[lxgr]

The root cause here seems to be fairly clear: (Excessive) vertical integration of platforms (or rather their owners) across domains.

The duopoly of mobile app stores would not be nearly as problematic if it wasn’t also tied to a duopoly in phone OS vendors, one of which also tied to a monopoly in phone vendors, which is tied to a monopoly (quasi-monopoly? not sure what to call iMessage in the US) in instant messaging platforms etc.

[jacquesm]

> The root cause here seems to be fairly clear: (Excessive) vertical integration of platforms (or rather their owners) across domains.

Which is exactly what RMS and like minded individuals have been warning about. Meanwhile Microsoft is working very hard to retro-fit this onto the remains of the PC market.

[kmeisthax]

You're both over and understating RMS's position here. He wasn't opposed to vertical integration, he was opposed to being told no. Vertical integration often means being told no, through not always through copyright means.

[willseth]

That's a pretty broad root cause. The problem is coming up with a remedy that can't be worked around or doesn't distort the market in other ways. It will be interesting to see what happens in Europe if/when they force Apple to allow side-loading apps.

[ethbr1]

The EU redress strikes at the core of the issue -- if Apple and Google are prohibited from monopolizing app stores and/or payment processing on their respective platforms (including via incentives, tying products to exclusive use, etc.), then their mobile OS/hardware monopolies loose a lot of their power.

[willseth]

The bigger question to me is to what degree will the platform owners be restricted from monetizing apps on the platform. Requiring apps to be installable at no cost to the developer makes a big assumption that platform fees are 100% rent. Some of the fee surely is, but if enough people are able to circumvent fees, it seems likely to impact the dynamics of the platform, e.g. If supporting 3rd party apps become less profitable, why wouldn't Apple and Google shift focus/investments to first-part apps and features and allow public APIs to languish?

[phone[phone]]

I personally think we need a United States v. Paramount Pictures, Inc.[1] ruling in mobile phone hardware.

Then Apple can produce their OS, Google can produce their OS, and handset makers can be free to choose what OSes and app stores to support on their phone.

[1] https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....

[burnerburnito]

Of course, keep in mind US v. Paramount recently got sunsetted and it was decided it could never happen again :^)

[turquoisevar]

> The root cause here seems to be fairly clear: (Excessive) vertical integration of platforms (or rather their owners) across domains.

Which is not illegal per se and, in most cases, such as Apple’s, not even subject to antitrust scrutiny.

Horizontal integration as a result of mergers is immediately subject to legal scrutiny.

Vertical integration by virtue of mergers can be subject to legal scrutiny.

Vertical integrations as a result of organic expansion are not subject to legal scrutiny.

From a US antitrust perspective, Apple is wholly in the clear as long as they don’t actively abuse their market power after they’ve gained their market dominance.

This means that Apple can be as restrictive and aggressive as it wants before it gains market dominance in the relevant market and maintains that stance as long as they don’t restrict after it gains market dominance.

This makes sense; in the US, they don’t want to punish success, and you are allowed to have an “innocent” monopoly. This also makes sense from the perspective of market-wide ramifications.

If you’d punish vertical integration or single-brand markets in general, then every start-up that automatically has a monopoly over its own products would be subject to punishment. If I develop a new smartphone tomorrow with its own OS and adopt Apple’s approach to the walled garden, I’d be immediately in trouble.

The fact that Apple became successful doesn’t change anything as long as that success isn’t gained by illegal means, like throwing my newly gained market dominance around.

The EU has a different approach to this, mainly through carving legislation that aims to target specific companies. Still, it remains to be seen if that can withstand adjudication by the courts because the EU courts aren’t very eager to condone targeting at this level and retroactively making things illegal.

In a general sense, it’s baffling to see how many people have trouble wrapping their heads around the simple premise that success isn’t punishable in and of itself and that you actively need to abuse your market dominance after you’ve gained it.

The rule of thumb is that if something is perfectly legal to do when you’re small, it’s also perfectly legal to maintain that behavior once you’re big, with very few exceptions.

This is precisely why Apple is always so restrictive when introducing something (e.g., App Store, no carrier bloatware, Apple Pay, commission rate, etc.) because they can always be more flexible. Still, they can never tighten the reigns once they’re successful.

Google tried this the other way around. Relatively open and permissive ecosystem. Now, they’re trying to close it up and bully other parties into doing what benefits Google; this got them in trouble.

Similarly, people really seem to have trouble wrapping their heads around the fact that “the iPhone” is just not the relevant market definition.

Courts almost never go with a single-brand market definition, because it almost never is a relevant definition and would open the door to ramifications across commerce, if only because pretty much every manufacturer has a single brand market and monopoly over it.

When determining the relevant market you want to include substitute products, both on the demand side and supply side.

Switching costs are a factor in determining the competitive pressure, but switching cost doesn’t mean that you can therefore exclude substitutions from the market definition, if only because there’s almost always a switching cost involved. Often times even very high switching costs exist, like a cancellation fee and switching cost can also be non-monetary like the time it takes to learn a product.

A lot of companies try to significantly increase switching cost to lock customers in. This doesn’t mean they don’t have competition in their market or that their acts are illegal.

The court has found that Google/Android is a suitable substitution both on the demand side as well as the supply side. People can switch to Android if Apple (indirectly) increases the costs of apps and developers can also switch if the cost of making apps becomes too high.

Keep in mind that the courts don’t care if an average consumer or supplier would do so, only if a marginal consumer/supplier would. In other words, if a small but significant amount of people would do so, typically 5-10%.