Apple and anti competitive practices.

[Dolph]

They don't have a monopoly though. They're dominant in the market, but that's not the same thing. There are other places which sell music - Amazon springs to mind. There are also many ways that various mp3 players sync music. I use rsync myself, because my mp3 player presents itself as a sensible filesystem.

I think there's dodgy ground because they are deliberately locking out competitor's products in a different market. Ethically, that may be wrong, but it's not monopoly abuse because (a) they don't have a monopoly in either market and (b) this practice isn't done to encourage ipod sales. Apple are all about controlling the experience, and allowing other players to sync with itunes affects their brand and image. They're not trying to suppress rival players, they're just protecting the brand.

Is it anti-competitive? Probably. I'd argue that whenever any vendor engages in some sort of lock-in, it's anti-competitive though. Doesn't automatically follow that it's illegal.

Apple have nearly 90% of the portable music player market with the ipod (source) and due to the itunes lock-in, 57% of the digital download market (source)

The anticompetative nature of the Ipod/Itunes is far more anticompetative than anything microsoft have done in the last 15 years (it would be the equivilent of preventing any alternative browser running on windows for example) and should be addressed, because apple not only have a monopoly (the EU definition, incidentally, is over 30% market share) but they are abusing it in ways that microsoft never have, nor would ever get away with.

Perhaps the problem is Apple's pockets aren't really deep enough, further proving that monopoly action is not to benefit consumers...

 

[meghatronic]

I'm not sure it's anti competitive, it's just a compatibility issue.

As a similar example should Sony have to make PS3 games/hardware that is compatible with the xbox?

That's a completely different issue - and you know it.

 

[Feek]

You do realise Apple is partially funded by Bill Gates right?

Source?

From what I recall, Microsoft (not Bill Gates specifically) bought something like $150,000,000 of non-voting Apple stock back in the late 1990s as a way of dealing with some potential lawsuits. I read somewhere a while back that Microsoft no longer have these shares anyway and as they were non-voting, they had no say in the running of the company.

I don't have a source for this, it's just stuff I remember hearing/reading and I really can't remember where.

 

[meghatronic]

"In August 1997, the Company and Microsoft Corporation (Microsoft) entered into patent cross license and technology agreements. In addition, Microsoft purchased 150,000 shares of Apple Series A nonvoting convertible preferred stock ("preferred stock") for $150 million. These shares were convertible by Microsoft after August 5, 2000, into shares of the Company's common stock at a conversion price of $8.25 per share. During 2000, 74,250 shares of preferred stock were converted to 9 million shares of the Company's common stock. During 2001, the remaining 75,750 preferred shares were converted into 9.2 million shares of the Company's common stock."

It is also worth pointing out that Apple wouldn't be around without that Microsoft investment. And it ensured there was Office on the mac etc.

 

[Feek]

So that's 18.2 million shares?
Why are they not listed here then?

 

[meghatronic]

So that's 18.2 million shares?
Why are they not listed here then?

They don't anymore. The fact they're not on that lists suggests they were off shooted. Unless that site doesn't include non-voting shareholders - which would be odd.

EDIT - Jobs has 5,546,451 shares?!??! @ $151 each?

 

[Delvis]

I for one hate Apple and their stupid bloatware.

I hope someone comes along and makes a fool of them.

 

[geekyEd]

In answer to OP the companies that are not considered to have a majority market share are not generally treated the same as the ones that are. take the usual AMD and Intel situation, AMD have been just as devious as Intel have been in the past as far as unfair trading practices such as bundling and discounts given based on the sole use of their product. But it is always the market leader that will get stung for it as they have a set of much stricter rules imposed upon them and they are under much more scrutiny from the authorities.

 

[meghatronic]

In answer to OP the companies that are not considered to have a majority market share are not generally treated the same as the ones that are. take the usual AMD and Intel situation, AMD have been just as devious as Intel have been in the past as far as unfair trading practices such as bundling and discounts given based on the sole use of their product. But it is always the market leader that will get stung for it as they have a set of much stricter rules imposed upon them and they are under much more scrutiny from the authorities.

Moot. Apple ARE the market leader in digital music players AND digital music delivery. See Dolph's post.

