Sorry Haters, But Apple is Not a Monopolist (Premium)

It’s been an interesting season of bad news for Apple, and that’s really brought the haters out in droves. But Apple’s problems selling iPhones need to be put in context, as the iPhone is still the best-selling smartphone in the industry. It’s not even close.

The haters aren’t interested in context, of course. They’re just interested in bad news about Apple. And this week, we learned that the U.S. Supreme Court may actually hear a case in which Apple has been accused of being a monopolist that illegally sets prices. And the haters are just ecstatic over the possibility that Apple, finally, might get knocked down a peg.

While I don’t quite understand the level of animosity here, I do have my own complex relationship with Apple. The firm makes some of the best hardware in the market, and that’s true whether you’re talking about iPhones, iPads, Macs, or Apple Watches. But its software and services are middling at best, and often wretched, and I try to avoid as much of it as possible.

My bigger issue with Apple, of course, is the hubris. Tim Cook and most (but not all) of the other executives who appear onstage at Apple’s press events exude a faux humility that is so transparent and obvious that I’m a bit confused why everyone doesn’t see it. I feel like I’m the only one in on the joke sometimes. But, of course, the joke is on us, the people who spend far too much money to acquire Apple’s very expensive products. We’ve been Apple Jacked.

But whatever. What is it that has Apple’s detractors foaming at the mouth this week?

The U.S. Supreme Court on Monday listened to arguments from the legal representatives of a class action lawsuit that accuses Apple of violating federal antitrust laws. According to the complaint, Apple requires apps to be sold through its own mobile app store, and it takes a 30 percent cut of each paid app.

Which, of course, is all true. But how is that an antitrust violation?

The complaint claims that by limiting app availability to a single store that it controls, Apple is artificially ensuring that app prices remain higher than would be the case if there were a choice of stores. It also claims that app developers overprice their apps in order to recoup the 30 percent fee that Apple charges.

These claims are nonsense.

Apple doesn’t have a single monopoly. The only near monopoly it did have, for MP3 players, was erased when smartphones appeared and wiped out that market. In the smartphone market, Apple commands about 13 percent share worldwide, and possibly 50 percent in the U.S. There’s no monopoly.

Within its own ecosystem, Apple has positioned itself as the default or sole supplier for various apps and services that are tied to its own platforms. But then so does every platform maker: Both Google and Microsoft behave similarly with Android, Chrome OS, and Windows. Doing so doesn’t constitute a monopoly: A customer can always choose to use a different platform.

With regards to the specific complaints, customers can choose to use Android instead of the iPhone. And most do: As noted, about 87 percent of all smartphones in use are Android handsets, not iPhones. Android users do have a choice of app sources, of course. But most simply use the Google Play Store, which, of course, also charges developers a fee for paid apps. Not doing so is dangerous, which played a huge role in Apple’s decision to not allow this on iPhone.

But the more important point, I think, is that developers set app prices, not Apple. They can choose any price they want, including giving an app away for free. And they compete with other app developers who may want to sell similar apps.

The system works. There are over 2 billion apps in Apple’s app store, which I think speaks to the overall health of this offering. And Apple has thus far paid out over $100 billion to app developers. So it has created a great new market. Both for app developers and for itself. Which is not illegal.

I’m having a hard time understanding why any user would try to sue Apple for this behavior. But I’m having a harder time understanding how this reached class action status. And I think it’s notable that no app developers have ever sued Apple for the opportunity it provides them.

Look, we can dislike Apple for a lot of things. But its app store is a success story that has been emulated elsewhere many times. And if you don’t like Apple or its ecosystem, you’re free to try the Google competition. Which is, by the way, an actual monopolist that needs to be investigated by the U.S. government.

Unlike Apple.