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What you have described is not a free market, but in fact 100% monopolistic anti-competitive moves that fall under anti-trust regulations.

by titzer 4y ago

Kerrick 4y ago
It’s a free market, but not a competitive market. Antitrust laws reduce the freedom of the market in order to increase competition, because it’s considered better for the majority of market participants to trade that freedom for competition.
cpursley 4y ago
How so? There are multiple chip makers (supply) and a huge pool of buyers (demand). As a consumer, I can now go out and buy a machine with Apple silicone, Intel, AMD. If anything, we're finally seeing some improvements after years of chip stagnation.
- cma 4y ago
  Apple did this with the ipod and later ipod mini too, full exclusivity for small drives in deals (covering music players only) to monopolize the segment, eventually across multiple additional drive manufacturers and technologies after the mini to keep it full monopoly. Everyone else was stuck for years with laptop drives that could never be pocketable. I'm not sure if node exclusivity was why Apple has the first true wireless earbuds, there was one competitor first with some giant ones so I suspect so, but lots of competitors followed fast (other foundry's nodes were more competitive then). Anyone know the history on that and what nm chips were used by them and earliest competitors?
  - scarface74 4y ago
    And Apple was far from dominant in the computer market then and were small fry compared to the other computer companies with respect to its revenue. Apple was just smarter and convince consumers to buy its products at a premium - just like with iPhones.
    - cma 4y ago
      > convince consumers to buy its products Consumers couldn't buy products with a pocketable harddrive: Apple had exclusivity agreements with all manufacturers of them to completely monopolize their use for music players.
      - scarface74 4y ago
        The story goes that IBM (?) shopped the hard drive around and no one was interested except for Apple. It’s still the lack of vision by other manufacturers. Also remember that the iPod wasn’t an immediate hit and it only sold 1 million in total in its first two years. It wasn’t until two years later when it was made available on Windows. Apple did the same with Flash storage before the iPod Nano came out. Any of its larger competitors at the time could have had the vision to see that flash based players were the future and ensure they had the supply.
  - hnaccount_rng 4y ago
    Apple was _years_ away from having the first wireless earbuds. I had The Bragi headphones (not Headphones) like 3 years before the AirPods got even announced. With basically all features sans handover but with an internal MP3 player and waterproof. Those were amazing but also somewhat clunky. But they were definitively long before Apple entered that market
- smoldesu 4y ago
  Okay, let's take this same logic and move it up one layer of abstraction. There are multiple fabricators (supply) and a small pool of chip manufacturers (demand). As a chip manufacturer, I cannot go out and buy competitive silicon. I can't even get last-gen silicon. The best you can get is an improved 7nm node from Samsung, but nobody wants to run their CPU on the blood and guts of Exynos chips. So, by definition, I'd say that Apple has monopolized the cutting-edge lithography business through leveraging a partner.
  - selectodude 4y ago
    A chip manufacturer absolutely could. Apple runs higher margins so they are willing to spend what it costs to get the bleeding edge stuff. Their customers appreciate the bleeding edge stuff and are willing to spend more to get it. It isn't like Samsung and AMD can't afford to jump on new nodes, they just won't be able to raise their prices enough for it to make sense to them.
    - Jensson 4y ago
      They can't, Apple has a contract to get all current supply, TSMC can't sell anything to AMD even if AMD paid more than Apple since they don't have any more to sell. They will get more to sell in a few years, but today they don't, you would have to go and convince Apple to sell their supply to you.
      - selectodude 4y ago
        AMD has every right and ability to offer TSMC money for slices of that exclusivity. We know this because Huawei split exclusivity with Apple for the first batches of N5 back in 2020. I imagine it cost them a lot of money.
arroz 4y ago
What monopoly? Apple pays more hence they get the product If someone else wants to pay more, they can get the product too There are other foundries too, they could get their phone chip done with Samsung on a similar technology What is true is that outside of TSCM and Samsung, you don’t have options for high end products
- cryptonym 4y ago
  Monopoly: the exclusive possession or control of the supply of or trade in a commodity or service. The fact they got more money than competitors and leverage that to get exclusive control doesn't matter much. Textbook definition of a monopoly. On legal side, IANAL, no idea if this could be illegal somewhere.
  - arroz 4y ago
    Apple doesn’t have exclusive control over 3nm process They will just get the first chips — maybe for the first year of production, idk
    - smoldesu 4y ago
      Yeah, this is what people said about 5nm too. Guess what? You can't even buy the 5nm node today because Apple still buys up the majority of it, and the few other competitors like Nvidia and AMD fight like animals for the scraps. Whatever you want to call it, it's pretty anticompetitive. Seeing them do the same thing for 3nm doesn't inspire confidence that they're going to do the right thing this time around.
    - ohgodplsno 4y ago
