A few thoughts on Apple and the DOJ

Today’s news has been a lot of conversation about Apple and the DOJ. Short version, the DOJ is apprarently investigating Apple’s iTunes business and if it somehow has violated antitrust issues. A good summary is this Bloomberg article. First and foremost, I’m not an anti-trust lawyer (much to my parent’s chagrin) so this is hardly legal analysis. Nevertheless, here’s how this looks to me.

1. Apple is no longer the scrappy underdog. With Apple’s position in the market (and a stone’s throw from exceeding Microsoft’s market cap) there’s going to come a lot more scrutiny about Apple’s business and their practices. That’s a fact of life when you hit a certain measure of success.

2. Apple has no monopoly on music, legal or not. There are legal monopolies and illegal ones. Hard to see how Apple has either. As a consumer, there are plenty of places I can go to get music without ever dealing with Cupertino. There’s no issue of DRM or lock in as there’s no DRM on iTunes music. Someone want to explain this to me?

3. One core issue seems to be Apple not willing to promote content that’s been given exclusivity elsewhere. Again, I must be missing something. If you give my competition exclusive rights on content why on earth would I invest dollars promoting it myself. I suspect I’d promote the content that was my exclusive. It’s one thing if there’s a single dominant store that says if you stock my competitors store, I’ll stop buying from you. That’s not what’s happening here.

4. This appears to be preliminary look. No one has said Apple has done anything wrong. Early reports are the music industry is driving the complaint. Having invested in Apple’s iTunes experiment early on, it paid off big time but also created a new player with a lot of power in the marketplace. If I’m the music industry, I’d probably prefer to see more digital stores and services compete with Apple. I’m not sure complaints to the government will achieve what market forces failed to achieve.

Bottom line? The world is a different place and Apple is going to be viewed as a very different company going forward. As more vanquished competitors cry foul, expect to see more of these types of stories going forward. As Apple success continues to grow, Cupertino will learn that it’s now playing by a different set of rules and expectations.

4 responses to “A few thoughts on Apple and the DOJ

  1. Excellent points. When I read the original article I thought perhaps Amazon would be the one under investigation for asking for prerelease exclusivity.

  2. If it really is the music industry driving this complaint, then I think it’s got less to do with antitrust, and more about the record labels trying to get back at Apple for taking control of their product. There is no monopolistic behaviour in anything Apple does. There is a perception among content creators that Apple, and only Apple, are capable of helping them bring their product into the 21st century and so they hand complete control over to Apple, who then do their thing. No one is forcing them to distribute their content exclusively through iTunes, they choose to do so because Apple have the devices they can be tied to with DRM, which was the original motivation for going the iTunes route in the first place.

  3. Not sure I understand what “monopoly” means any more when it comes to anti-trust law. iTunes has at least as big a piece of the digital music business as Microsoft had of the PC business, but I didn’t hear many pundits coming to Microsoft’s defense. All I heard was the bogus argument about the size of Microsoft’s piece of the pie. As a consumer, there were places I could go to get a non-Microsoft operating system computer, just as I can buy an iRiver (are they still in business?) or Sony or Microsoft music player. Plenty of people saying there were better alternatives to Windows out there as well. I sure didn’t hear Steve Jobs (or any of the Silicon Valley digirati) calling for the DOJ to get out of Microsoft’s face. Where were you guys while Apple was driving one 3rd-party developer after another out of the Mac game? Where were you when Apple was bundling i-This and i-That into the Mac OS? Where’s my Mac menu screen for picking a default web browser? Seems to me there’s too much of one POV when it comes to Microsoft and another when it comes to Apple.

  4. There are only two markets where Apple has a monopoly. Digital downloadable songs, and personal media players.

    The former might not be a monopoly as there are other ways to get digital songs – physical media, streamed music, subscriptions – so if the market is just digital songs (and not limited to downloadable), Apple is far from a monopoly.

    If Apple is a monopoly, it’s still not clear to me what they’ve done to abuse that monopoly. Unlike Microsoft, they are not driving out competition by forcing anyone to include their software and not anyone else’s, and they have not created an open platform and then bundled free software to force someone else’s software off the market.

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