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You don't need to have a monopoly to engage in anti-competitive behavior. Of course it makes it easier, but it isn't required. Consider obvious examples like dumping or tying.

I'm not an expert, but I believe one benchmark the EU uses in competition law is a "dominant position" which from memory can exist at > ~40% market share.

Clearly Apple has a dominant position in online music sales, so it is likely that they could be subject to oversight at least as far as music goes. As they have built all of their other services into their music store (still literally, iTunes) it seems possible to me that review might extend further into the iTunes ecosystem.

Given that by all appearances they have just lost Symbian despite efforts to promote an EU produced competitor in the smartphone market they are probably watching it all quite closely.

It isn't clear to me that you can discount any action here even if traditional benchmarks aren't being met. Technological rate of change may be out pacing traditional regulatory adaptations.

Computing platforms are becoming intimately involved in everything we do. It isn't much of a stretch to imagine a world where one device wakes you up, gets you to work, pays for your lunch, opens your locks, handles all communications, proves your identity, and saves all your mementos.

It seems unlikely to me that Euro or US regulators will want to let a mobile computing platform become so vertically integrated that it controls all content, payments and communications arbitrarily with the only remedy being switching to a competing totally integrated platform.

> You don't need to have a monopoly to engage in anti-competitive behavior.

"Anti-competitive" behaviour is a much broader brush than antitrust, which has a reasonably specific meaning. Antitrust--in the US at least--relates to the Sherman Act [1] and the Clayton Antitrust Act [2].

Example applications:

> - price discrimination between different purchasers, if such discrimination tends to create a monopoly

> - exclusive dealing agreements

> - tying arrangements

> - mergers and acquisitions that substantially reduce market competition.

While such things are always open to interpretation by courts, it's important to consider their historical application [3]. Standard Oil and AT&T aren't anywhere in the same league as Apple.

It's worth noting that the intent of antitrust law and enforcement is to protect competition itself. AT&T is a good example because the barrier to entry for creating a telecommunications company was (and still is) so high.

Of course the solution was ludicrous and one that the US seems to have not learned its lessons about yet: it swapped one large monopoly for 7 regional monopolies. But I digress...

The Microsoft case is often brought up. It was a controversial case. At the time it virtually wasn't possible to have a (useful) PC (which accounted for >95% of the computer market at the time) without Windows. What's more, the nascent Web posed a strategic threat to Microsoft, one it sought to subvert by giving away IE for free and making it non-standards-compliant in an effort to tie users to IE and thus to Windows.

Now compare this to Apple. Apple holds no monopoly on phones. It doesn't require carriers to only sell its phones. Anyone content you sell choose to sell through the iTunes ecosystem you can sell elsewhere.

What people typically mean when they say "Apple should be investigated for antitrust" is "I really want an iPhone but I don't want one with Apple's restrictions so surely this should violate some kind of antitrust law right?"

No.

> Clearly Apple has a dominant position in online music sales

26.7% of music sales in 2010 [4]. Higher for online music sales I'm sure but is that a meaningful restriction? Antitrust isn't there to protect companies from competition. Any company can sell music. Amazon proves this. Apple doesn't require exclusivity.

The fact that to date any competition has been completely ineffective does not signal an antitrust violation in and of itself.

> Technological rate of change may be out pacing traditional regulatory adaptations.

There's no "may be" about it. And for this reason alone the DoJ will be reluctant to intervene (IMHO). For example, the Microsoft case was settled years after it had ceased to be relevant.

The market has a way of sorting these things out, at least as far as high-tech goes.

> It seems unlikely to me that Euro or US regulators will want to let a mobile computing platform become so vertically integrated that it controls all content, payments and communications arbitrarily with the only remedy being switching to a competing totally integrated platform.

No mobile platform has the sort of market share you're talking about to be relevant from an antitrust point of view.

I consider these vertical platforms to be a transitory problem and one that exists largely because the market is so new. These things will (IMHO) surprisingly quickly become commoditized.

