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Apple does not have a “monopoly on iPhone hardware and iOS”. This is a fundamental misunderstand of the term. You cannot have a monopoly on your own product, be

by zaroth 6y ago

Apple does not have a “monopoly on iPhone hardware and iOS”. This is a fundamental misunderstand of the term. You cannot have a monopoly on your own product, because a monopoly is a state of a market and your own product is not a market. Understanding this is fundamental to the actual legal issue at hand. First, the argument against Apple is not that they are bundling an App Store with their iPhone. The argument against Apple is that they are restricting behavior that Apps may perform on their Store and also disallowing other stores. If their App Store was downloaded separately but then enforced the same restriction, you have exactly the same legal issue. Implementing the App Store to be a separate manual download, but keeping the same restrictions in place if it is installed, would be just as illegal as exactly what they are doing today. They would have to at least allow installing multiple App Stores side by side, if not eliminate certain contractural provisions of being able to publish on the Apple App Store itself. As for why Apple’s curation is bundled with the phone, it’s not a question of whether it “needs to be” that way, it’s a question of why Apple chose to do it that way. They chose that route for a myriad of very significant reasons relating to user experience, usability, privacy, security, safety, brand & reputation, performance, and accountability. From a financial standpoint they chose it because it ensure apps are profitable for both Apple and Developers, as well as consistent and predictable for end users. They also eliminate almost all software piracy on their platform with their model, which increases App Store revenue. Their model enables HCI, Privacy, and Billing policies which they can enforce platform-wide, and which they can demand otherwise abusive apps to follow, simply because there is no other option if you want access to Apple’s customer base.

