Apple: Monopoly? What monopoly? (video)

Tim Cook keeps it simple, plays the Walmart card.

walmart aspirin monopolyApple can’t be regulated as a monopoly, Cook insisted in his CBS Morning News interview, because Apple has minority shares of the global smartphone and PC markets. He doesn’t mention smartwatches or wireless ear buds.

But he does push back against Elizabeth Warren’s theory that a platform—like, say, the App Store—can be viewed and regulated as a monopoly:

I think some people would argue, if you are selling a good, then you can’t have a product that competes with that good. But … that’s an argument that takes you down the path that Walmart shouldn’t be stocking an alternative or house brand.

My take: Now that’s an analogy to which most Americans can relate! Think of Apple-branded apps, Cook is saying, like Walmart-brand aspirin. Wait a minute… Does that mean Walmart can insist on a 30% cut from every bottle of Bayer’s sold from its shelves?

Cue the video:

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15 Comments

  1. David Emery said:

    One problem comes when Apple removes other apps that conflict with its own default apps. That’s always been questionable on Apple’s part.

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    June 5, 2019
    • Gregg Thurman said:

      Wal-Mart is not obligated to carry products that compete with its own brands.

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      June 5, 2019
      • David Emery said:

        True… But even if only in the ‘court of public opinion’, seems to me to be much better for Apple to compete on price and functionality, rather than dictat.

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        June 5, 2019
        • Gregg Thurman said:

          “True… But even if only in the ‘court of public opinion’, seems to me to be much better for Apple to compete on price and functionality, rather than dictat.”

          Apple does compete on price/functionality, and it appears that Apple’s target consumers are finding value/functionality in Apple’s products (though priced higher than the competition) they don’t find in competing products.

          Besides, price is not a differentiator except for non-differentiated products. My ex-wife (not the wealthiest person by any means) uses a Windows desktop and a BYOC MacBook Air at work and an iPhone/iPad at home. Retiring at the end of this month she is looking at new Macs to replace her MacBook Air (7 years old). She is gravitating toward the iPad Pro 11″.

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          June 5, 2019
  2. Gregg Thurman said:

    “Wait a minute… Does that mean Walmart can insist on a 30% cut from every bottle of Bayer’s sold from its shelves?”

    PED, I rejoined because it’s so important for you to understand how retail works.

    Retailers are shelf space limited. They know exactly how much ($$$) each linear foot of shelf space should generate. One of the most important metrics in retail is revenue per square foot. Apple generates more revenue per square foot than any other retailer in the world. Ergo a position in an Apple Store, or Apple App Store, is very valuable, much more so than in any other retail outlet.

    Wal-Mart and all of the other big box retailers (most small ones as well) take a very, very small cut from the retail price of the item sold. To insure retailer profitability the manufacturer/distributor guarantees the retailer X revenue per linear shelf space dedicated to that manufacturer’s products. Could the combination of the retailers nominal participation in the actual sale, plus the shelf space guarantee equal 30%? Depends on the volume (turnover) of the product, but, yes, it could. The deal is that a lot of manufacturers (most?) can’t afford to compete with the national brands for big box shelf space. Does that make Wal-Mart a monopoly? Absolutely not.

    Apple’s 30% cut is justified by the demand by manufacturers and developers to get products into Apple Stores and Apps into Apple’s App Stores. That some complain about the cut is a reflection of how little CONSUMER demand there is for their respective products, not what Apple is charging.

    That 30% gets the developer access to a unified/central distribution point to the wealthiest mobile consumer demographic that, before Apple’s iPhone App Store, did not exist, forcing developers to create their own online distribution capabilities. Those efforts were incredibly fragmented and difficult to find, with varying degrees of ease of use and version control.

    Nokia was, at one time, the world’s #1 handset/smartphone manufacturer, yet apps for its products were scattered all over the internet, difficult to find and even if you found something you wanted it may not run on the version of Symbian (Nokia produced several for different models and/or markets) your handset utilized.

    Apple eliminated all those barriers enabling developers to successfully market their respective creations. Additionally, the Apple online Stores are curated to insure purchases are safe to install (privacy/tracking/malware) on your Apple device, a consumer protection that was non-existent before Apple’s App Stores. Apple, as a single handset manufacturer, pays out orders of magnitude more to developers each year than the entire handset app development industry generated in its lifetime before the iPhone.

    These suits, while legally (SCOTUS decision) allowed to proceed, are going to go nowhere.

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    June 5, 2019
    • Gary Morton said:

      Agreed, but the Plaintiff’s lawyers will be chalking up fees all the way to the supreme court,. Some lower courts/juries are also likely to go against Apple just because that is what typically happens. The plaintiffs will feel good when they win in lower court, temporarily justifying the fees they are paying. The attorneys will win big on both sides.

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      June 5, 2019
      • Gregg Thurman said:

        Perhaps. I think you do enough as it is. ; )

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        June 5, 2019
  3. Kirk Burgess said:

    Walmart is welcome to take a 30% margin on every product it sells if it chooses.

    If consumers and suppliers don’t like that, they are most welcome to stop their Walmart relationship and go somewhere else to buy/sell their products, just like consumers and developers are most welcome to leave the iPhone ecosystem and go somewhere else to buy/sell smartphone apps & services (eg any android phone).

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    June 5, 2019

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