It's for this same reason that I just don't really care about Facebook's apparent dominance of their space. Or at least I don't have the same sense of urgency about it that some seem to.

[1]: http://en.wikipedia.org/wiki/Sherman_Antitrust_Act

[2]: http://en.wikipedia.org/wiki/Clayton_Antitrust_Act

[3]: http://www.hg.org/article.asp?id=6025

[4]: http://www.tuaw.com/2010/05/24/itunes-share-of-the-us-music-...

How is Apple's app store requirement not straight-forward tying under the plain language of 15USC§14?

The language there is: "It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce".

All the requirements under the plain language are there: 1) Apple is selling a commodity, access to the Apple App Store, to providers. 2) The commodity is used within the United States. 3) The sale will be on the condition or understanding that the app manufacturer does not purchase payment processing for the iPhone application from any competitors of Apple. 4) The condition may substantially lesson competition in a line of commerce, namely payment processing for iPhone applications, because most iPhone developers will be unable to use one of Apple's competitors.

It seems that Apple's behaviour is exactly what the Clayton Act anticipated and prohibited.

Except that "payment processing for iPhone applications" is a very artificial category. It seems the language would be more appropriate for a situation where, say, Apple was financially discouraging developers from porting their apps to Android; in this case, they're forcing developers to accept less money on their platform, which, if anything, encourages the competition.

Apple was financially discouraging developers from porting their apps to Android

This is an interesting statement because if you remove the word 'financially,' they have done that by disallowing development with cross-platform tools.

I'm sure somebody will try to sue, but I actually think that it opens a big hole for someone like Google to gain an edge. It's even possible that Google could put out a device that has far more content available than would be available on the i* because content providers won't want to play with Apple any more.

This applies to anything if you define your market tightly enough and "payment processing for iPhone applications" is about as tight a definition as you can get.

If you can define things that tightly how is it different to my going into a shop (for the sake of argument let's make it a shop which sells goods the owner makes and therefore can't be bought elsewhere) which only accepts cash and claiming that they're anti-competitive because they don't accept alternate payment mechanisms?

Unless the iPhone obtained a dominant position in the smartphone market choice exists - you can go elsewhere, as can developers and you can buy (and they can sell) apps from other places and pay or bill in other ways.

That's the market working and that's why anti-trust laws are unlikely to apply under the current circumstances - they're designed to ensure competition and smartphones is a market as competitive as pretty much any on the planet right now.

Anti-competitive legislation doesn't just apply to pure monopolies. For example see the investigation into tech companies agreeing not to steal employees of each other, just because there are other companies out there that hire developers it doesn't mean such practices can't violate antitrust laws.

A more relavent example. Consider that you lived in a city where some service was provided my only a single provider (for example a bus service or cable internet service), even though you could move to another city to use alternative services, those operators are still considered to have a monopoly because moving houses is a high barrier to switching.

Similarly switching phones is a high barrier due to contracts and other purchases (apps, books, etc) causing you to be tied in.

In the NBC example, switching between stations has negligible cost. Many pieces of legislation have been introduced for the sole purpose of reducing switching cost (for example reverse engineering for compatibility legislation), because high switching cost can create localized monopolies.

People also love to narrowly define antitrust as legal action against the perpetuation of monopoly without knowing what else it includes.

You don't have to have a monopoly to have the DOJ investigate. All you have to do is engage in anticompetitive practices. Monopoly is only a potential result of these practices, which you can get an overview of here: http://stats.oecd.org/glossary/detail.asp?ID=3145

I should have used anticompetitive, apologies.

The issue that I am seeing here is the following, and this may be a gross misinterpretation of the rules that apple has put forth.

I get a dropbox monthly account. I access my dropbox account through the official dropbox client on iPhone. Apple says that drobbox must do one of two things, either: 1. offer their service through apples store, and apple takes their skim. 2. pull their official app.

As far as I can tell from the rules that apple put forth, if you have a product for which you can sell recurring billing plans, you must give apple their opportunity to skim, even if you manage your own billing platform, and your margins are too thin to give apple their cut.

