The obvious hesitation I have is just that some companies really do benefit from a lot of vertical integration. Could Apple be Apple if they were forced to spin off the phone business, or the chip design house, or the OS?
What would it mean for the startup ecosystem if getting bought by a conglomerate was a less plausible exit?
How would regulators enforce that the split off entities were truly independent vs faking it and then having exclusivity deals that meant they were basically still the same singular entity?
If it weren't, the things that are integrated become available for others - meaning better products for all, no?
What's the societal benefit of integrating all these advances in single companies?
TLDR: it’s complex, but successful vertical businesses have fairly different products, efficiencies, and outcomes.
My first thought is that the "apple Qualcomm" that would come out would have incentives to make better chips without needing to also sell phones (competing with other chip manufacturers) but I can understand that the chip industry is very costly and risky, I can see how without integration they can't compete with any current player - too expensive and risky.
Yes, no other company but Apple could have pulled that off, but that’s only because Apple themselves are a monopolist with the market power to fight another monopolist.
That’s not a good thing. The solution to monopolies isn’t more monopolies. A much smaller company than Apple could have theoretically created a better processor than Qualcomm, but it just couldn’t happen due to multiple anti-competitive factors. Like how Qualcomm has a patent portfolio that gives them a monopoly on 4G modems, and can use that to force companies to purchase other components from them if they want a modem.
https://www.cnet.com/tech/mobile/qualcomm-us-ftc-apple-chips...
They are one of the most vertically integrated large companies, but they are allowed to monopolize their own products. There is no iPhone market - that’s a product within a huge market of other mobile devices that anyone can join.
And if I’m completely wrong about you, then I apologize. My patience for these internet arguments isn’t what it used to be. To answer your question, there are no doubt thousands of comments on this website about that topic. Ignore the ones that seem to come from Apple fanboys, and you’ll find the right answers.
The way I see it, Apple has targeted a very specific kind of customer. And these people have a few things in common:
Value privacy
Value great hardware
Willing to recognize and pay for all the ways Apple adds value: packaging, UX, etc...
And there are some more, but I feel listing more won't add value here.
I do like the Apple M1 computer I own. And I like the older 8 and 16 bit ones too. The reasons are very different with the older machines being open and hackable and the M1 being fast with crazy good battery life given the overall performance.
However, I flat out won't own an Apple phone. Too closed down, and the UX is not well aligned with how I prefer to do things.
I disagree strongly with many things Apple does and feel their products often are too restrictive.
But, I do not have to use anything they make either.
Some have argued that Apple has serious lock in on their products. Yep. Except for the computers, I agree! That is why I won't use any of their stuff.
Yet lots of people want it that way and Apple delivers it to them and asks those people to pay right up, and those people do pay up and a whole lot of those people are happy having seen good value for their dollar.
In my view, Apple gets to do that.
And nobody has to like them doing that, right?
How is any of it a monopoly?
Serious question.
As you say, many people disagree with you. It is very possible they have more of an argument than then just being idiots or shills or whatever disparaging label you want to give them. The question you are responding to is a legit one. People will continue to ask for justification whenever you proclaim Apple a monopolist. The fact they haven’t been convinced by the thousands of comments means your position isn’t as self evident as you think.
(I own zero Apple products, not really a fan of any mega corp)
So when people say Apple has a monopoly, I want to know what market they control so entirely that they are able to eliminate any competitors should they choose to behave anti-competitively. People often say they have a monopoly on iPhones, but that’s not a market, it’s a product that they make and sell. If 90% of mobile devices were iPhones, I’d agree, but they’re not, so Apple cannot have a monopoly in that market.
Sometime people suggest they have control over mobile development. Targeting iPhones is profitable because iPhone users spend money. It’s no different from console development (PS5, Switch, Xbox) where all software goes through a gatekeeper who takes a cut. How does that control mobile development when they’re in the minority in the market?
They have a huge market cap and pile of cash, that still doesn’t make them a monopoly. They don’t have price control in any market segment. Sticking with phones, you can get Samsung and Pixel phones for higher and lower cost.
AFAICT they don’t meet any common or legal definition of a monopoly so I am interested in what industry people think they control.
You’ve not said why you think they’re a monopoly, so I can really only assume the common things I see people complain about. A company having business practices that might be considered hostile does not make them a monopoly though. That word has a specific meaning.
Is profit in a market a measure that’s ever been used to identify a monopoly? Apple has no method of controlling prices in the mobile market, so what difference does it make if they are one of the few profitable companies? That’s why I mentioned buying out fab processes, but that might be anti-competitive, but still not monopolistic.
By definition monopolies dominate a market so thoroughly that they can prevent equivalent products from being offered at lower prices. Apple does not have the power to keep mobile device prices high, despite their fab dominance (and there are other fabs that offer substitute processes).
There are dozens of cheap mobile devices that, despite low profitability, still dominate the market. Despite Jobs’ claim that the iPhone was guarded by patents, competitors with essentially the same features were available within a year of the iPhone’s release.
Does Apple have some anti-competitive practices? They’ve been found to in the past (employee recruiting between companies), and may or may not now, but that is separate from being a monopoly.
Saying Apple doesn't have a phone monopoly because of cheap Android devices is like saying Microsoft didn't have one because doing work on a piece of paper was still a thing.
I think Apple’s long term privacy and e2ee pushes and googles recent attempts at the same would not exist across a pile of medium sized companies. iCloud Photos leaking would continue to be a thing.
I guess going public would be the move realistically. I would prefer to see a shift toward startups aiming for solvency though, which I believe would make better companies. Companies that fit a role in society better. Free market capitalism isn't really happening if consumers aren't paying for anything and the money rains in from the VC heavens instead.
This (among other things) contributes to the trend of increasing consolidation in virtually every industry in America.
What they are missing out is alternative investment categories only available to those with more money, or estate planning solutions that are expensive to setup.
Which is what the Sherman Act says:
"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other per- son or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court."
It hasn't been rigorously enforced since the 1960s, but the Department of Justice does have the option of enforcing it as written.
And companies like Google have more than just "big money political influence". YouTube banned discussions on legitimate discussion of Covid and politics in the past few years, for instance.
In case I'm unclear, I feel that not keeping our economy diverse and fair because China might make more stuff than us if we do is very misguided.
No, we wouldn't.
That is the goal and why "Break up Google" is being aggressively pushed by pro-Chinese bots on reddit, twitter etc.
"Break up Google" should be translated to "Give all the data to China".
Before the rise of TikTok I would as a European have supported the US shooting itself in the foot by breaking up Google, Microsoft etc. I assumed those would be trivially replaced by European alternatives. However today, post-TikTok, I know the majority of people will just eagerly jump on the first Chinese spyware alternative that pops up.
The free market wasn't solving that problem. A new baby formula factory can't just be built to cover a gap that'd probably disappear in a year. But that leaves people in a shitty position for a year.
By the definition I learned in school, that's not a free market, precisely because it can't scale on both supply and demand sides. If it can't be (if factory startup costs will always be too high) then that's an argument for regulation to offset the problem, but it's not a free market problem.
Even assuming that this is a good idea, this have an unnecessary risk of being unconstitutional and getting scrapped by the justices. If you want to limit property rights in this fundamental way, that has to be based on a very strong judicial basis. That's why almost all reasonable antitrust regulation happens in a reactive way, because it has to prove that those regulated entities are actually doing something harmful.
Antitrust is reactive because consolidation is a slow burn and it takes a while for a critical mass of voters to feel the problem. Thats why Obama and Biden have taken completely different approaches, despite being ideologically similar.