gpm 6y ago
> Apple does not have a “monopoly on iPhone hardware and iOS”. This is a fundamental misunderstand of the term. You cannot have a monopoly on your own product, because a monopoly is a state of a market and your own product is not a market. Precedent deeply disagrees with you on this. At the supreme court level see Eastman Kodak Co. v. Image Technical Services Inc. To quote the first paragraph of wikipedia out of laziness: https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec.... > Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (1992), is a 1992 Supreme Court decision in which the Court held that even though an equipment manufacturer lacked significant market power in the primary market for its equipment—copier-duplicators and other imaging equipment—nonetheless, it could have sufficient market power in the secondary aftermarket for repair parts to be liable under the antitrust laws for its exclusionary conduct in the aftermarket.[1] The reason was that it was possible that, once customers were committed to the particular brand by having purchased a unit, they were "locked in" and no longer had any realistic alternative to turn to for repair parts. This has been held at the appeals court level to apply to products as well as repair services (because why wouldn't it). See newcal industries v. ikon office solution. Unfortunately since a large portion of the opinion focuses on this, it's hard to find a single quote that summarizes. Read the background and then search aftermarket in the opinion: https://www.leagle.com/decision/20081551513f3d103811540 https://www.leagle.com/decision/20081551513f3d103811540: Here is my best attempt at picking out a relevant paragraph that explains the law: > Taking these cases together, three relevant principles emerge. First, the law permits an antitrust claimant to restrict the relevant market to a single brand of the product at issue (as in Eastman Kodak). Second, the law prohibits an antitrust claimant from resting on market power that arises solely from contractual rights that consumers knowingly and voluntarily gave to the defendant (as in Queen City Pizza and Forsyth). Third, in determining whether the defendant's market power falls in the Queen City Pizza category of contractually-created market power or in the Eastman Kodak category of economic market power, the law permits an inquiry into whether a consumer's selection of a particular brand in the competitive market is the functional equivalent of a contractual commitment, giving that brand an agreed-upon right to monopolize its consumers in an aftermarket. The law. permits an inquiry into whether consumers entered into such "contracts" knowing that they were agreeing to such a commitment. So I don't think it's a slamdunk whether or not Apple's secondary markets here are aftermarkets that anti trust can be applied to because of the third point in the above paragraph, but it's not a slamdunk the other way either, and your claim that you can't have a monopoly on IPhone apps because IPhone is apple's product is fundamentally flawed (rather, if it's true, it's because purchasing an IPhone is akin to signing a contract that you will only use IPhone apps distributed from Apple, and that you will only use Apple's payment system on those IPhone apps).
- zaroth 6y ago
  > "Your claim that you can't have a monopoly on IPhone apps because IPhone is apple's product is fundamentally flawed". I never claimed that at all. It's a question for the courts to decide if it wants to allow Apple's current App Store contract to stand, and if not, what remedy they propose. But it wouldn't be because Apple has a "monopoly" on the iPhone or iOS, it would ride partly on the question of, from your own source, "whether consumers entered into such "contracts" knowing that they were agreeing to such a commitment", and I suppose partly on whether the contract is illegally anti-competitive even if it was entered into knowingly. Further quoting from your own source, Newcal v Icon; "First and foremost, the relevant market must be a product market. The consumers do not define the boundaries of the market; the products or producers do. Second, the market must encompass the product at issue as well as all economic substitutes for the product. As the Supreme Court has instructed, "The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it." As such, the relevant market must include "the group or groups of sellers or producers who have actual or potential ability to deprive each other of significant levels of business." Further reading of that case (a great example by the way) involves discussion of an interesting case against Domino's pizza. Franchisees attempted to sue because they were contractually required to purchase ingredients from Domino's, and Domino's therefore held a monopoly on their ingredients. It's not that substitute ingredients didn't exist, they just weren't allowed by Domino's to buy them. Similarly with the App Store, it's not that other apps don't exist, it's just that contracturally, iOS doesn't allow you to download them. There is a competitive market for apps (very clearly!) but yet the market for apps on an iPhone is contractually limited in a way which you might be tempted to call a monopoly. The Third Circuit ruled otherwise. As long as customers knowingly entered into this contract, the existence of the contract provision does not create a illegal monopoly. > "The Third Circuit held that the contractually created difference among otherwise-substitutable products was insufficient to create an economically distinct antitrust submarket." The counter argument is given as Kodak v. Image Technical Services. In this case, Kodak is monopolizing the market for repair parts and services. The Supreme Court rules that buyers of Kodak machines could not reasonably predict that such a purchase would lock them into buying overpriced Kodak parts and services down the line. > The Court rejected that analogy on the ground that the consumers could not, at the time of purchase, reasonably discover that Kodak monopolized the service market and charged supracompetitive prices for its service. Id. Kodak's market power in parts and services, therefore, did not arise from a knowing contractual (or quasi-contractual), arrangement. By comparison, no one who is buying an iPhone could reasonably be unaware that the App Store is the only way to install apps on it. More importantly, Apple isn't being sued by consumers. It's being sued by App Developers, who did certainly quite knowingly enter into a contract with Apple to write apps for their platform. I don't know of any statue that requires Apple to provide access to their own device to third party software developers. Third parties can write an app for iOS or not, but when they do so, developers enter into a contract with Apple that decidedly comes with some conditions.
jariel 6y ago
"They chose that route for a myriad of very significant reasons relating to user experience, usability, privacy, security, safety, brand & reputation, performance, and accountability." This is incredibly naive. They chose it to be this way for the purposes of profit. Android is testament to the fact that high degree of quality and security and consistency can be maintained without any of the most iOS aggressive restrictions. There is no material difference between security on either platform, they're both generally fine, apps are great on Android and people are not falling off the side of the earth because of 'scams or fallouts' regarding Android. The existence and relative quality of the Android universe renders most of the arguments for iOS walled garden moot. The term 'monopoly' may not apply perfect, but it's reasonable in the discussion, the anti-trust issues are obvious and have many historical parallels.
- zaroth 6y ago
  > This is incredibly naive. Maybe you stopped reading. I also said they did it for financial reasons. To say they did it purely for profit is overly reductionist. But in the sense that they believe the policies they have put in place make their device superior in the market, and make the App Store generate more dollars per user (both for Apple and for Developers), then you could say that profit is always an underlying motive. As it is and as it should be in capitalism. Whether you believe Android is great or not is irrelevant. I personally think you are glossing over some very high profile failings and failures of Android, but it’s totally besides the point. Similarly totally irrelevant whether they could have made different technical and policy choices over the last 12 years which may or may not have obtained the same or similar outcomes. Apple does not owe anyone the right to distribute their Apps on Apple’s own store, no more than any product can demand placement on their own terms in any store. Only if Apple holds a monopoly on smartphones could Apple’s right to enforce their own policies on their own phone be limited. That’s why the term monopoly is important. The existence and relative quality of the Android universe renders disagreements over Apple App Store policy beyond the reach of an anti-trust act.
- temp667 6y ago
  If andorid is great, then folks will pick android. That's fine and competition. Things are a lot cheaper on android to, so they win on price. The one android phone I ever purchased 1) Shipped with bloatware in the base install (!!!) 2) Shipped with an older android version. 3) The updates never came 4) The messaging story was CRAP (unsecured SMS / spam SMS) Meanwhile I'm getting 4-5 years of updates on every iphone I have ever purchased. I've never gotten spam imessages I don't think. etc. Apple choses these features because they think it will let them charge more for their stuff - which I think it does. Making a product people want by reducing scam behavior shouldn't be illegal, and people wanting your product and being willing to pay extra for it doesn't make you a monopoly. Def makes apple rich though!

