Making the headlines: The US Supreme Court ruled on Monday that a class action lawsuit by users alleging Apple's App Store's monopolistic behavior could progress.
The Big Picture: Why "market definitions" are so central to cartel fights.
- Suppose you operate the only restaurant in town – do you have a monopoly?
- If the market is defined as "dining" or "eating out," then do so.
- If the market is defined as "food" or "food," people can buy and cook food, right?
In App Store Lawsuit Users Are Charging Apple By Forcing Developers to Sell iPhone Apps Only Through Apple's Store A decline in these sales drives up prices.
- Apple has argued that users can access software and services through their phones' web browsers, among other things, and that most of the apps accessed through the App Store are downloaded for free – not a single penny.
If you define the market as "iPhone apps," Apple looks like a monopolist – it retains full control of space.
- You can not place an app that's not an app store on an iPhone without damaging it, and manipulate the operating system in a way that violates Apple's terms and invalidates the warranty.
If you instead define the market as "smartphone" apps, " will give you another result."
- That's because users have Android phones and access to a whole other universe of apps Choice – Presto, no monopoly.
The same principles apply in the debate over the dissolution of Facebook .
- In his recent essay, in which he argued that Facebook had become too powerful, co-founder Chris Hughes argued, that the company "is a powerful monopoly that dwarfs its rivals and wipes out competition from the category of social networks.
- "The category of social networks" is one way to define this market, which Facebook considers to be the most monopoly.
- But if you call it "messaging," then Apple, Snapchat, and the mobile carriers all look like savory competitors.
Similarly, Google appears to have a monopoly on the search market in many countries, but if you define the market as "online information" instead, the case is much murky.
- Google Android practices have also been subject to antitrust enforcement: Last year, an EU ruling sanctioning Google for practices related to the Android Play Store declared that Google had a monopoly on this market.
Our Thought Bubble : In the technical field, market definitions are unusually fluid, as hardware develops quickly and software is infinitely flexible.
- Complaints and karting These processes are slow to evolve and markets have changed in the time they can be negotiated.
- But the power of technology giants has grown so much that many critics see antitrust remedies as the only way to rebalance the industry game.