 

[Wicksta]

I'm not sure it's anti competitive, it's just a compatibility issue.

As a similar example should Sony have to make PS3 games/hardware that is compatible with the xbox?

Thats a terrible example - you're doing it wrong, no one asked Apple to make iTunes compatible with the Palm Pre. If you want to use consoles it would be more like a 3rd party developer making games that are compatible with the PS3 and then Sony releasing an update to deliberately stop them working so that they could sell more of their own games.

I'm an iPhone and Macbook user and I think Apple's deliberate blocking of the Palm Pre stinks. I guess I'm unusual as an Apple owner though in that I'm not some kind of religious zealot who will defend everything the company does.

 

[manoz]

I haven't read whole thread but I don't think the Apple thing should be compared to the MS IE issue. It's not like MS put a lock in windows that prevented you from using a feature like Flash or Java in Firefox or Opera. Plus the new IE is actually pretty good and ain't a POS software like iTunes. I used to dislike Apple cos they weren't green enough, they improved that but now this, they are going back down.

 

[growse]

Apple have nearly 90% of the portable music player market with the ipod (source) and due to the itunes lock-in, 57% of the digital download market (source)

The anticompetative nature of the Ipod/Itunes is far more anticompetative than anything microsoft have done in the last 15 years (it would be the equivilent of preventing any alternative browser running on windows for example) and should be addressed, because apple not only have a monopoly (the EU definition, incidentally, is over 30% market share) but they are abusing it in ways that microsoft never have, nor would ever get away with.

Perhaps the problem is Apple's pockets aren't really deep enough, further proving that monopoly action is not to benefit consumers...

Are we saying that they're abusing they're player dominance to lock people into itunes, or is it the other way round? Can you buy music from amazon and load it onto your ipod? If not, then I'd agree that they're abusing their 90% market share to inflate their online store market share. However, I'm less convinced of the argument that they're using itunes to lock people into ipods. They're already hugely dominant in the player business and don't need to lock down itunes to secure more ipod sales. It seems to me to be the wrong way round. Itunes is a large player in the market, and is heavily marketed, but it's by far and away not the only place to buy digital music.

I'd agree that monopoly action doesn't benefit consumers, I'd just say that this isn't a monopoly. Arguably, despite not using itunes or owning an ipod, I've benefited from Apple's dominance, as it's encouraged competitors to make better products. RIM may never have developed the Blackberry Storm if it weren't for the iphone, and I'm very happy that they did.

*edit* just thought - is this debate similar to the OSX on apple hardware debate? Are Apple abusing anything by locking a product in one market (OS) to a product in a different market (hardware)? If so, are people less concerned about that because of their lower marketshare? What if they only allowed itunes to be run on OSX, and therefore a Mac, effectively locking ipods to their OS and hardware business - would that be anti-competitive? Would that be illegal?

 

[Tefal]

Are we saying that they're abusing they're player dominance to lock people into itunes, or is it the other way round? Can you buy music from amazon and load it onto your ipod?

iirc you have to use itunes to put stuff on an ipod.

not sure if you can put amazon music into itunes though.

 

[Dolph]

Are we saying that they're abusing they're player dominance to lock people into itunes, or is it the other way round? Can you buy music from amazon and load it onto your ipod? If not, then I'd agree that they're abusing their 90% market share to inflate their online store market share. However, I'm less convinced of the argument that they're using itunes to lock people into ipods. They're already hugely dominant in the player business and don't need to lock down itunes to secure more ipod sales. It seems to me to be the wrong way round. Itunes is a large player in the market, and is heavily marketed, but it's by far and away not the only place to buy digital music.

I'd agree that monopoly action doesn't benefit consumers, I'd just say that this isn't a monopoly. Arguably, despite not using itunes or owning an ipod, I've benefited from Apple's dominance, as it's encouraged competitors to make better products. RIM may never have developed the Blackberry Storm if it weren't for the iphone, and I'm very happy that they did.

For a very long time, you could not use music purchased on itunes with any other music player due to fairplay (this has now been changed, but only after the damage has been done). (example source 1) (example source 2). This has the obvious effect of locking current Ipod owners into buying future apple products in order to continue using their purchased library without major inconvience.