by zaroth 6y ago

gpm 6y ago

> Apple does not have a “monopoly on iPhone hardware and iOS”. This is a fundamental misunderstand of the term. You cannot have a monopoly on your own product, because a monopoly is a state of a market and your own product is not a market. Precedent deeply disagrees with you on this. At the supreme court level see Eastman Kodak Co. v. Image Technical Services Inc. To quote the first paragraph of wikipedia out of laziness: https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec.... > Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (1992), is a 1992 Supreme Court decision in which the Court held that even though an equipment manufacturer lacked significant market power in the primary market for its equipment—copier-duplicators and other imaging equipment—nonetheless, it could have sufficient market power in the secondary aftermarket for repair parts to be liable under the antitrust laws for its exclusionary conduct in the aftermarket.[1] The reason was that it was possible that, once customers were committed to the particular brand by having purchased a unit, they were "locked in" and no longer had any realistic alternative to turn to for repair parts. This has been held at the appeals court level to apply to products as well as repair services (because why wouldn't it). See newcal industries v. ikon office solution. Unfortunately since a large portion of the opinion focuses on this, it's hard to find a single quote that summarizes. Read the background and then search aftermarket in the opinion: https://www.leagle.com/decision/20081551513f3d103811540 https://www.leagle.com/decision/20081551513f3d103811540: Here is my best attempt at picking out a relevant paragraph that explains the law: > Taking these cases together, three relevant principles emerge. First, the law permits an antitrust claimant to restrict the relevant market to a single brand of the product at issue (as in Eastman Kodak). Second, the law prohibits an antitrust claimant from resting on market power that arises solely from contractual rights that consumers knowingly and voluntarily gave to the defendant (as in Queen City Pizza and Forsyth). Third, in determining whether the defendant's market power falls in the Queen City Pizza category of contractually-created market power or in the Eastman Kodak category of economic market power, the law permits an inquiry into whether a consumer's selection of a particular brand in the competitive market is the functional equivalent of a contractual commitment, giving that brand an agreed-upon right to monopolize its consumers in an aftermarket. The law. permits an inquiry into whether consumers entered into such "contracts" knowing that they were agreeing to such a commitment. So I don't think it's a slamdunk whether or not Apple's secondary markets here are aftermarkets that anti trust can be applied to because of the third point in the above paragraph, but it's not a slamdunk the other way either, and your claim that you can't have a monopoly on IPhone apps because IPhone is apple's product is fundamentally flawed (rather, if it's true, it's because purchasing an IPhone is akin to signing a contract that you will only use IPhone apps distributed from Apple, and that you will only use Apple's payment system on those IPhone apps).

