No, Apple is not a railroad

From friend-of-the-blog Tom Farris:

I’m not 100% certain why, but that strikes me as the wrong analogy.

Regulating the railroads did not happen right away, much like the mobile phone market. However, regulation came into play specifically because it became in the “national interest” for the government to force it to assure the expansion that was deemed essential to the nation as a whole, in terms of tying the country together, ease and cost of expansion of population and goods and services. Not letting the railroad barons decide to go where it was most profitable for them alone.

The railroad comparison would be a good analogy for the phone companies as there is an overarching “national interest” to be filled: Telecommunications, in all its forms that they provide.

But a cell phone company? Even a BIG one? No.

Having a game or product available to millions, or even 10’s or 100’s of millions of users is not of “national interest.” Especially when those same products are available on other phones, Samsung, Motorola, Xiaomai, etc. ad nauseum. And they are a bigger market in terms of actual number of phones sold and in the wild.

When you buy a Ford Fiesta, you do not get the size, comfort, nor luxury of the Lincoln Navigator, or Cadillac Escalade. But that is your choice. If you believe that the size, weight, and added safety features are not worth it in real terms or even in terms of trying to impress your peers or neighbors, then you don’t buy it. And no amount of howling about fairness or gross margins is going to change that. And to cap it off, while you can buy a used Chevy at the Ford dealership and you can Hot Rod (Jailbreak?) it, and you can by any new car and Hot Rod (definitely Jailbreak!) it (and void your warranty in the process, just like an iPhone), you certainly cannot go to the Ford dealership and order a new Chevy of any configuration. Or complain about warranty voiding for hot rodding your Engine Management software when the car breaks.

American capitalism cannot be torn like that… No Target products in Walmart, no Walmart products for sale in Target. Vons in Ralph’s, no. New Rolls-Royces on the VW lot, Nein! The list is literally endless, No El Pollo Loco at KFC, or at Popeye’s, or at Church’s. I know I’m belaboring the point, and that is the point.

My take: If occasionally the comment stream doesn’t give you enough space to make your point, feel free to email it to me at ped@ped30.com. No promises.

18 Comments

  1. John Butt said:
    This is a very worthwhile post thanks ped.

    There are plenty other subscribers who could write posts here worth reading.

    5
    May 29, 2021
  2. Fred Stein said:
    Thanks. Love it. Good time to point out what Epic wants the court to do:

    Force Apple to jailbreak iOS/App Store to help help Epic take a piece of Epic’s competitor’s in-app game purchases, mainly from children who are wasting their parents money.

    Verge, NYT, etc. are on a “mission from god” to help Epic. (blues brothers)

    2
    May 29, 2021
  3. David Emery said:
    I think we continue to have problems separating Epic’s lawsuit from the more general questions.

    The railroad analogy, “a ‘common carrier,'” has some real strength. The kinds of regulation imposed on the railroads in the late 19th century can certainly be used as a model for regulating parts of the Internet. One thing the railroad industry (not just Pennsylvania or Southern Pacific, but also Railroad Express Agency, Union Tank Line, etc) has in common with the Internet is that by the 1870s, most railroads were interconnected. Competition was fierce, and lots of back room deals were done.

    2
    May 29, 2021
    • David Emery said:
      Railroad regulation included monitoring and exposing shipping rates (prohibiting secret rebates) and for safety appliances on rail cars and work rules for railroad workers. By the end of the 19th century, I think the number was “1 in 6” worked for the railroads in some fashion. The Internet industries (ISPs, service companies, device makers, software vendors) hasn’t achieved that level of employment penetration, but arguably has reached that level of penetration into individual lives and commerce.

      0
      May 29, 2021
    • David Emery said:
      So if regulation is inevitable (which I believe it is, for better or worse), then understanding the rationale and impact of regulations on the dominant industry of the late 19th century should be helpful.

      Apple is not a railroad, but at times it sure feels like the kind of coast-to-coast railroad empire several 19th century capitalists/robber barons (pick your term 🙂 ) were trying to achieve.

      0
      May 29, 2021
    • Fred Stein said:
      I concur the common carrier, or essential services, topic deserves our attention, and that of legislators world wide. And yes, the App Store is a gateway or some may say, chokepoint.

      Since iOS and all the alternatives provide web access free and open, and since 85% of Apps are free, but curated for safety, the common carrier topic has to get down into the detail. One specific detail – essential services have to be essential.

      6
      May 29, 2021
      • David Emery said:
        From an informal perspective it’s getting increasingly hard to argue that a cell phone is not an ‘essential service,’ legally “a type of anti-competitive behavior in which a firm with market power uses a “bottleneck” in a market to deny competitors entry into the market.”

        But as a reminder, the 4 legal tests are
        1. control of the essential facility by a monopolist
        2. a competitor’s inability to practically or reasonably duplicate the essential facility
        3. the denial of the use of the facility to a competitor; and
        4. the feasibility of providing the facility to competitors

        Of course, Congress can pass different laws, these are the tests under current law and precedents/judicial rulings.

        3
        May 29, 2021
        • THOMAS E FARRIS JR said:
          I don’t disagree with your focus on the cell phone as an “essential service”, I would not go so far as to say that all of the variety of features that the cell phone provides, such as a camera (an excellent one at that in many instances) or word processors, spreadsheets, photo editing, to name a few,, and most certainly games are not ‘essential services’ (no matter how much parents use them as baby-sitters) that would or should be defined and ‘protected’ under that regulated umbrella. Surely the Federal government didn’t require railroads to provide dining cars, just because the railroad carried people.

          0
          May 30, 2021
      • THOMAS E FARRIS JR said:
        @Fred Stein I’m trying to think of an argument for defining any cell phone game as ‘essential’ or even the ability to play one being an ‘essential service’…Anybody??

        0
        May 30, 2021
        • Kirk DeBernardi said:
          @ Thomas E Farris Jr —

          Simple.

          Games aren’t essential. They’re unfortunately being misconstrued as such. They are extremely popular — the world over, I might add.

          Most apps AREN’T essential. They’re mostly conveniences — also popular the world over — that carry enough sway in our personal lives that WE consider them “essential”.

          Apply a twist to that popular ad phrase — “What’s on your smartphone?” and you’ll quickly discover what I mean.

          The communication function can be construed as essential if deemed such by the powers that be. After all, it is a phone.

          If you use it for that — 😉

          1
          May 30, 2021
  4. Michael Goldfeder said:
    A “Hobo” wants to take over the RR and put all of the customers at risk for viruses and malware. The customers don’t want this at all. In fact, they’re electing to have their privacy preserved in the recent “opt out of tracking” option provided by Apple’s new iOS software.

    As I’ve said from the outset, this was a simple breach of contract case by Epic who as a PR stunt filed a lawsuit claiming antitrust issues. Antitrust actions are filed by both the US Attorney, and in the current avalanche of legal actions against Amazon, numerous State’s Attorney General’s.

    I look forward to reading the Judge’s decision sometime this summer.

    4
    May 29, 2021
    • Jonny T said:
      Top post. Can’t get clearer. Thanks.

      0
      May 30, 2021
  5. No matter how they regulated the railroads, rail car manufacturers must still adhere to requirements of gauge and safety (braking, coupling, tank wall, suspension, etc.) to roll their stock. No sneaking non-compliant rolling stock out of the yard onto the main line!

    3
    May 30, 2021

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