[jrockway]

Anticompetitive actions? Microsoft got in trouble for bundling IE. Why wouldn't Apple get in trouble for actively prohibiting competing browsers?

This is Europe, after all, not the US. The average consumer actually has some rights over there. (In the US, we basically have "if it blows up and ruins your face, Apple has to buy you a band-aid" and "you have the right to not buy it".)

[Anechoic]

Microsoft got in trouble for bundling IE. Why wouldn't Apple get in trouble for actively prohibiting competing browsers?

Microsoft got in trouble for using IE to strengthen their Windows monopoly - it wasn't too long ago that if you want to online banking, etc, you had to use IE and ActiveX which meant you had to use Windows.

Apple has no such monopoly, even in the smartphone space where Finland's Nokia has several times the marketshare of the iPhone.

[DrJokepu]

The EU policy doesn't even mention the term "monopoly". It is about "abusing a dominant position". From Article 102: (can be found at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:... )

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

[halo]

I'm not sure how you can be so confident that the regulators will conclude that Apple doesn't have a monopoly if investigated by regulators.

This can be far from obvious. In the Microsoft case, it was decided that the operating system market is distinct from the web browser market. This conclusion is decidedly non-intuitive, since what does and does not make up a modern operating system is largely arbitrary, as anyone who has used a modular system knows.

What's to stop the EC deciding that the iTunes Store is distinct from the phone and MP3 player market? To me, it seems that the distinction between hardware and retail being different markets is much more clear than the line between where an OS ends and where software starts.

[tptacek]

The terminal point of this logic suggests that the EU is also going to rule that we can develop arbitrary applications for our cable set-top boxes, for Cisco switches, and for automotive engine computers.

[MWinther]

Isn't it intuitive that browsers, which for the most part are available for several different operating systems, is a separate market from the operating system itself? Seem like two different markets to me. Of course, on the iPhone there is so far no browser market, but that would be the exception, no?

[halo]

X.Org is available on several different operating systems too, but I assume you don't think that Microsoft should have been prevented from shipping a GUI with their OS.

[fungi]

...XYZ has no such monopoly...

If i had a dollar for every time that had to be explained.

[ZeroGravitas]

I'll take a dollar for every time it has to be explained that government action on "monopoly" doesn't require 100% of a market (and that "market" is a vague concept). I think I'd come out ahead.

[tptacek]

It sure as heck takes more than 25%.

[cmelbye]

I'd prefer the latter ("you have the right to not buy it") to the government interfering in the internal operations of Apple. If I didn't like how Apple was taking so long to decide on Opera Mini, I would have a world of alternatives. I could use an Android phone, use a Nokia phone, get a cheap flip phone, make my own phone, not use a phone at all. Apple does not have the obligation to approve every last web browser that developers submit, and I'm fine with that, so I've decided to use their phone.

[thingie]

Why? If I don't think that "government interfering in the internal operations of some company" is generally bad and morally wrong (and I don't [1]), is there any other reason to think this? Is there any objective reason why should the European governments let Apple do anything it likes at the expense of the European companies and customers? (This is not necessarily the case, but it's close.) I'm not saying that you are wrong and I don't think that some government should "interfere" in this case, but I'd like to know your reasons why it should not. Just curious.

[1] I don't even think that we're speaking about "internal operations", there are numerous external companies and customers involved, how is that an "internal operation"?

[netcan]

Are you asking in the very general sense? Of course there are reasons, both "moral" and practical.

One important one is that when courts and politicians get involved, manoeuvring in the system is more important then manoeuvring in the market. This becomes the central focus of managers. Managers without talent or experience in this area give way to managers that are.

Remember, this is not just a matter of flipping a switch. The case against Microsoft took years. During that time, the beginning of the PC revolution, the most important thing the most important company could do was win a court case and preserve a public image.

This is damage that happens so long as the system stays clean. Another problem with this sort of action is that it creates terrible incentive for corruption. Fortunes can be won or lost depending on a political decision. The owners of those fortunes will try to influence the process.

On the flip side, it isn't obvious that there is much return to this sort of "intervention." Microsoft & IBM, the two great monopolies of the computer industry both failed to do much harm. The both were clearly affected by competition. The markets stayed competitive. New products appeared. Innovation happened. They made high profits (MS still has great profits), but no obvious damage happened.

To see this at work look at telcos and other infrastructure owning companies around the world, where government intervention is usually highest. Look at the CEOs of these companies. These are guys who know how to oil the system, not lay copper wire and certainly not how to answer a customer service call. It is not uncommon for corruption to be present. Many countries have telcos owned by members of a political elite.

