2 ms·

> 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,

by 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.

by gpm 6y ago

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.