Apple monopoly? Only on planet Bizarro!

Apple monopoly? Only on planet Bizarro!

Summary: With Apple finally pulling the cover off its subscription pricing plan for iPad content, vendors are screaming about antitrust violations. Now there are reports that Justice and the FTC as well as the European Commission are taking a look. Only on Superman's Bizarro world in a parallel universe could this be true.

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With Apple finally pulling the cover off its subscription pricing plan for iPad content, vendors are screaming about antitrust violations. Now there are reports that Justice and the FTC as well as the European Commission are taking a look. Only on Superman's Bizarro world in a parallel universe could this be true.

The Wall Street Journal pointed to sources in antitrust agencies as well as talking with some legal analysts.

According to the "experts," the determination is about whether Apple dominates the market, and even what exactly comprises the market. Is it all media, spanning print and digital, or just digital. And what exactly is "digital" here? Is it the hardware platform, the format, the store and development tools?

But, [Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law] said, if Apple gets to a point where it is selling 60 percent or more of all digital subscriptions through its App Store, "then you might move into territory where an antitrust challenge would seem feasible."

Mr. Ghosh said courts in antitrust inquiries may look favorably when a company can articulate a legitimate business justification for behavior alleged to be anticompetitive. For this reason, Apple may "come up with a business justification" for some of its restrictive subscription terms, he said. "They have invested in a platform so they need to create incentives to use the platform."

But what do the numbers really tell us at this moment?

If we're taking about e-readers, then the iPad is still trailing by some 15 percent the Amazon Kindle. Of course, the Kindle is losing share and the iPad is gaining but the share figures measured a few months ago showed the Kindle at 47 percent and the iPad at 32 percent.

If we're talking about mobile app share, then Apple is in third place: RIM is on top with 33.5 percent share, Google Android is in second with 26 percent and Apple a close third place with 25 percent.

And even in the mobile video market, where Cupertino has dominated for years with the iPod, Apple is only somewhat over 60 percent. In a recent survey, Apple iTunes movie downloads accounted for 64.5 percent of the market, Microsoft Zune Video Store rose to 17.9 percent and Sony had a 7.2 percent share.

Maybe the problem is about apps. If you look at actual 2010 sales of apps, then Apple had an 82.7 percent share, with Android coming in with a 4.7 percent share. And perhaps it's a reflection on early-adopters of the Android platform refusing to actually pay for their apps. That will certainly change over time.

So, what am I missing, other than a bunch of whining content creators, that there's a real antitrust issue here? There's no there there.

Topics: Apple, Enterprise Software, Security

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123 comments
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  • Not a monopoly, but damn greedy!!!

    Seriously their contribution here above and beyond non subscription appstore ecosystem is only slightly more than zero...
    Johnny Vegas
    • Apple is pro-customer, nothing freedy

      @Johnny Vegas:

      Apple refused to give away subscribers personal information to publishers (it allows it only if subscriber explicitly agrees to every type of information that could be sent to publisher) and it protected customers' right to buy the same thing for the same price.

      And, of course, <b>Apple is right to require 30%</b> of retail price since publishers actually pay more than that selling their magazines through distributors and retail outlets. Apple maintains infrastructure, channel costs, datacenters, and it created this channel, so it is fair.

      So Apple it all around good here. Nothing to do with DOJ antitrust or whatever.

      Apple is pro-customer. That is why there is no junkware on any of Apple devices, for example. Or this is the same why Apple does not allow cell networks to tamper with iOS UI etc.
      DDERSSS
      • You mean Apple is pro CONSUMER (since not all of its CUSTOMERS are happy)

        @denisrs No one is saying Apple isn't pro-consumer. Most of us, myself included, even agree that Apple has the right to charge its rent for hosting the apps.<br><br>I simply take the stand with others saying that 30% is steep, irrespective of its comparison with other distributors and retailers. We know retailers charge more for physical products; that's why we don't buy music CDs from brick-and-mortar stores anymore. <br><br>App sales and content provision have different margins of profitability, and those in the know are saying 30% is cutting too much into that.<br><br>We know you are an avid Apple advocate. I, too, use iDevices and as a consumer I simply do not wish to see a decline in the choice and quality of the apps I use because of this deal, however far down the line it may be.
        Tech watcher
      • Yes, a Monolopy!

