the population uses store A and half store B. Store A and B are happy with the profits and are not competing on the margins, both will take 30% of your products, both will ban your product if they judge they don't like it, maybe store A will block you if you compete with them and store B will block you because some algorithm. So basically you have 2 big pile of shit and you are forced to chose witch one stinks less or looks less disgusting. Also if you think at the clients of store A and B this fake competition costs them more so the only people that benefit are the store owners, free market should always push for competition and consumer good not for making more oney then a nation. If all this crap is legal then laws need to be changed and this would include limitations for Wallmart or physical stores too.

scarface74 7y ago
I hope you’re not implying the old wives tale about Apple nit allowing apps that compete with it on the store. If so, there are plenty of existence proofs that that isn’t true.
- logfromblammo 7y ago
  What applications in the Apple store are able to function as the default SMS app or the default web browser engine? On Android, I can use Signal for SMS and Firefox for browser engine. On my spouse's iPhone, the iOS applications with the same names are severely restricted in their functionality. Blocking ads, scripts, and tracking is significantly more difficult. If you believe these are core OS functions, and therefore not subject to competition, Microsoft has a old story to tell you about Internet Explorer web browser and Windows 95 OS.
  - scarface74 7y ago
    Are they allowed to be default no. Are they allowed on the App Store - yes.
    - rickdeckard 7y ago

mcv 7y ago

Large supermarket chains are absolutely a great example of monopsony power. Producers selling to the supermarket often can't choose their own price. The supermarket can decide the price, and if the producer doesn't like it, he gets to sell nothing at all, even if the actual customers do like the product. And supermarkets absolutely use this power. I've heard of supermarkets deciding to discount certain items against the wishes of the producers, but still letting the producers pay for the discount. Because the supermarket controls the distribution channel, they wield power over both the customer and the producer.

ShroudedNight 7y ago
The stories I've heard are worse than this. You establish a contract to sell your product for $x, they don't pay you until you believe the only money you'll ever see is from a lawsuit, then they demand you take $y, where y is significantly less than x, and if you don't like it, you can sue them, at which point they'll boycott all your other products too.

belorn 7y ago

The difference is that walmart actually purchase the products that they sell in their store. They are a reseller. A more accurate comparison is a market hall which permit sellers to set up booths in return for a cut of the revenues. As an example I would look at stores around Olympics games, where the organizers holds enormous power in controlling who get to sell what, the price and the cut. The level of control they assert seems pretty similar to that of apple.

jfengel 7y ago
It's not quite true that Walmart purchases products. Walmart's arrangements keep a lot of the risk on the supplier. They charge for warehousing and distribution, and they don't pay for what doesn't get sold. It is, in a lot of ways, like the market model you suggest. Not precisely; it is its own thing (and is popular precisely because it's so innovative in its business model, which lowers prices for its customers). So analogies with Walmart are always going to be problematic, but it's worth noting that their model is very different from the simple retail-reseller model. https://spendmatters.com/2015/09/16/what-the-new-wal-mart-storage-fees-and-payment-terms-mean-for-suppliers/ https://spendmatters.com/2015/09/16/what-the-new-wal-mart-st...
braythwayt 7y ago
We're splitting some really fine hairs here. As a customer, I have an account with Apple. When I purchase an app, I pay Apple, and I presume they give 70% of my payment to the developer. As a customer, it feels like a retail store. I give money to the store, but I end up in a warranty relationship with the manufacturer, much like buying something from a store.

cforrester 7y ago

I can remember a time when there were serious complaints about Walmart's influence in the home video market. It used to be very expensive to produce a DVD, and smaller studios couldn't afford to produce both an original widescreen and a cropped ("pan-and-scan") version for 4:3 televisions. For the longest time, Walmart would refuse to carry a title that didn't have a cropped version. It ended up forcing some to choose between losing a significant source of sales and compromising the visual quality of a film's only home video release.

redwall_hp 7y ago

The difference is you don't purchase a Walmart store first. Neogreekisms aside, I personally think the iPhone ecosystem smells like a new kind of monopoly that the people who set down existing antitrust law couldn't have foreseen. Imagine buying a nice desk to work on, and being told you could only buy paper and pens from the manufacturer of the desk. Maybe other vendors could be considered if 30% of their revenue went to the desk manufacturer. Preposterous, right? That's the world be live in and accepted as the norm for smartphones. Not a monopoly on a market scale, but the notion of selling someone a "platform" couldn't have really been foreseen a century ago. It's a similar idea, but it's more monopolism targeted at the market that surrounds the platform. One particularly egregious example: Apple should reasonably be allowed to determine which products they sell on the App Store, but by preventing the installation of arbitrary apps from outside of the store, they've created a monopoly that they use for moral policing and anticompetitive practices. Apple not only disallows nudity-centric apps or apps that control nicotine vaporizers on their store, but effectively has banished them from their phones entirely. Which seems very suspect, and arguably they should not have the right to stop people from using what may be their primary computing platform as they see fit. Then there's the issue of ebooks and music: Apple takes 30% of every in-app purchase, and developers are forbidden from using alternate payment processors to get around that. As such, Amazon can't reasonably sell ebooks in their app (you have to use a web browser and figure out the weird absence of buying capabilities yourself, as a user) since it would soak up the entire margin. Apple, however, competes with Amazon and sells ebooks themselves...which is questionable. Spotify cannot sign people up for their service without giving Apple an ongoing 30% cut of the subscription...meanwhile, Apple competes with them.

magduf 7y ago
>Maybe other vendors could be considered if 30% of their revenue went to the desk manufacturer. Preposterous, right? That's the world be live in and accepted as the norm for smartphones. To be fair, on Android, you at least have the ability to sideload apps or use different app stores. Of course, not many people do, but the option is there.

baddox 7y ago

There's nothing slippery about that, because Walmart is already commonly given as a textbook example of monopsony.