      Apple doesn't have exclusive control Except for the first year where they take a headstart where nobody else can either have matching chips or figure out what issues come out of this process, making them get an even bigger advantage as they have stabilized their process on year 2 when everyone is barely building up. Don't be a clown. You know fully well what Apple is doing.
onlyrealcuzzo 4y ago
I hate Apple and monopolies as much as anyone. But, no - what was described is not anti-competitive at all. If - in addition to what was described - part of the deal is that Apple would only make the deal if TSMC would not add any more capacity for 2 years NO MATTER WHAT - that is blatantly anti-competitive and monopolistic. If no one else is willing to pay for TSMC to build another facility to produce more chips - then that's a free market. Apple was the highest bidder and won.
- adam_arthur 4y ago
  Monopolistic behavior is subjective. Shutting out all competitors from new technology for years by outspending them (arguably from profits largely made via other monopolistic like behaviors) could qualify for many. I'll never understand the endless parade of apple goons who rush to defend them at every turn. Use some critical thought instead of treating it like sports
  - jlmorton 4y ago
    What you're describing is a monopsony, not a monopoly. And Apple is not by any contortion of the imagination a monopsony for chips. Apple and Samsung are the largest buyers, but they're barely cracking single digits market share.
    - adam_arthur 4y ago
      I'm not describing a monopsony. I'm describing a company that is able to pay far higher than competitors due to anticompetitive practices which drive their margins far above what would be realized in a truly competitive environment. I'd gladly like to see the alternative timeline where Microsoft charged 30% for all software on windows and where you and others shamed them for it. Because I know for a fact all of those defending Apple here would have at the time
      - deleted 4y ago
        [deleted]
krastanov 4y ago
Not that I disagree with your overall message, but to nitpick: the "free market" is exactly the thing that fails into "100% monopolistic anti-competitive moves" without "anti-trust regulations". I do not want a free market, I want a regulated market.
- mentat 4y ago
  See regulatory capture.
mort96 4y ago
Free markets often result in accumulation of wealth and marketshare, with the big players making anticompetitive moves. Anti-trust regulations make the market less free. The free market sucks. People need to stop valorizing it.
- adam_arthur 4y ago
  Competitive markets are what drive long term results for the economy, not free markets. Though the two often go hand in hand. In a purely free market, monopolies can form and exist in perpetuity
- Workaccount2 4y ago
  Fortune favors the fortunate
  - lotsofpulp 4y ago
    In this particular example, it seems like fortune favored the company that invested billions of dollars and years of R&D in creating a combination of hardware and software that consumers desire.
- varispeed 4y ago
  That's the problem, that has not been solved, because those corporations growing so big have enough money to buy any politician or government. To have a truly free market it should be accounting for this edge case - that is once a company grows beyond certain size it should by law be split. There should be other provisions - for instance if the big corporation causes a legal trouble, they should match the legal team of they claimant - for instance, if someone is suing Apple because of an issue with their hardware and Apple sets aside £100m legal budget - by law they should be required to set £100m for the claimant, so there is level playing field. That of course only if the judge decides for the case to go on.
  - mort96 4y ago
    I'm not sure what you're getting at. The definition of a free market is one in which private corporations can do what they want without government regulation; the more laws there are which regulate business, the less free the market is. So saying that a law which splits companies once they reach a certain size makes the market freer sounds like an oxymoron to me. It would certainly have the potential to make the market work better and improve competition, but that's not what a free market is.
mytailorisrich 4y ago
The problem of monopoly is not with Apple but with TSMC.
drexlspivey 4y ago
Offering a higher price is anti competitive now?
- yvdriess 4y ago
  They key is who is offering the higher price and is there a pattern. A company with a dominant market position can use the resources that flows from said dominance to keep out competitors.
  - scarface74 4y ago
    Apple neither has a dominant position in cell phones or computers.
  - hnaccount_rng 4y ago
    No, the key is offering a higher price AND then not using what you bought. Check out Apple’s delivery times. Those are still far from acceptable…
moino06 4y ago
Some people had similar arguments during the whole "break Facebook" thing. Ultimately, the free market took care of it (Tiktok).
ezconnect 4y ago
There's only one buyer and that is Apple it's not anti-competitive or monopolistic. If there were more buyer the capacity will be increased.
0x457 4y ago
Well, Apple is essentially bankrolling development and production, so they get exlusive rights. Anyone is free to outbid Apple for this right, and also free to not impose that at all. Thanks to Apple's money, TSMC was able to secure a large chunk of ASML EUV equipment. Also, Apple didn't make intel fumble their 10 nm process or Qualcomm to miss aarch64. Result of anticompetitive practices of intel and Qualcomm made them lazy and that resulted in this, not Apple buying TSMC capacity. How is that not free market?