        @denisrs The antitrust issue is that that there isn't any way to get apps onto the iAnything other than iTunes, therefore the question arises "Is Apple unfairly leveraging it's dominant position in the mobile media market to unfairly lock competitors out?" With over 60% of the tablet market going to the iPad and the big chunk of the mobile music market dominated by the iPod family, Apple is an effective monolopy the same way Microsoft was a monolopy in the 1990s. And we all remember how thats gone for Microsoft.
        Scubajrr
      • agreed, apple is always pro consumer

        @denisrs

        and only here in tech pundits' lala land can this be a bad thing.

        from counternotions.com:
        "Put simply, publishers don?t want readers to opt in, because they know readers will prefer to opt out. Transparency is not a friend of publishers who for decades made a mint by selling out readers to advertisers and list brokers. Most readers may not be aware of this, but those who are don?t like it. Publishers know that and hate Apple for calling their bluff. If personal info harvesting isn?t essential for publishers? business model and it is in the interest of readers, then why would they be against an instant referendum in the form of the opt in button?

        This, of course, isn?t about the readers. It?s not even about Apple?s App Store. It?s about the clash of two different business models. One that sells the customer to the highest bidder through a product and the other that sells a product directly to the customer. For the former, the product is a vehicle, often an excuse, since it holds no value for the publisher. For the latter, the product is the source of value, it lives and dies by the utility and delight it brings to the customer."
        banned from zdnet
      • RE: Apple monopoly? Only on planet Bizarro!

        @denisrs

        At the end of the day, when all the whining is over, Apple will collect 30% of subscription fees, publishers will increase subscription rates to compensate, and we the consumers/customers will be flipping the bill for it.
        Masari.Jones
      • At the end of the day ...

        @Masari.Jones

        ... content providers who overcharge customers to cover the 30% Apple fee will lose out to other companies who can provide similar services cheaper.

        I don't care that Rhapsody doesn't like the new Apple subscription model. Because when Rhapsody makes a stupid move that protects themselves instead of helps their customers, that will create an opportunity for another better company to step in and do what Rhapsody should be doing.

        To the company's whining about the margins, I say "f--k you!" You finally have a market and means to get people to start actively paying for your digital content that you've had to give away for a couple of decades in exchange for ridiculously low CPM banner ad sales, and you're going to complain about it?

        These companies are so stupid. I don't care about them at all. I'll get my content from someone else.
        RationalGuy
      • And what about on your Macbook?

        @denisrs
        Then what's to stop Apple from charging Rhapsody 30% to stream music though to you on of their desktop computers?

        How is it different on an iPhone as opposed to on their desktops?

        Apple maintains the OS, they provide the base for Rhapsody's software? If Apple says Rhapsody or Pandora can only be accessable thru their new Mac App Store, should they get 30% each month from Rhapsody?

        Good Thing MS isn't doing this, though maybe they should just copy Apple again and do the same thing with Windows 7.
        John Zern
      • RE: Apple monopoly? Only on planet Bizarro!

        @denisrs
        how is having a 300% markup and out of date equipment on pcs pro-customer ?
        rparker009
      • re: Yes, a Monopoly!

        @Scubajrr
        Not that I'm defending Apple, but since when does 60% marketshare constitute a monopoly? True, Apple may be the biggest fish in the pond, but there are plenty of others swimming around in that 40% ... and they're all due to release new hardware and software within the next 6-12 months that -- if their claims are to be believed -- will de-throne the iPad and iPhone as the mobile devices of choice of the masses (yes, I know: techies prefer Android).

        To me, it seems a bit premature to be talking about anti-competitive tactics when the tablet market is still in its infancy. Any innovator that releases a "new" product (and the iPad isn't a new concept) is a monopolist for a while, until competitors start following in their footsteps. Apple didn't invent the tablet market -- it's just following a trail that has already been blazed. And in a year, the market will be bigger and Apple's share of it will likely be considerably smaller.

        Put another way: Apple has invested heavily -- in R&D, marketing, etc. -- to make its iDevices successful. It continues to do so. But it also knows that the tech market is a fantastically fickle one: by this time next year, the iPad _could_ be just an also ran. So Apple has every right to try to recoup its investment as quickly as possible.

        Ultimately, market forces will prevail: Right now, many consumers like the iPad -- enough to put up with some of the restrictions and prices that Apple enforces. If 30% royalties are truly too much, publishers won't produce their products for the iDevices, but instead for Android or something else and those devices will become more popular because that's where the content will be.