I can understand why apple wants it their way, and clearly it is good for consumers (no need to pull out your credit card, we got it on file already), but for businesses where the profit margin is really thin, adding 30% could kill you. So you can raise the price across the board to deal with apple, or you just don't have anything that can access your product on the iphone.

As I understand it (and I may be wrong) that particular scenario (Dropbox) is not well defined in the Apple rules - so it's wait-and-see how they enforce things.

Personally I doubt they would piss off popular development shops like Dropbox and 37Signals (who have Highrise and Campfire clients in the App Store) - but then again they do have history there.

So in my mind, the reason this upsets people is this: Imagine you bought a Sony TV and all you could ever watch on it was Sony produced movies, tv shows, and Sony music unless the other studios gave them 30% of the revenue. You can even only hook up a PS3 and Sony speakers, and there's no other way to get something on the TV but by going through Sony.

Is there still tons of great content? Sure. Do the original artists have a right to go elsewhere? Sure. Could the other studios afford to take the hit? No. Would the other studios make deals with the other TV manufacturers? Probably. But because of their position, you as the owner of a Sony TV wouldn't get to watch some awesome movies and same for people who bought another type of TV. In order to reach a Sony TV customer, Sony would be forcing artists to have Sony produce their content, and that's where it's anticompetitive.

Stepping back to reality, how crazy is this analogy? Well how different really is an iPad from a 10" TV? Sony TVs play movies, music, have apps, etc, etc just like an iPad. Sure in the real world, you need a special partnership with Sony to install your apps onto the actual TV, but there's tons of other ways to get your content onto the TV. Difference here is that Apple has blocked off any of those other channels. And that's why it's an issue.

Did Microsoft ever have a monopoly on OSes? Hardly. Look at Mac OS, OS/2, BeOS, AIX, Solaris, Debian, Slackware, SUSE, Red Hat, RISC OS, BeOS, QNX, OpenBSD, FreeBSD, IRIX, VMS, Palm OS, EPOC OS (nee Symbian) etc.

I'm replying to the reply to your post, and not your post because for some reason I can't reply directly to it.

Microsoft has >90% market share in OSes. The existence of a rival product doesn't negate a monopoly. The existence of a true alternative negates a monopoly. Apple doesn't even have a dominant share of ANYTHING except portable music players (which, incidentally, play content from other vendors just fine -- oh and you can _legally_ rip your Apple DRMed music to CD and play it anywhere so where's the lock-in?).

If the reply gets beyond a certain depth there is a built in delay (that gets longer the deeper you get).

It's there because Hacker news has decided that there is no value in deep conversations, they prefer the more shallow ones and feel that they get a better result that way. Presumably it also serves as a brake on certain kinds of anti-social behaviour such as flamewars and trolling.

It's in the terms of service or rules for newbies or something like that.

(edit: went looking for the text in the guidelines so I could link it, but couldn't find it. Sorry. It might be one of PGs articles that I was thinking of)

From what I've gathered from other hn'ers was that the reply was gone so that it couldn't turn into a quick back and forth between two authors.

If you ever need to reply, click the link button for that comment, the reply box is now available.

MS had over 90% of the market. Apple is selling 90% of phones?

Microsoft never had 90% of the "operating system" market. They had 90% of the "desktop operating system" market.

What marketshare does iTunes have in "phone synchronisation software"? Carefully define your market and you can probably find a monopoly.

That really sounds like a distinction without a difference. MS had control of 90% of consumer and office computing. True? Apple doesn't control anywhere close to that in phones.

I disagree with your premise that embedded devices and servers don't matter.

My premise is that embedded devices and servers don't matter to the vast majority of people who use computers, then and now.

If you're a home or office user, you can't use a server to do your work. You can't use an ATM to do your work. You can't really be pretending the desktop computer market is some narrow or obscure thing, can you?

In 1998, as a home or office user, you had a very specific set of choices for computing tasks, of which Microsoft controlled the vast majority.

