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> The issue isn't that Apple has a monopoly on "their app store" but rather that they have a monopoly on distribution of apps to the set of customers with iOS d

> The issue isn't that Apple has a monopoly on "their app store" but rather that they have a monopoly on distribution of apps to the set of customers with iOS devices. You keep saying this but it's unlikely that the courts will see it this way. The US legal system generally doesn't consider an aftermarket of a single brand's product to be a valid antitrust market unless specific exceptions are met. I've explained why in detail elsewhere. [1] Because it would be inappropriate to punish a firm for its natural monopoly in its own products, courts embraced a sweeping prohibition against analyzing alleged anticompetitive activity by focusing on single-brand relevant markets: "[A]bsent exceptional market conditions, one brand in a market of competing brands cannot constitute a relevant product market." [2] The court held that “the aftermarket is the relevant market for antitrust analysis only if the evidence supports an inference of monopoly power in the aftermarket that competition in the primary market appears unable to check.” [3] When a manufacturer lacks market power in the primary market, an aftermarket restriction set forth in a purchase contract is generally safe from challenge under the antitrust laws. Numerous courts have rejected aftermarket claims based on contract provisions that exclude competition in an aftermarket. Because such restrictions are disclosed to customers at the time of purchase, customers can understand and plan for the aftermarket restriction before they are locked in. [4] > what makes it a monopoly is that there are no viable alternatives to it. The court will (correctly) point at Android and ask, "why isn't that a viable alternative"? [1] https://news.ycombinator.com/item?id=24193731 https://news.ycombinator.com/item?id=24193731 [2] https://casetext.com/case/metzler-v-bear-automotive-service-equipment-co https://casetext.com/case/metzler-v-bear-automotive-service-... [3] https://www.ftc.gov/system/files/attachments/us-submissions-oecd-2010-present-other-international-competition-fora/aftermarkets.pdf https://www.ftc.gov/system/files/attachments/us-submissions-... (This is an excellent read for anyone curious about how aftermarkets are treated in antitrust law, btw.) [4] https://eu-competitionlaw.com/competitionantitrust-challenges-in-technology-aftermarkets/ https://eu-competitionlaw.com/competitionantitrust-challenge...

summerlight 6y ago
> The court will (correctly) point at Android and ask, "why isn't that a viable alternative"? Because flagship Android phones comparable to iPhone are not cheap enough to switch solely due to apps. This is a textbook monopolist argument: "if you don't like me, then you can always move out!"
- scarface74 6y ago
  What apps did most iPhone users actually pay for? Most of the money from the App Store come from in app purchases from play to win games. The other come from subscriptions that are cross platform.
  - summerlight 6y ago
    That actually supports my point. Most of the apps are under $1 ~ $5, so the cost ratio between a phone and an app is extremely high. Why would I invest >$1000 into Android just to avoid paying $0.3 to Apple? You don't move your home because you don't like your local hospital. The exact same logic applies here.
    - scarface74 6y ago
      If you agree that most money made on apps from within the App Store are from pay to win games, are you really shedding a tear over the lost revenue on loot boxes and coins to get past a level in Candy Crush?
- nodamage 6y ago
  As I quoted above, a key factor the court will consider is whether the customer knew of the restriction at the time of purchase, could have made an alternative purchase without the restriction, and went ahead and purchased anyway.
AnthonyMouse 6y ago
> https://casetext.com/case/metzler-v-bear-automotive-service-equipment-co https://casetext.com/case/metzler-v-bear-automotive-service-... That is a district court case with no value as precedent. And in that case, like most of the others regarding aftermarkets, the monopoly in the aftermarket is obtained merely by refusing to sell OEM parts (and thereby monopolizing the repair market). Apple isn't refusing to sell OEM screens and batteries -- I mean they are, but that isn't what we're talking about today -- they're using technological measures to purposefully exclude competitors for app distribution. That's a lot more brazenly anti-competitive than merely not selling parts and service independently. It's also questionable whether you can really get away with calling the entire software market an "aftermarket" of the device market. It's like claiming that online retail is an "aftermarket" of the real estate market because the goods get shipped there. That's not exactly the same thing as the "aftermarket" for copier service, is it? It claims too much. > https://www.ftc.gov/system/files/attachments/us-submissions-oecd-2010-present-other-international-competition-fora/aftermarkets.pdf https://www.ftc.gov/system/files/attachments/us-submissions-... This is, similarly, predominantly an analysis of lower appellate court cases narrowing the Supreme Court's Kodak decision. The one you're quoting from is a 1st Circuit decision, whereas the case Epic filed is under the 9th Circuit. And this is from your link, Page 6 of the FTC paper: > 13. In the context of aftermarkets, a key question regarding product market definition is whether the aftermarket constitutes a relevant product market separate from the foremarket. The hypothetical monopolist test can answer this question—if a profit-maximizing hypothetical monopolist of an aftermarket (that is not a monopolist in the foremarket) would raise prices by at least a small but significant and non-transitory amount, then foremarket competition is not sufficient to prevent against anticompetitive behavior in the aftermarket; thus it is appropriate to analyze competition in a separate relevant market comprising the aftermarket. If there was any doubt that this is true for the app store market, wasn't this the very thing Epic went out of their way to empirically prove? Epic is willing to charge less than 30% to distribute apps, and thereby charge lower prices to consumers. If the hypothetical monopolist in the "aftermarket" couldn't have charged more than Epic without hurting their sales in the primary market then how is Apple actually doing that? The claim that they would be making up for it by charging less for the product in the "foremarket" would require them to actually be doing so -- does Apple charge less for its phones than its competitors? (No.) Likewise: > Even where the original equipment market is a monopoly, however, if buyers understand that they are locked in (hence vulnerable to hold up), there will be no additional harm from hold up in the aftermarket–the monopolist cannot charge more in total than the buyer’s reservation price for the services generated by the equipment over its lifetime. This falls apart for the app store market because it's a market like web hosting where there are customers on both sides -- the person buying "hosting" might also be selling something, but they're still a customer. So to avoid the market effects that are supposed to be constraining them, they only need to charge the fee to the developers who don't get to choose which phone their own customers have. And then that's in fact what they do -- it's the developers who pay the 30%, and they're even prohibited from providing the equivalent discount when the product is purchased from competing channels that charge less, so the phone customer can't choose a different phone that has cheaper apps or in-app purchases, because the developers aren't allowed to provide the discount.