        Or maybe the content producers will opt to publish their content on a web site instead -- perhaps even behind a pay wall of their own, then they get to control their own little eco-system ... and deal with all the headaches and hassles that come along with it.

        But publishers don't have to put their content on iPads. And if they do, they're choosing to do so for a reason: they want to tap into Apple's pool of customers -- customers that Apple paid considerable sums to attract and retain, and has a right to charge someone to access. Whether that's the best business strategy remains to be seen. Personally, I don't think it does make as much sense long-term, which is why I prefer many of Google's tactics: give it away for free to attract an audience that you then make money off in other ways (mainly via ad dollars, in Google's case). But that's why I apparently don't run Apple ... or Google.
        jscott69
      • 60% is not a monopoly

        @jscott69

        But, having been involved in such a case with a business, 60% is typically considered a "minimum threshold" by the courts to consider these cases.
        oncall
      • Apple is pro-customer?

        @denisrs If they were, they'd allow competative music stores on their device. They'd allow competative video stores, etc. If there were profit to be made from a fart app, they'd publish their one fart app and pull all other fart apps from the app store. how is that pro-customer?
        A Gray
      • RE: Apple monopoly? Only on planet Bizarro!

        @oncall <i>60% is not a monopoly but, having been involved in such a case with a business, 60% is typically considered a "minimum threshold" by the courts to consider these cases.</i><br><br>Well since Apple has an 82% share of the mobile app market... they might get looked at a bit differently.

        http://www.zdnet.com/blog/igeneration/blackberry-app-world-beats-android-and-nokia-is-the-apple-app-store-unstoppable/8310?tag=mantle_skin;content
        Badgered
      • RE: Apple monopoly? Only on planet Bizarro!

        @denisrs [i]Apple is pro-customer. That is why there is no junkware on any of Apple devices, for example. Or this is the same why Apple does not allow cell networks to tamper with iOS UI etc. [/i]

        No.. Apple is pro-bottom line. If making people believe they are pro-customer helps the bottom line, that's what they'll work with.
        Badgered
      • True

        @Badgered
        "Well since Apple has an 82% share of the mobile app market... they might get looked at a bit differently."

        However, it is not an mature market is it? Apple's is just a few years old, Android far younger and WP7 really just started. And even if they have a "monopoly" of the mobile app market the question becomes are they using their market share to illegally stifle competition in the mobile app space? Are they demanding, for instance, that app makers who build in Apple's app space not make apps for WP7 or someone else or perhaps cutting a discount of fees in agreement to not build for competitors as other "monopolists" have done in the past? The answer to that of course is no, Apple has absolutely nothing to do with Androids, WP7's or RIM's app markets and it applies its rules evenhandedly even if they are subject to change.
        oncall
      • RE: Apple monopoly? Only on planet Bizarro!

        @Scubajrr
        <i>The antitrust issue is that that there isn't any way to get apps onto the iAnything other than iTunes, therefore the question arises "Is Apple unfairly leveraging it's dominant position in the mobile media market to unfairly lock competitors out??</i>

        Only one little hole in you theory. ON the iPad there is an ?App Store? app. (like the iPod, and iPhone). So you can connect via WiFi (or 3G) and get the apps directly on your iDevice. But I guess you won?t let a little thing like Facts get in the way of a good F.U.D. rant huh?
        Rick_K
      • RE: Apple monopoly? Only on planet Bizarro!

        @Rick_K
        uh.... in case you didn't know... the "App" icon on the idevices is the idevice version of itunes store....

        chuckle
        rhonin
      • RE: Apple monopoly? Only on planet Bizarro!

        @oncall [i]However, it is not an mature market is it?[/i]

        How old is Apple's Apps store now? What is considered mature for an app market where things grow so quickly?
        Badgered
      • RE: Apple monopoly? Only on planet Bizarro!

        @DeRSSS
        There is some very good insight here that I agree with very much.
        <H1><a href="http://www.my-philadelphiachiropractor.com">Philadelphia Chiropractor</a></H1>
        epark732
    • RE: Apple monopoly? Only on planet Bizarro!

      @Johnny Vegas

      And, of course, you are a successful individual with the knowledge and skills to make that assessment.

      Nothing creates envy from the hinterlands than success.
      781lc