Servers, embedded devices and PCs are totally different markets.

That's kind of like saying if a car company owned 95% of the market, they wouldn't be a monopoly becuase you can always just ride a bike.

The answer to your question is "yes" according to the antitrust litigation that actually took place — and if you would like to understand why, then pay close attention to the phrase "relevant market" in the "Conclusions of Law" document from the MS v DOJ case. This phrase plays an important role in determining monopoly status (the question raised in this thread) and this document makes interesting reading along these lines.

http://www.justice.gov/atr/cases/f218600/218633.htm

Whether this zone of commercial activity actually qualifies as a market...depends on whether it includes all products "reasonably interchangeable by consumers for the same purposes." ..."Because the ability of consumers to turn to other suppliers restrains a firm from raising prices above the competitive level, the definition of the 'relevant market' rests on a determination of available substitutes."

The court's opinion was that the operating systems you mentioned were not "reasonably interchangeable by consumers for the same purposes". The fact that Microsoft would be able to to raise prices "above the competitive level" was key. This was very much the case in the 90s when this litigation took place.

I would have to say that's a pretty harsh indictment of Linux distributions and Mac OS by the US DoJ.

By that definition, it makes me wonder if iTunes has a monopoly in "phone synchronisation software". This monopoly allows Apple to raise its store prices above a competitive level.

I would have to say that's a pretty harsh indictment of Linux distributions and Mac OS by the US DoJ.

On the one hand, it's a little worse than you're suggesting because this was actually the opinion of the court. The DoJ was just the plaintiff.

On the other hand, the implied indictment of Linux and MacOS of the era isn't as bad as you're suggesting. I encourage you to go though the document, since you have the URL handy and I gave you the phrase to grep for. Take a look at the following excerpt:

The Court has already found, based on the evidence in this record, that there are currently no products - and that there are not likely to be any in the near future - that a significant percentage of computer users worldwide could substitute for Intel-compatible PC operating systems without incurring substantial costs.

Now I know you're tempted to rephrase this in some way that bolsters your perspective, but be careful with such temptations, for if & when Apple finds themselves in the same hot water it's going to happen through litigation and the determination will be made in a court — where the tool of choice is linguistic precision in general, and pulling key definitions & tests from precedent in particular. Every word in the above quote has weight, and you should make no substitutions if you want to gauge how things might play out were litigation brought against Apple.

In the above excerpt, note the phrase "Intel-compatible PC operating systems", which is part of the definition of the "relevant market" under which the determination of monopoly status was judged. The MacOS of the era ran only on PowerPC machines and some aging Motorola 680x0 hardware. So there's no harsh indictment of MacOS here.

As for linux of the 90s, I suppose you could look to phrases like "significant percentage of computer users worldwide could substitute" and "without incurring substantial costs". Linux distributions of the era could not rise to that standard. Although you would be correct to note that vendor lock-in played an important role in those "substantial costs".

I'm going to break away from my devil's advocate argument.

I was rhetorically trying to show:

i) The parent's argument is weak. The existence of competitors is not sufficient to show whether Apple is or is not a monopoly. Microsoft had a lot of competitors. Even in 1998, there was a lot of OSes.

ii) The argument that Microsoft was a monopoly was, frankly, ridiculous to begin with, based on defining a market in an oblique way. The same argument could be extended into many fields to show that many other products have a monopoly.

Even so, I do believe that Microsoft engaged in anticompetitive behaviour in actively trying to destroy Netscape and its desktop OS competitors. The weak "monopoly" argument should be sidestepped completely, since it was terrible to begin with.

I do think there is an fine line between limiting creativity and preventing anti-competitive behaviour, and it's not clear where that line is.

I think the EC's "browser choice" decision is shocking given that a web browser is an integral part of any OS, especially in 2011, whether that OS is Windows, Mac OS X, a Linux distribution or whatever else.

