A few hours after Steve Jobs announced the terms of Apple‘s new subscription service for digital content, the word “antitrust” began to be heard on the same day of the announcement (Tuesday), Shubha Ghosh, professor of antitrust at the University of Wisconsin law told the Wall Street Journal: “My position is one of suspicion.” And it raised two crucial questions that are sure to be discussed a lot in the coming weeks:
“If Apple has a sufficiently dominant position in the market to keep out competition, and if it exerts” anti-competitive pressure on the price. “
The answer to the second question is clear when approached from the perspective of Rhapsody, a subscription music service that offers a free application in the iTunes online store. Rhapsody issued a statement Tuesday calling Apple’s requirement to keep 30% of each sale “financially unsustainable.” The company added that it would seek to talk with other similar services in the market to determine “an adequate legal and business response to this new provision.”
The answer to the first question, whether Apple has enough control over a particular market for regulatory authorities to question whether its conduct has been abusive or coercive, depends on how we define the market.
Any market search on the Internet returns pie charts where Steve Jobs appears. For example, in a graph, Apple accounts for 73.4% of the market for MP3 players. In another, iTunes takes 83% of Internet music sales. There are others, with old dates, that show that Apple dominates 99.4% of the market for mobile applications and 99% of downloads of television programs. Last fall, the iPad had a 95% share of the tablet market.
The point is, Apple is no longer your mainstream gamer, as it was in the Mac vs. Windows war in the 1980s and 1990s.
In many markets, especially those based on the iTunes / iOS ecosystem, Apple’s power is greater than Microsoft has ever had, as it controls the hardware, the operating system, the online store, and the terms under which third parties can trade your products in that space.
None of the above is illegal unless the company begins to act as an intimidating bully and abuses its market power.
Tuesday’s announcement could imply that it has crossed that line. If so, in the months to come we will hear how Apple repeats the same legal arguments used by Microsoft when it faced multiple legal battles with US regulatory authorities.
Like Steve Jobs in his statement Tuesday, Bill Gates argued that Microsoft was simply trying to do what was best for its users. If content publishers try to accuse Apple of controlling the market for tablet computers and they are making huge money from monopoly, it may respond as the Journal suggests: Any publisher who disagrees with Apple’s terms is free to distribute their product through anyone else. conduit, printed and digital.