What you have described is not a free market, but in fact 100% monopolistic anti-competitive moves that fall under anti-trust regulations.

by titzer 4y ago

What you have described is not a free market, but in fact 100% monopolistic anti-competitive moves that fall under anti-trust regulations.

Kerrick 4y ago

It’s a free market, but not a competitive market. Antitrust laws reduce the freedom of the market in order to increase competition, because it’s considered better for the majority of market participants to trade that freedom for competition.

cpursley 4y ago

How so? There are multiple chip makers (supply) and a huge pool of buyers (demand). As a consumer, I can now go out and buy a machine with Apple silicone, Intel, AMD. If anything, we're finally seeing some improvements after years of chip stagnation.

cma 4y ago
Apple did this with the ipod and later ipod mini too, full exclusivity for small drives in deals (covering music players only) to monopolize the segment, eventually across multiple additional drive manufacturers and technologies after the mini to keep it full monopoly. Everyone else was stuck for years with laptop drives that could never be pocketable. I'm not sure if node exclusivity was why Apple has the first true wireless earbuds, there was one competitor first with some giant ones so I suspect so, but lots of competitors followed fast (other foundry's nodes were more competitive then). Anyone know the history on that and what nm chips were used by them and earliest competitors?
- scarface74 4y ago
  And Apple was far from dominant in the computer market then and were small fry compared to the other computer companies with respect to its revenue. Apple was just smarter and convince consumers to buy its products at a premium - just like with iPhones.
  - cma 4y ago
    > convince consumers to buy its products Consumers couldn't buy products with a pocketable harddrive: Apple had exclusivity agreements with all manufacturers of them to completely monopolize their use for music players.
    - scarface74 4y ago
      The story goes that IBM (?) shopped the hard drive around and no one was interested except for Apple. It’s still the lack of vision by other manufacturers. Also remember that the iPod wasn’t an immediate hit and it only sold 1 million in total in its first two years. It wasn’t until two years later when it was made available on Windows. Apple did the same with Flash storage before the iPod Nano came out. Any of its larger competitors at the time could have had the vision to see that flash based players were the future and ensure they had the supply.
- hnaccount_rng 4y ago
  Apple was _years_ away from having the first wireless earbuds. I had The Bragi headphones (not Headphones) like 3 years before the AirPods got even announced. With basically all features sans handover but with an internal MP3 player and waterproof. Those were amazing but also somewhat clunky. But they were definitively long before Apple entered that market
smoldesu 4y ago
Okay, let's take this same logic and move it up one layer of abstraction. There are multiple fabricators (supply) and a small pool of chip manufacturers (demand). As a chip manufacturer, I cannot go out and buy competitive silicon. I can't even get last-gen silicon. The best you can get is an improved 7nm node from Samsung, but nobody wants to run their CPU on the blood and guts of Exynos chips. So, by definition, I'd say that Apple has monopolized the cutting-edge lithography business through leveraging a partner.
- selectodude 4y ago
  A chip manufacturer absolutely could. Apple runs higher margins so they are willing to spend what it costs to get the bleeding edge stuff. Their customers appreciate the bleeding edge stuff and are willing to spend more to get it. It isn't like Samsung and AMD can't afford to jump on new nodes, they just won't be able to raise their prices enough for it to make sense to them.
  - Jensson 4y ago
    They can't, Apple has a contract to get all current supply, TSMC can't sell anything to AMD even if AMD paid more than Apple since they don't have any more to sell. They will get more to sell in a few years, but today they don't, you would have to go and convince Apple to sell their supply to you.
    - selectodude 4y ago
      AMD has every right and ability to offer TSMC money for slices of that exclusivity. We know this because Huawei split exclusivity with Apple for the first batches of N5 back in 2020. I imagine it cost them a lot of money.

arroz 4y ago

What monopoly? Apple pays more hence they get the product If someone else wants to pay more, they can get the product too There are other foundries too, they could get their phone chip done with Samsung on a similar technology What is true is that outside of TSCM and Samsung, you don’t have options for high end products

cryptonym 4y ago
Monopoly: the exclusive possession or control of the supply of or trade in a commodity or service. The fact they got more money than competitors and leverage that to get exclusive control doesn't matter much. Textbook definition of a monopoly. On legal side, IANAL, no idea if this could be illegal somewhere.
- arroz 4y ago
  Apple doesn’t have exclusive control over 3nm process They will just get the first chips — maybe for the first year of production, idk
  - smoldesu 4y ago
    Yeah, this is what people said about 5nm too. Guess what? You can't even buy the 5nm node today because Apple still buys up the majority of it, and the few other competitors like Nvidia and AMD fight like animals for the scraps. Whatever you want to call it, it's pretty anticompetitive. Seeing them do the same thing for 3nm doesn't inspire confidence that they're going to do the right thing this time around.
  - ohgodplsno 4y ago
    Apple doesn't have exclusive control Except for the first year where they take a headstart where nobody else can either have matching chips or figure out what issues come out of this process, making them get an even bigger advantage as they have stabilized their process on year 2 when everyone is barely building up. Don't be a clown. You know fully well what Apple is doing.