I do think Apple and the iPhone creates genuine questions about where the line should be drawn. Is it reasonable for them to close up the protocols in iTunes to prevent anyone from creating their syncing software? Is it reasonable for them to want a cut from downloadable content on their platform?

In my mind, they will always be anti-competitive practices, whatever the letter of the law says.

Again, with respect to your second point, the court had no choice but to pursue what you believe was "ridiculous", because it is required by section 2 of the Sherman Antitrust Act:

The threshold element of a § 2 monopolization offense being "the possession of monopoly power in the relevant market,"...the Court must first ascertain the boundaries of the commercial activity that can be termed the "relevant market."

...and it was germane to the standards regarding product tying relevant to section 1 of the same act:

Proceeding in line with the Supreme Court cases, which are indisputably controlling, this Court first concludes that Microsoft possessed "appreciable economic power in the tying market," Eastman Kodak, 504 U.S. at 464...Because this Court has already found that Microsoft possesses monopoly power in the worldwide market for Intel-compatible PC operating systems (i.e., the tying product market), Findings ¶¶ 18-67, the threshold element of "appreciable economic power" is a fortiori met.

(Both of those excerpts are from the same Conclusions of Law document, of course.)

It's very easy for you to say that "the same argument could be extended into many fields to show that many other products have a monopoly." It's quite another thing to frame your argument in terms of section 1 & 2 violations such that the way you have defined your "relevant market" actually pertains to product tying and preservation of monopoly power through anticompetitive acts. In other words, it's not enough that an anticompetitive act happened: it must also have been used to preserve power — and not just any power but monopoly power, and not just any monopoly power but monopoly power in a market relevant to the anticompetitive claims. And even if you manage to frame it this way, it still must pass through the crucible of the court, as it did in MS v DOJ.

In my mind, they will always be anti-competitive practices, whatever the letter of the law says.

Anticompetitive acts are not illegal in and of themselves. They are illegal for establishment or maintenance of monopoly power, however — and one can't apply that test via hand-waving. The Sherman act is very specific.

The problem is that they had a huge share of the market, and they abused that to keep other players out.

With respect to computer manufacturers they had a variety of illegal practices which meant that it was difficult or impossible for them to sell other OSes. Since Apple doesn't sell its OS for generic PCs, the main player this hurt was Linux. From memory an example of this was that the OEMs had a huge discount on the 'face' price of Windows, but if they sold anything except Windows they couldn't get this special price, even for the Windows computers they did sell.

Similarly they drove Netscape out of business by bundling Internet Explorer with their OS, and then later retrofitting the OS so that IE was baked into a bunch of things that it hadn't been baked into previously (such as Explorer), such that removing IE and replacing it with Netscape or $other_browser would actually break Windows. They didn't have to do that, and it didn't make any sense to do that, except for the express purpose of breaking Netscape.

As for OS/2, allegedly Microsoft stole all the good technology to use in their own products, and then played silly buggers to the point where it was massively delayed.

BeOS died an unnatural death, which is odd. Neal Stephenson has this interesting article about that. I'll link to the cliff notes in case you're in a hurry:

http://en.wikipedia.org/wiki/In_the_Beginning..._Was_the_Com...

The thing that gets me about BeOS is everyone I personally know who used it raves about it... but when I go looking for old pictures of it, it is butt ugly. I mean truly hideous. Dos pre-windows 3.1 hideous. It is worse than 90s Linux is how bad it is. :D But hey, apparently it was the superior technology, and yet nobody would sell any PCs with it installed ... FOR SOME STRANGE REASON (cf above discussion on Microsoft's 'intimate' relationship with PC manufacturers)

Don't you think that the iPhone/iTunes/iTunes Store is engineered to keep other phone synchronisation software out?

http://lmgtfy.com/?q=using+iphone+without+itunes

Not especially. Syncing was a major pain in the butt for most devices back in the old days. I don't think that Apple were trying to establish a monopoly on synchronization software, I think they were just trying to make it easy and painless to use. Whether they succeeded or not is an exercise left to the reader. I think that some people just have this image of Steve Jobs as some bond style villain stroking his white cat and holding the world to ransom for one meeelion dollars /pinky in corner of mouth/

However, if you asked me whether their proprietary dock connectors were an abominable crime against humanity, you might get a different answer. :D

Stephenson himself said that Mac OS X is the spiritual successor to BeOS, and would be described as such in any future revisions of the essay.

