Guess who has a monopoly? Apple. No, not on iPhone marketshare. Definitely not on, well, any piece of hardware Apple sells. There is no monopoly on the Mac or iPad, not on Watch or AirPods. So where is Apple’s monopoly?
The App Store.
Until recently, if you searched certain keywords on the App Store’s search function, often you would get Apple’s apps first, then commercial competitor apps after that. The New York Times has an excellent example of exactly how it was before Apple began to tinker with the search results to avoid the monopoly accusation spin.
It won’t matter. Why not?
A monopoly is not illegal. Most of Apple’s iPhone applications– Safari, Calendar, Contacts, Reminders, Notes, News, Podcasts, Weather, Books, Numbers, Pages, Keynote, Clock, Stocks, and Mail (to mention a few) are free.
Why would an app developer design and publish an app that has free competition? Differentiation. Some third-party apps are better than Apple’s and worthy of a price tag. The problem Apple faces is the spin from critics more than law, but the company has responded appropriately but rejiggering App Store search results so that keywords like browser or email or books or podcasts or reminders do not automatically list Apple’s own apps as competition.
That’s the right thing to do because Apple gets a cut of the price tag for commercial apps, so it makes sense to help developers with better rankings on search results.
The critical spin, however, is that Apple is abusing a monopoly. If a monopoly is not illegal then is Apple guilty of monopolization?
First, that the defendant possesses monopoly power in a properly-defined market and second that the defendant obtained or maintained that power through conduct deemed unlawfully exclusionary. The mere fact that conduct disadvantages rivals does not, without more, constitute the sort of exclusionary conduct that satisfies this second element. Instead, such conduct must exclude rivals on some basis other than efficiency.
Does Apple excludes competing third party commercial apps from the App Store’s search results?
No. Why not?
Apple’s apps have been ranked higher on results, one could argue the company is abusing its monopoly, yet Apple does not make money on free apps, so the recent changes to search results make more sense– Apple promotes third party apps because, 1) it’s the right thing to do, and, 2) the company makes more money.
The thing to remember about legalities is that courts allow argumentation from multiple perspectives. The thing to remember about critics is they will spin an argument to push for change before going to court.
For several decades courts drew the line between efficient and inefficient exclusion by asking whether the conduct under scrutiny was “competition on the merits”. Courts equated such competition on the merits with unilateral conduct such as product improvement, the realization of economies of scale, innovation, and the like. Such conduct was lawful per se, since it constituted the normal operation of economic forces that a free economy should encourage. At the same time, courts condemned as “unlawful exclusion” tying contracts, exclusive dealing, and other agreements that disadvantaged rivals.
Apple spins its position, despite being a monopoly. Critics spin their position because they want Apple to make appropriate changes. Most iPhone and iPad customers don’t care much about the issue because, 1) free apps are good, 2) better apps are worth a price tag.
Apple executives Phil Schiller to the NYT:
There’s nothing about the way we run search in the App Store that’s designed or intended to drive Apple’s downloads of our own apps,” Mr. Schiller said. “We’ll present results based on what we think the user wants
Yet, Apple has made changes that benefit third-party app developers. That’s the right thing to do.