Spotify, Rdio, Pandora and certainly others that I haven't heard of are all competing for a spot on iOS while Apple's Music software is both bundled and cannot be uninstalled. Are there parallels here to Microsoft and Internet Explorer? Is there something I am missing otherwise?
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The problem is in them having a 30% charge on app purchases, making the competitors price go up to keep their bottom line the same, while Apple is still selling $9.99 membership. The App Store TOS also prevents competitors from providing a link to buy membership outside of the App Store.– Jacob SwansonCommented Sep 12, 2015 at 7:04
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2 Answers
In United States v. Microsoft, Microsoft was accused of abusing its monopoly power by bundling. A prerequisite for this type of Sherman Act Section 2 claim is that the company must have monopoly power to abuse.
Market share is one of the primary measures courts use to determine if a company has monopoly powers, and therefore can be punished for abusing them. At the time of the Microsoft case, its market share was over 80% of all PCs and over 95% of Intel PCs.
In United States v. Alcoa, 148 F.2d 416, Learned Hand considered three possible market share numbers. He wrote that market share of more than 90% "is enough to constitute a monopoly; it is doubtful whether sixty or sixty-four percent would be enough; and certainly thirty-three per cent is not."
Worldwide, iOS has about 15% of the smartphone OS market. In the US, it's about 40%. According to Judge Hand, that's well below "doubtful" and awfully close to "certainly not" a monopoly.
No monopoly equals no monopoly power equals no Sherman Act Section 2 violation.
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But how is market share defined with an app ecosystem? It is not just phones. It is computers, watches, music devices, tablets, and maybe even cars. At what point can you define a meta market that takes this reach into account? And if Apple introduced a sub-$50 device that caused its share of just mobile devices to increase very quickly, would that "trigger" a pursuit? Commented Sep 19, 2015 at 7:56
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1The more you broaden the market, the lower Apple's market share gets. Unless you can find a way to define a market where Apple has a majority market share--and I can't think of a way to do that--they can't exercise monopoly power.– chapkaCommented Sep 19, 2015 at 11:35
These competitors typically give away their applications for free, and sell paid memberships either through App Store purchases, or through their websites. The terms and conditions these competitors receive are the exact same ones that any other distributor of applications through the App Store gets.
These competitors can instead sell paid memberships exclusively through their website, let Apple pay for the cost of distributing their free applications, and pay not a penny to Apple. If they chose not to do so, that's their problem.
answered Sep 16, 2015 at 23:09
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You pay to get your app into the store, nothing from apple is free.– AndyCommented Sep 17, 2015 at 0:29
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Poor little things, they have to pay less than $100 a year for Apple to give them their development tools, review their apps to meet quality standards, publish them, host them on Apple's servers, pay for all the downloads, and so on. Commented Sep 17, 2015 at 20:41
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Well $100 is not the same as "not paying a penny to Apple," and that doesn't include the percentage (30% i believe) they take of sales an in-app purchases, and out of store purchases are forbidden. Oh, and the software is free because the hardware is not. You cannot build an Apple app on anything but a Mac. Google charges a onetime $25 fee, and MS a onetime fee of $10, and both take a smaller percentage of fees. So not a penny is clearly a lie. And their review process is painfully slow and opaque, so spare me your nonsense.– AndyCommented Sep 17, 2015 at 22:42
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Seriously, @Andy, what you are claiming has nothing to do with the question asked and is a pure rant. My post gave some good reasoning why Apple wouldn't be found in violation of antitrust. Your comment adds nothing of value to that. Commented Sep 18, 2015 at 22:55
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You have something in your answer which is factually incorrect, which puts your entire answer's validity into question. There's no need to make the false claim about not having to pay Apple, so you should remove it from your answer. I'm not ranting, you're simply wrong about part of your answer and refuse to acknowledge it. Actually your entire answer is irrelevant because even if everything were true in it, that still doesn't preclude Apple having a monopoly. AT&T still had a monopoly even after they were forced to allow 3rd party equipment.– AndyCommented Sep 19, 2015 at 0:45