Friday, February 18, 2011

Is Apple In Antitrust Violation?

Apple has built a powerful tablet in the iPad and the best mobile device with its iPhone. And it supports its products with an App Store to feed it content. It remains the most forward thinking company among scores of others. But that front runner status also causes trouble and the rise of online subscriptions through the App store is causing ripples. "The Justice Department and Federal Trade Commission's interest in Apple's new subscription service is at a preliminary stage, and might not develop into either a formal investigation or any action against the company. But it comes as Apple has attracted growing antitrust scrutiny in the U.S. and Europe."

So Apple has built an aggregate site; why can't others. Shouldn't companies be allowed to build apps that can be downloaded without going through the Apple digital store. Perhaps that is the crux of the issue. The app site enables convenience and that convenience is worth something. If the apps store is what drives higher subscription rates, than perhaps the commission charge is justifiable. But if good marketing can push consumers to find apps outside the store, then all the better for competition.

"To make a case against Apple, antitrust enforcers would have to show that Apple has market power and is abusing it. That depends on how they define a market. Apple's iPhone is the phone of choice for many affluent consumers, but it has only a 16% share of smartphone sales and a sliver of the broader mobile-phone market." And the tablet market is still in its infancy. I hate to see government regulation slow down innovation, but it is also important that barriers to entry remain low to encourage more competition.