onlyrealcuzzo 4y ago

I hate Apple and monopolies as much as anyone. But, no - what was described is not anti-competitive at all. If - in addition to what was described - part of the deal is that Apple would only make the deal if TSMC would not add any more capacity for 2 years NO MATTER WHAT - that is blatantly anti-competitive and monopolistic. If no one else is willing to pay for TSMC to build another facility to produce more chips - then that's a free market. Apple was the highest bidder and won.

adam_arthur 4y ago
Monopolistic behavior is subjective. Shutting out all competitors from new technology for years by outspending them (arguably from profits largely made via other monopolistic like behaviors) could qualify for many. I'll never understand the endless parade of apple goons who rush to defend them at every turn. Use some critical thought instead of treating it like sports
- jlmorton 4y ago
  What you're describing is a monopsony, not a monopoly. And Apple is not by any contortion of the imagination a monopsony for chips. Apple and Samsung are the largest buyers, but they're barely cracking single digits market share.
  - adam_arthur 4y ago
    I'm not describing a monopsony. I'm describing a company that is able to pay far higher than competitors due to anticompetitive practices which drive their margins far above what would be realized in a truly competitive environment. I'd gladly like to see the alternative timeline where Microsoft charged 30% for all software on windows and where you and others shamed them for it. Because I know for a fact all of those defending Apple here would have at the time
    - deleted 4y ago
      [deleted]

krastanov 4y ago

Not that I disagree with your overall message, but to nitpick: the "free market" is exactly the thing that fails into "100% monopolistic anti-competitive moves" without "anti-trust regulations". I do not want a free market, I want a regulated market.

mentat 4y ago
See regulatory capture.

mort96 4y ago

Free markets often result in accumulation of wealth and marketshare, with the big players making anticompetitive moves. Anti-trust regulations make the market less free. The free market sucks. People need to stop valorizing it.

adam_arthur 4y ago
Competitive markets are what drive long term results for the economy, not free markets. Though the two often go hand in hand. In a purely free market, monopolies can form and exist in perpetuity
Workaccount2 4y ago
Fortune favors the fortunate
- lotsofpulp 4y ago
  In this particular example, it seems like fortune favored the company that invested billions of dollars and years of R&D in creating a combination of hardware and software that consumers desire.
varispeed 4y ago
That's the problem, that has not been solved, because those corporations growing so big have enough money to buy any politician or government. To have a truly free market it should be accounting for this edge case - that is once a company grows beyond certain size it should by law be split. There should be other provisions - for instance if the big corporation causes a legal trouble, they should match the legal team of they claimant - for instance, if someone is suing Apple because of an issue with their hardware and Apple sets aside £100m legal budget - by law they should be required to set £100m for the claimant, so there is level playing field. That of course only if the judge decides for the case to go on.
- mort96 4y ago
  I'm not sure what you're getting at. The definition of a free market is one in which private corporations can do what they want without government regulation; the more laws there are which regulate business, the less free the market is. So saying that a law which splits companies once they reach a certain size makes the market freer sounds like an oxymoron to me. It would certainly have the potential to make the market work better and improve competition, but that's not what a free market is.

mytailorisrich 4y ago

The problem of monopoly is not with Apple but with TSMC.

drexlspivey 4y ago

Offering a higher price is anti competitive now?

yvdriess 4y ago
They key is who is offering the higher price and is there a pattern. A company with a dominant market position can use the resources that flows from said dominance to keep out competitors.
- scarface74 4y ago
  Apple neither has a dominant position in cell phones or computers.
- hnaccount_rng 4y ago
  No, the key is offering a higher price AND then not using what you bought. Check out Apple’s delivery times. Those are still far from acceptable…

moino06 4y ago

Some people had similar arguments during the whole "break Facebook" thing. Ultimately, the free market took care of it (Tiktok).

ezconnect 4y ago

There's only one buyer and that is Apple it's not anti-competitive or monopolistic. If there were more buyer the capacity will be increased.

0x457 4y ago

Well, Apple is essentially bankrolling development and production, so they get exlusive rights. Anyone is free to outbid Apple for this right, and also free to not impose that at all. Thanks to Apple's money, TSMC was able to secure a large chunk of ASML EUV equipment. Also, Apple didn't make intel fumble their 10 nm process or Qualcomm to miss aarch64. Result of anticompetitive practices of intel and Qualcomm made them lazy and that resulted in this, not Apple buying TSMC capacity. How is that not free market?