[thingie]

I wasn't trying to be so general, and wanted to talk mostly about Apple and Appstore :-) But thank you, it's a good answer. Anyway, I think that while market will usually find a workable solution, we cannot expect it to ever find the best one (well, and especially socially responsible one, whatever it means :-)). Of course, regulation, even in the best interests, can fail badly and make things much much worse. Still, I think it would be better for us all if Apple was forced to make iPhone development more open, and the risks of doing so are not so great. But I agree that those risks could be seen as a good reason to avoid it. After all, we can live quite happily even with closed iPhone (or no iPhone at all :-)).

[netcan]

If you are interested in rule of law, it's pretty risky. You need to decide who has the power to decide what a company can and can't do. In this case, the only way to do that is with fairly arbitrary power and that is bad for rule of law.

They would need to be able to scrutinise then change Apple's appstore approval process/policy and make sure that it is indeed being followed. Apart from affecting their macro policies, this precludes that Apple's ability to decide arbitrarily which is pretty important to what they are trying to do. If you do take a more general/macro view, which I think you need to, you need to take into account how this affects Apple's behaviour and the general effect on the market.

The idea that apps need to be babysat and approved is controversial, but worth testing. This is what APple is doing right now, in the market. They are testing a hypothesis: 'An authoritarian marketplace will result in better apps and a better user experience.' Other hypothesis such as: 'some babaysitting is good but we should let people opt out and install whatever they want' will also probably be tested.

[mattmanser]

I find your position to be tenable at best, what is and is not an addictive food additive? What recreational drugs are and are not good for the public health? All these are arbitrary decisions too.

I doubt you would suggest the US should get rid of the FDA. It is not such a jump to conclude that if drug companies must be watched for practices which damage consumers, why not a retail firm? The line America has drawn for regulation is just as arbitrary as the one European countries do, Europe is just a bit more suspicious of laissez-faire capitalism than America.

And I highly doubt they are baby sitting this app because of quality.

[MWinther]

I don't agree that iPhone development isn't open. There are free tools and free documentation readily available, albeit not for all platforms. This is of course no different than many other developer environments, such as the tools for Windows 7 Phone will be.

So open would mean "if Apple was forced to lower the demands on the applications submitted to the app store" in this case, I guess? To which I would say, "Quite the contrary." I think Apple should enforce higher requirements when it comes to human interface guidelines, for instance. But it's of course a process that's evolving, and it will take some time to get it right.

One could argue that the demands put on the Apps in the App store is increasing competition, since it encourages developers not wanting to be subjected to them to develop for alternate platforms. I just hope the courts will see it that way, if it comes to it.

[ZeroGravitas]

On what basis are you claiming IBM and Microsoft didn't do any harm?

If the free market economies didn't exist, how would the Soviets know that they'd fallen behind?

I'm not saying it's an easy question to answer, it's not, but you apparently think it is.

[netcan]

Well, this is the problem with any sort of empirical answers to economics questions. That said, we see some strong signals here. If you agree with some or all of them, it is an indication:

- Both IBM & MS do not feel as intimidating today as they did at their peek. - Technology moved forward in ways that made their monopolies less important. - Innovation in competing products happened - Innovation within these companies happened. - There was fast paced borrowing of concepts from competing products - Prices decreased

Out of all of these, the first is IMO the important one. MS' position in 96 didn't guarantee its position in the future. Generations in technology are relatively fast and create opportunities to break monopolies. Even if it is bad (I agree that this is up for discussion), you can just wait it out.

Compare this to telephone lines or rail roads and it seems like software, even if it is a platform, is not in as much danger.

[Tycho]

Companies are just extensions of the rights/properties of individuals. You might as well ask whether the it's morally bad for the government to insist JK Rowling use/promote other authors' characters in her novels.

[biafra]

Governments protect companies all over the world. Why shouldn't they protect consumers (or in this case companies against other companies) as well?

[stricken]

I'm probably wrong but I thought Microsoft got in trouble for that because of their market position? There's plenty of other phones for Opera to run it's browser on.

That "50 million iPhones sold" from the event was a world wide number wasn't it?

[jasonlotito]

You are wrong. Market position isn't a bad thing. Monopolies aren't illegal in the US. However, the actions you perform can be, and this is what MS did. It wasn't it's position, but how it used that position to stop competitors.

[rscott]

Riiiight. I guess that makes sense if one disregards the fact that the iPhone OS is by no means a standard in the cell phone arena. There is plenty of competition out there, unlike there was for x86, which would be a pillar for an antitrust suit.

[wooster]

Apple operates in dozens of countries. In some of these, the laws around competition are extremely counter-intuitive to American observers.

[rscott]

Do explain.