Roger McNamee to Apple: Take an antitrust chill pill

An Open Letter to Tim Cook on Why Apple Should Compromise With Antitrust Regulators” posted in Time Magazine:

Apple is no longer the plucky upstart it was when Steve Jobs returned two decades ago. The company has a market value bigger than the GDP of all but eight countries in the world. In the trailing four quarters, your firm enjoyed a tax rate of about 14%, which has attracted the attention of Senator Warren, among others, who believe it is too low. Apple has huge economic power, which it uses for competitive advantage. Some of the victims of that economic power are fighting back, not unreasonably, and Apple’s brand with policy makers has taken a beating. The company’s reaction? One of surprise and resentment, which is not working. The time has come to change Apple’s approach.

Every major tech company deploys AI and surveillance in ways that are inscrutable and often harmful. Tech giants are so big that their decisions transform societies, too often for the worse. Apple is nowhere near the worst offender, but because it accounts for nearly half of the North American smartphone market, the scale of its issues is too big to ignore. Governments around the world feel political pressure to intervene to address Apple’s anticompetitive behavior.

Regulators in the U.S. and Europe are adapting antitrust laws created for an industrial economy. It is an imperfect situation, a blunt instrument where surgical precision would be better, but the alternative is to cede even more power to unelected monopolists. The big targets are Amazon, Google and Facebook, but regulating those companies will be complex and time consuming, as some of the worst harms are not covered by current statutes.

Regulators may seek easier targets to get an early win and Apple is positioned to be that target. Its anticompetitive behavior has drawn public attention out of proportion with the damage it causes.

From a regulatory perspective, fixing Apple is relatively simple. Doing so will strengthen regulators’ hand for the bigger fight against internet platforms by sending the message that collateral damage is an acceptable cost in pursuit of reform…

At this point, antitrust intervention in Europe, the U.S., or both is almost certain. By refusing to engage with the legitimate concerns of policymakers, Apple is risking its core security and privacy brand to protect business practices that are not essential to its future…

Please stop viewing antitrust as a penalty for success. Antitrust intervention is the prize for winning in business by an overwhelming margin. It only happens when the status quo has become politically unsustainable. Think of it as the gold medal, the signal to begin a new game. Congratulations, Apple won!

My take: I suspect Cook’s long-term plan is not that different from McNamee’s. No reason, however, for Apple to play its cards before it has to.

9 Comments

  1. Fred Stein said:
    Yet another….

    person who thinks they know better than Apple..

    rehash of false* left-wing tropes. (And I’m a liberal)

    4
    September 10, 2021
  2. David Emery said:
    With respect to so many of these proposals, the right thing to ask is “Cui Bono?”

    2
    September 10, 2021
  3. Jerry Doyle said:
    “…. have tarnished Apple’s reputation.”

    From my perch Mr. Roger McNamee, Apple’s brand reputation never has been regarded as highly or more favorably then it is viewed today. I suspect many on this blog would agree. Look no farther than Apple’s CEO. The public’s view and trust surrounding Tim Cook is impeccable in comparison with their view surrounding Congress and this administration’s over zealous and ambitious regulators.

    “…. There is one more thing Apple can offer to regulators: public support for the tech reform movement.”

    Say what? Public support for the tech reform movement? Where? I am the public consumer and I have heard no call of public support for tech reform. The cry for tech reform comes only from media talking heads, politicians seeking media broadcast time, political appointees with a self promoting agenda and Developers wanting a “free ride.” There is no call among “consumers” demanding tech reform. Nada!

    “…. In addition, Apple is ideally positioned to help regulators take on their most important targets: Amazon, Google, and Facebook. By supporting regulators, Apple would likely gain goodwill that would pay dividends for years to come.”

    Candidly, Roger McNamee’s open letter comes across to me as recognizable “weakness” by the current administration’s regulators using Executive Branch authority instead of Legislative Branch authority to initiate tech reform. If the politicos can persuade Apple to engage in the administration’s Executive Branch initiative, then the politicos believe they can pull off their reform initiative by circumventing the arduous and laborious (but proper) legislative path. McNamee even admits as much when he writes: “…. In addition, Apple is ideally positioned to HELP (emphasis added) regulators take on their most important targets: Amazon, Google, and Facebook. By supporting regulators, Apple would likely gain goodwill that would pay dividends for years to come.”

    Now I just need to figure out the purpose of Roger McNamee’s ostensible benevolent overtire to Apple.

    4
    September 10, 2021
    • Alan Birnbaum said:
      * overture ( not overtire)

      0
      September 10, 2021
    • Fred Stein said:
      Excellent points, Jerry, especially “tarnished reputation”.

      Forbes publishes a brand value report every year. Last year top-ranked Apple’s brand value increased by 17%. McNamee just slings mud (or some other substance of similar color and consistency) with no regard to facts.

      The only thing tarnished is McNamee himself and his platform Forbes.

      0
      September 10, 2021
  4. This notion that only rich people benefit from stock ownership is bull. American workers have 401k plans. Most appear to be invested in mutual funds or market index funds. Any mutual fund manager that hasn’t added Apple shares to the holdings missed a boat. Index funds also benefit immensely from Apple’s rise.
    Little people everywhere (Asia, EU & Robinhood et al.) are now directly investing in shares, learning about capital gains. It’s plain wrong to say only the uber-wealthy are benefitting from share buybacks or the overall rise of tech shares.

    3
    September 10, 2021
    • Bob Goldstein said:
      I totally agree. I was unionized working class, I never made much money. I did what the government said to do which was to set up a retirement plan. I set up an IRA and as soon as 401K plans became available I set that up as well. Investing is for everyone, not just the uber-wealthy. What’s the point of investing if the gov’t wants to tax capital gains 50%?
      I have this argument all the time with a friend. He does not get that his wife’s pension is invested in the stock market.

      0
      September 10, 2021

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