zaroth 6y ago
> "Your claim that you can't have a monopoly on IPhone apps because IPhone is apple's product is fundamentally flawed". I never claimed that at all. It's a question for the courts to decide if it wants to allow Apple's current App Store contract to stand, and if not, what remedy they propose. But it wouldn't be because Apple has a "monopoly" on the iPhone or iOS, it would ride partly on the question of, from your own source, "whether consumers entered into such "contracts" knowing that they were agreeing to such a commitment", and I suppose partly on whether the contract is illegally anti-competitive even if it was entered into knowingly. Further quoting from your own source, Newcal v Icon; "First and foremost, the relevant market must be a product market. The consumers do not define the boundaries of the market; the products or producers do. Second, the market must encompass the product at issue as well as all economic substitutes for the product. As the Supreme Court has instructed, "The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it." As such, the relevant market must include "the group or groups of sellers or producers who have actual or potential ability to deprive each other of significant levels of business." Further reading of that case (a great example by the way) involves discussion of an interesting case against Domino's pizza. Franchisees attempted to sue because they were contractually required to purchase ingredients from Domino's, and Domino's therefore held a monopoly on their ingredients. It's not that substitute ingredients didn't exist, they just weren't allowed by Domino's to buy them. Similarly with the App Store, it's not that other apps don't exist, it's just that contracturally, iOS doesn't allow you to download them. There is a competitive market for apps (very clearly!) but yet the market for apps on an iPhone is contractually limited in a way which you might be tempted to call a monopoly. The Third Circuit ruled otherwise. As long as customers knowingly entered into this contract, the existence of the contract provision does not create a illegal monopoly. > "The Third Circuit held that the contractually created difference among otherwise-substitutable products was insufficient to create an economically distinct antitrust submarket." The counter argument is given as Kodak v. Image Technical Services. In this case, Kodak is monopolizing the market for repair parts and services. The Supreme Court rules that buyers of Kodak machines could not reasonably predict that such a purchase would lock them into buying overpriced Kodak parts and services down the line. > The Court rejected that analogy on the ground that the consumers could not, at the time of purchase, reasonably discover that Kodak monopolized the service market and charged supracompetitive prices for its service. Id. Kodak's market power in parts and services, therefore, did not arise from a knowing contractual (or quasi-contractual), arrangement. By comparison, no one who is buying an iPhone could reasonably be unaware that the App Store is the only way to install apps on it. More importantly, Apple isn't being sued by consumers. It's being sued by App Developers, who did certainly quite knowingly enter into a contract with Apple to write apps for their platform. I don't know of any statue that requires Apple to provide access to their own device to third party software developers. Third parties can write an app for iOS or not, but when they do so, developers enter into a contract with Apple that decidedly comes with some conditions.

jariel 6y ago

"They chose that route for a myriad of very significant reasons relating to user experience, usability, privacy, security, safety, brand & reputation, performance, and accountability." This is incredibly naive. They chose it to be this way for the purposes of profit. Android is testament to the fact that high degree of quality and security and consistency can be maintained without any of the most iOS aggressive restrictions. There is no material difference between security on either platform, they're both generally fine, apps are great on Android and people are not falling off the side of the earth because of 'scams or fallouts' regarding Android. The existence and relative quality of the Android universe renders most of the arguments for iOS walled garden moot. The term 'monopoly' may not apply perfect, but it's reasonable in the discussion, the anti-trust issues are obvious and have many historical parallels.

zaroth 6y ago
> This is incredibly naive. Maybe you stopped reading. I also said they did it for financial reasons. To say they did it purely for profit is overly reductionist. But in the sense that they believe the policies they have put in place make their device superior in the market, and make the App Store generate more dollars per user (both for Apple and for Developers), then you could say that profit is always an underlying motive. As it is and as it should be in capitalism. Whether you believe Android is great or not is irrelevant. I personally think you are glossing over some very high profile failings and failures of Android, but it’s totally besides the point. Similarly totally irrelevant whether they could have made different technical and policy choices over the last 12 years which may or may not have obtained the same or similar outcomes. Apple does not owe anyone the right to distribute their Apps on Apple’s own store, no more than any product can demand placement on their own terms in any store. Only if Apple holds a monopoly on smartphones could Apple’s right to enforce their own policies on their own phone be limited. That’s why the term monopoly is important. The existence and relative quality of the Android universe renders disagreements over Apple App Store policy beyond the reach of an anti-trust act.
temp667 6y ago
If andorid is great, then folks will pick android. That's fine and competition. Things are a lot cheaper on android to, so they win on price. The one android phone I ever purchased 1) Shipped with bloatware in the base install (!!!) 2) Shipped with an older android version. 3) The updates never came 4) The messaging story was CRAP (unsecured SMS / spam SMS) Meanwhile I'm getting 4-5 years of updates on every iphone I have ever purchased. I've never gotten spam imessages I don't think. etc. Apple choses these features because they think it will let them charge more for their stuff - which I think it does. Making a product people want by reducing scam behavior shouldn't be illegal, and people wanting your product and being willing to pay extra for it doesn't make you a monopoly. Def makes apple rich though!