Once indication of when a company has ‘made it’ is when they start to be the target of antitrust attention. A couple of years ago, Google entered that club and now Apple looks set to follow.
Apple is facing two antitrust accusations. First, there is its exclusive deal with AT&T. This was a deal inked prior to Apple even entering the phone market but we should recognise that, on its face, it hinders consumer choice. Of course, that is not the antitrust standard. The question is whether it damages competition. Now normally an exclusive deal can do that by allowing one firm to extend its monopoly position into related markets — in this case, it would be Apple and AT&T locking up the iPhone so that other networks will be driven from the market. Notice that it isn’t about other phone makers being driven from the market as AT&T still sells other phones — so exclusivity is one-sided. Now AT&T’s market share has grown but it hardly looks like other carriers will be driven out of business or crimped anytime soon. Indeed, I would say that the general consensus is that the main harm from this deal has been to Apple itself. In other countries, I suspect that the iPhone market share is much higher where there is no network locking of iPhones. The point here is that it is tough to define a market where Apple has dominance let alone a monopoly. It isn’t the mobile phone market (Nokia still is the largest). It isn’t the smart-phone market (where at least in the US Apple lags both RIM and Android-based phones). The only market it is a monopoly in is the market for iPhone. Now while I, for one, will accept no substitute, you will only need to look at the comments (I am anticipating) to see that that is not a shared view and maybe, not a widely shared view. A monopoly for a market defined so narrowly around one company is a monopoly by definition but that is hardly the standard for antitrust analysis.
The second claim is on the access to the iTunes App Store and by virtue of that access by developers to being able to sell iPhone apps. Apple controls that access and sets its own criteria — criteria that likely are not universally shared. It also appears to limit access by apps that compete with its own functions; although those functions are ones it gives away for free. Moreover, apps need to satisfy Apple’s pricing terms. But is this illegal monopolisation? The question again is what market does Apple have a monopoly or substantial market power in? The best candidate is that there is a market for application distribution and use and that Apple has a large share of that platform. Now it still lags both Android and RIM for installed base on such platforms but it does appear to have the largest revenue. But that does not necessarily equate to market power. Could Apple, for instance, raise all app prices by 5 percent and find that profitable? It is highly unlikely. While its installed base of current iDevice users would not be able to substitute out, it would face a terrible time competing for new consumers and renewals. This is probably why Apple has not done this even as its installed base has grown. But even if Apple has substantial market power here, there remains the question of its rights to set terms. One issue is that it set those terms at the beginning — well, before it had, by definition, a market, let alone market power — and it has not changed them since. It has only added features. If it took features away, at the very least, we could start to consider whether there is a case against them but that hasn’t happened and nor does it look like it is going to happen.