summerlight 6y ago

> The court will (correctly) point at Android and ask, "why isn't that a viable alternative"? Because flagship Android phones comparable to iPhone are not cheap enough to switch solely due to apps. This is a textbook monopolist argument: "if you don't like me, then you can always move out!"

scarface74 6y ago
What apps did most iPhone users actually pay for? Most of the money from the App Store come from in app purchases from play to win games. The other come from subscriptions that are cross platform.
- summerlight 6y ago
  That actually supports my point. Most of the apps are under $1 ~ $5, so the cost ratio between a phone and an app is extremely high. Why would I invest >$1000 into Android just to avoid paying $0.3 to Apple? You don't move your home because you don't like your local hospital. The exact same logic applies here.
  - scarface74 6y ago
    If you agree that most money made on apps from within the App Store are from pay to win games, are you really shedding a tear over the lost revenue on loot boxes and coins to get past a level in Candy Crush?
nodamage 6y ago
As I quoted above, a key factor the court will consider is whether the customer knew of the restriction at the time of purchase, could have made an alternative purchase without the restriction, and went ahead and purchased anyway.

AnthonyMouse 6y ago

> https://casetext.com/case/metzler-v-bear-automotive-service-equipment-co https://casetext.com/case/metzler-v-bear-automotive-service-... That is a district court case with no value as precedent. And in that case, like most of the others regarding aftermarkets, the monopoly in the aftermarket is obtained merely by refusing to sell OEM parts (and thereby monopolizing the repair market). Apple isn't refusing to sell OEM screens and batteries -- I mean they are, but that isn't what we're talking about today -- they're using technological measures to purposefully exclude competitors for app distribution. That's a lot more brazenly anti-competitive than merely not selling parts and service independently. It's also questionable whether you can really get away with calling the entire software market an "aftermarket" of the device market. It's like claiming that online retail is an "aftermarket" of the real estate market because the goods get shipped there. That's not exactly the same thing as the "aftermarket" for copier service, is it? It claims too much. > https://www.ftc.gov/system/files/attachments/us-submissions-oecd-2010-present-other-international-competition-fora/aftermarkets.pdf https://www.ftc.gov/system/files/attachments/us-submissions-... This is, similarly, predominantly an analysis of lower appellate court cases narrowing the Supreme Court's Kodak decision. The one you're quoting from is a 1st Circuit decision, whereas the case Epic filed is under the 9th Circuit. And this is from your link, Page 6 of the FTC paper: > 13. In the context of aftermarkets, a key question regarding product market definition is whether the aftermarket constitutes a relevant product market separate from the foremarket. The hypothetical monopolist test can answer this question—if a profit-maximizing hypothetical monopolist of an aftermarket (that is not a monopolist in the foremarket) would raise prices by at least a small but significant and non-transitory amount, then foremarket competition is not sufficient to prevent against anticompetitive behavior in the aftermarket; thus it is appropriate to analyze competition in a separate relevant market comprising the aftermarket. If there was any doubt that this is true for the app store market, wasn't this the very thing Epic went out of their way to empirically prove? Epic is willing to charge less than 30% to distribute apps, and thereby charge lower prices to consumers. If the hypothetical monopolist in the "aftermarket" couldn't have charged more than Epic without hurting their sales in the primary market then how is Apple actually doing that? The claim that they would be making up for it by charging less for the product in the "foremarket" would require them to actually be doing so -- does Apple charge less for its phones than its competitors? (No.) Likewise: > Even where the original equipment market is a monopoly, however, if buyers understand that they are locked in (hence vulnerable to hold up), there will be no additional harm from hold up in the aftermarket–the monopolist cannot charge more in total than the buyer’s reservation price for the services generated by the equipment over its lifetime. This falls apart for the app store market because it's a market like web hosting where there are customers on both sides -- the person buying "hosting" might also be selling something, but they're still a customer. So to avoid the market effects that are supposed to be constraining them, they only need to charge the fee to the developers who don't get to choose which phone their own customers have. And then that's in fact what they do -- it's the developers who pay the 30%, and they're even prohibited from providing the equivalent discount when the product is purchased from competing channels that charge less, so the phone customer can't choose a different phone that has cheaper apps or in-app purchases, because the developers aren't allowed to provide the discount.