216. United States v. Apple by Steven Sinofsky

Like the Microsoft case, however, this case was filed on what is clearly the tail-end of the innovation and adoption curves for smartphones. From an innovation perspective that is literally the dumbest time to file a case because little will change with phones while the court is trying to figure out how to fix phones, but outside of phones the world will change enormously. (View Highlight)

To those that think they know what to do today, I get that. I built products too. But Apple chose to build a product a different way. It blows my mind this is being debated at all. Companies make product choices and the market decides even when they have 0% share and even when people disagree in hindsight. (View Highlight)

“While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal. The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.” (View Highlight)

Even so this is the narrative the DOJ and States employed—Apple is a closed system that has a monopoly and protects that monopoly, stifles innovation, and raises prices by not opening itself up. The filing leaves plenty of room for other charges to come along. The actual legal violation then takes these five perceived technical problems and delineates how they violate the Sherman Antitrust Act. The core of the complaint repeats the following: (View Highlight)

Using “app distribution to undermine…” is a view that phones should be like PCs. This is completely and utterly ignorant of the unique market offering that is iPhone and ignores any notion of the evolution of technology. I was searching for an analogy but somehow it seems like forcing car makers to sell cars without airbags because there’s an airbag duopoly. (View Highlight)

What the DOJ is trying to do is turn the iPhone into Android, which is exactly what the marketplace does not want. Just as the DOJ tried to remove a browser from Windows which was exactly what the marketplace did not need to happen. (View Highlight)

While no doubt some tech enthusiasts in the US want the iPhone to be like a PC, the 90% case is not only do they not want that, but they are paying Apple for that not to happen in the face of the Android duopoly. In Europe, which has recently had a much more aggressive antitrust program and by many accounts is now the leader, the modus operandi is that it is the competitive marketplace and choice and specifically competitors that need to be protected. (View Highlight)

In general, at least what is said, US courts do not like to delve into product design and prefer behavioral and structural remedies rather than picking and choosing winning products or product approaches. That was why the quick leap to “break up Microsoft” got exciting as a structural remedy which was all the rage after breaking up AT&T. No one is expecting Apple to be broken up into anything. (View Highlight)

Right now the first filing is “shots fired” and all about creating the narrative. It is tempting to evaluate a case on merits and to pick sides. Except the problem is antitrust people already picked their side. It is also the case that many stories will tell the tales of successfully antitrust efforts like the MS case. Good grief. (View Highlight)

This more than anything gets to the deepest irony of this case. It a case about Apple’s smartphone just as there is broad recognition that the smartphone while hardly at a nadir, is past peak innovation. (View Highlight)

“Unless Apple's anticompetitive and exclusionary conduct is stopped, it will likely extend and entrench its iPhone monopoly to other markets and parts of the economy. For example, Apple is rapidly expanding its influence and growing its power in the automotive, content creation and entertainment, and financial services industries…” (View Highlight)

Apple has aspects of how they integrate their products that provide huge benefits to consumers and in most every case those benefits are available to third parties. Most third parties do not want to build those same products as Apple because they don’t want to rely on Apple’s platform. So in most cases what is going on is that Apple has success simply because others want to exploit consumers in their own way. It is not so straight forward that this is a one-way thing. (View Highlight)

“From its inception, Apple had a knack for expensive, high-end design and niche marketing relative to its competitors. But it struggled to compete against rivals that offered lower prices and more programs. After two decades, Apple struggled to compete against Windows personal computers and by the late 1990s, it was on the brink of bankruptcy.” (View Highlight)

The amazing thing is how vibrant all of these are today. It is just puzzling what this is about except for large incumbents with margin challenges looking to not pay Apple for delivering safe, reliable, frictionless customers on a platter. It is decidedly not about innovation. (View Highlight)

This is another example of not giving credence to what Apple already does. For example with house keys in HomeKit by using HomeKit keys are part of a Home, shared across users, managed across devices, etc. Regardless of how many brands of locks one has. Failing to even acknowledge the benefits Apple brings is irksome. (View Highlight)