The itunes software being locked to the Ipod, and the continued effort to prevent third party software from being able to load software on an ipod also made it excessively burdensome to purchase media from another source and then have to load it in to itunes compared to buying media within itunes. (source). This forces people to use itunes and in turn gives an unfair advantage to apple in the digital music sales market.


There are also issues with hardware lockin attempts by Apple that are nice and recent (as in this year).

http://www.crunchgear.com/2009/03/1...-only-from-apple-amounts-to-hardware-lock-in/

Apple's anticompetetive practices would never be tolerated from someone like microsoft, despite them having a similar (possibly greater) stranglehold on the target market than microsoft do (MS have never tried to make a closed environment like Apple have)

 

[Pixel]

Watch Pirates of Silicon Valley if you want a slightly better look at the history between Microsoft and Apple.

Also, I'd rather shove a needle into my eye than install iTunes, worst program I've used in a long time.

 

[growse]

For a very long time, you could not use music purchased on itunes with any other music player due to fairplay (this has now been changed, but only after the damage has been done). (example source 1) (example source 2). This has the obvious effect of locking current Ipod owners into buying future apple products in order to continue using their purchased library without major inconvience.

The itunes software being locked to the Ipod, and the continued effort to prevent third party software from being able to load software on an ipod also made it excessively burdensome to purchase media from another source and then have to load it in to itunes compared to buying media within itunes. (source). This forces people to use itunes and in turn gives an unfair advantage to apple in the digital music sales market.


There are also issues with hardware lockin attempts by Apple that are nice and recent (as in this year).

http://www.crunchgear.com/2009/03/1...-only-from-apple-amounts-to-hardware-lock-in/

Apple's anticompetetive practices would never be tolerated from someone like microsoft, despite them having a similar (possibly greater) stranglehold on the target market than microsoft do (MS have never tried to make a closed environment like Apple have)

I think I agree with this - using the dominance on the ipod to increase itunes dominance isn't particularly desirable. I find it interesting though that if they had minority market shares, people would just be calling it lock-in and moving on. The fact that they've got a 90% share in the player market implying that the rules change is what I find interesting. At what point do we say that it's unacceptably anti-competitive? As I said early, any vendor that does any kind of lock in (a lot of them do) is engaging in anti-competitive practices, so I'm curious as to what the tipping point is.

 

[LordSplodge]

Surely part of the problem is that the Palm Pre pretended to be an iPod. I really can't blame Apple for blocking a device that pretends to be something else in order to work. It's pretty sneaky on the part of Palm really.

That's what I thought. It's Palm being sneaky.

Apple's iTunes has only been designed to work with iPods (and now iPhones) since its conception.

Why is it now a problem? Oh and music from the ITMS can be used on other devices so that isn't part of the issue.

 

[JonB]

Then Microsoft certainly aren't a monopoly, but are dominant.

There weren't going to be done by the EU for being a monopoly though. They were done for anti-competitive behaviour. Read some articles about it.

 

[Dolph]

I think I agree with this - using the dominance on the ipod to increase itunes dominance isn't particularly desirable. I find it interesting though that if they had minority market shares, people would just be calling it lock-in and moving on. The fact that they've got a 90% share in the player market implying that the rules change is what I find interesting. At what point do we say that it's unacceptably anti-competitive? As I said early, any vendor that does any kind of lock in (a lot of them do) is engaging in anti-competitive practices, so I'm curious as to what the tipping point is.

I actually regard Apple's behaviour as worse than Microsoft's. There is a really simple remedy that can be enforced on Apple though, and it's simply to make them standardise and publish the specification to allow others to create hardware and software that uses the itunes protocols.

For me, the problems come not with bundling, but with specific locking out of a combination, irrespective of who is doing it. (This is, incidentally, something that microsoft have never done in the desktop area, although they have to a point in the server marketplace).

EU guidelines for a dominant market position is actually one company having greater than 30% of the market, I would actually agree with that if their enforcement and logic in what is and is not permissable was more sensible.

 

[Dolph]

There weren't going to be done by the EU for being a monopoly though. They were done for anti-competitive behaviour. Read some articles about it.

Which isn't a patch on the anticompetetive practices of Apple...