Somebody did do a ten(?) year update to it with Stephenson's blessing, but from recollection I think they didn't really grok why OS X was so good. They also didn't write as well as Neal, but hey, that's not an especially exclusive group.

http://garote.bdmonkeys.net/commandline/index.html

It is good and original, but the bits that are good are not original, and the bits that are original are not good.

I recall reading it and thinking "he got that wrong, and that's wrong, and that's wrong, and all of that is wrong" all the way through. I think he was one of those pundits that fundamentally just doesn't understand why people like working with an OS like OS X, they think it is because of some superficial silly reason. Like "consumers like it because it is white and shiny" or "because the UI is pretty".

No no no. A thousand times no. I and everyone I have talked to who uses both, prefer the Mac because Windows is like the death of a thousand papercuts. There is in general no one thing you can point to that is especially horrible (obvious exceptions: Win ME and early Vista and Win CE), but there are a million different things that all add up to an unpleasant experience.

Disclaimer: I used Windows 7 on a decent spec machine recently and it was actually pretty good. But see the above quote about good and original. If Windows is going to end up just copying all the good bits from some other OS, why not switch to that OS now and get the benefits straight away rather than waiting 5-7 years?

Screw you buddy! Apple has a monopoly on Apple products and everybody but you knows it!

Apple should be prosecuted for their illegal monopoly over their own products. I hope they are punished just as much as Microsoft was for abusing their Windows monopoly. Now /that/ would be justice!

I'm trying to decide if you are being ironic or not. If you are, it isn't clear at all. If you aren't, your argument makes zero sense whatsoever. You don't have a monopoly "over products"; you have a monopoly over markets.

Really? Tell me please, what was the penalty imposed on Microsoft after being convicted of illegally abusing their monopoly power?

At the very least, it was a tremendous drain on their public image and wallet. Don't underestimate these effects, and if you're young you should read a bit of history to have a sense of Microsoft's trajectory and goals at the time. You should at least know what the Halloween Documents are.

http://catb.org/~esr/halloween/

Thanks, I am aware of the history. My point, which you've confirmed, is that nobody actually knows what the penalties are, because they were so light or non-existent.

You could argue that it scared Microsoft enough to keep their head down for a while because there was a lot of talk about forcibly splitting Microsoft.

The strain on their image and wallet was largely self-inflicted. They were caught with their hand in the cookie jar and they were saying "we've done nothing wrong, we know not of the cookie of which you speak".

Ultimately they didn't need to fight as hard as they did (appealing, using delaying tactics to drag it out, pissing in the European's porridge etc), but in the end all they got the equivalent of a slap on the wrist with a wet bus ticket.

Why do the specific findings of damages and penalties matter here? There was more than one case and they intertwined and resolved in not-so-obvious ways. I'd say it's naive or simplistic to ask "What exactly was the penalty?" the same way it would be to ask about the end result of IBM's antitrust case (13yrs, dropped). Does that mean there weren't any penalties?

One of Microsoft's results was that they were found guilty of monopolistic practices and that will never go away, even though the larger case wound up being settled (as is standard when a rich and/or powerful defendant is going to be found guilty). That their hand was in the cookie jar is a fact of public record.

While many decry the settlement itself, it's also important to look to history for the circumstances of the agreement: it was hashed out in the weeks following the 9-11 attacks. You take your eye off the ball and some scumbag is going to take it, in this case Microsoft and the Bush DOJ workers shaping the agreement.

There are more Android phones than iPhones. Which market do you think Apple has a monopoly over? They have a quarter or something of the US smart phone market and less world wide.

They have the market cornered on mobile app sales AFAIK.