Apple and Google as railroad monopolies

From "App-Store Bill Targeting Apple, Google Is Approved by Senate Panel" in Friday's Wall Street Journal:

Sen. Richard Blumenthal (D., Conn.) likened Apple and Google to railroad monopolies who own the means for other companies to get their products to market.

“Consumers, if you are watching, you pay more because of the monopolist rent fee that is charged to you as a result of their monopolistic power,” he said.

Sen. John Cornyn (R., Tex.), who voted “no” Thursday, suggested the fees were fair compensation for the platform the companies provide.

“I hope we’re not, by focusing on these specific cases, suggesting that somehow there is something wrong with creating a new product that has value to consumers and making a profit and creating jobs,” Mr. Cornyn said.

My take: There's the issue in a nutshell.

17 Comments

  1. “ A monopoly occurs when a firm lacks any viable competition and is the sole producer of the industry’s product.” At most the App Store is a duopoly, alongside Google except the game developers have many other platforms to choose from and other apps can reach customers through a web site.
    Why aren’t the Senators focused on the OPEC cartel fixing the price of oil, now above $90/barrel, and strangling the world economy while a huge surplus exists in Saudi sands?

    6
    February 4, 2022
    • Romeo A Esparrago Jr said:
      Yes. In today’s world, we have many modes of delivery transport (air, ground, ocean, rail) and carriers (UPS, FedEx, ATS/Amazon Transportation Svcs, Deutschposte, China Post, USPS, et al). If we’re to use the analogy – MS platforms for PC & XBox, Sony for PS & Switch, Steam, Roblox, and Qualcomm testing with Epic. Doesn’t even sound like a duopoly, let alone a monopoly.

      3
      February 4, 2022
    • Rodney Avilla said:
      “Why aren’t the Senators focused on the OPEC cartel fixing the price of oil”

      Because the OPEC cartel is not under US jurisdiction, and they don’t appear to want to voluntarily follow our laws?

      2
      February 4, 2022
      • True, Rodney.
        However the Saudi’s own Motiva, the operator of the Port Arthur refinery in Louisiana, the largest refinery in North America. At the same time they engage in price-fixing along with all OPEC+ members, by creating artificial supply constraints. WTO and GATT seem toothless when it comes to natural resources trade. But rich citizens of Western nations can afford high gas prices for their SUVs and we do love those billion dollar arms sales so like Roseanne Roseannadanna often said, “Never mind!”

        0
        February 4, 2022
  2. Daniel Epstein said:
    Senator Blumenthal doesn’t seem to have an example that shows me how much more I am paying while giving me the same safety and features I expect to receive. I don’t think there are any real examples. There are examples where the businesses who sell to me would make more money but not much savings to me without more risk. I am sure I could also be paying less for many products I buy if everyone who sold products had regulated prices. I could be saving money by buying cheaper products. Can he guarantee they will perform the way I want them to? Will he pay for the time lost by me if they don’t? No one is forcing me to buy into the Apple ecosystem. I am forcing those businesses to deal with me in the Apple ecosystem that way on purpose.

    5
    February 4, 2022
  3. Fred Stein said:
    Monopoly – not at all.
    Duopoly? The definition say’s “collision”. See wikipedia.

    Did the railroads ever give 85% of their customers a free ride? Never? Apple let’s 85% of the Apps ride for free, including Apps that make tons of money, which happens to include Meta.

    Plus web-Apps which do not leverage the 100’s of thousands of APIs designed for Apps are completely free from fees and curation.

    2
    February 4, 2022
  4. Fred Stein said:
    Railroads? Blumenthal read your history. The first adjudication of the ‘attractive nuisance’ was against a railroad in mid 19th century England.

    Lesson: The railroad was held liable for harm caused by not taking safety measures for a cart on its property. If Apple and Google are railroads, they are obligated to take safety measures, which have costs.

    2
    February 4, 2022
  5. Lalit Jagtap said:
    Our system is rigged, and these lawmakers have special access to trade stocks. All the US law makers and immediate family members should be asked to follow compliance rules with regard to investing in the public or private companies. These rules should be similar to compliance requirements for an employee at the Wall Street bank. Last 3 years most US lawmakers and family members have gained from the public markets. Such a compliance rules will keep US lawmakers awake, and keep them motivated to learn about technology driven innovative companies. These lawmakers were sleeping after 2008 crisis, and now during the pandemic “App Store” has become more important issue for them. These lawmakers did not focus on investing in the FTC or FCC or for that matter having a new talent at IRS. These lawmakers wasted our blood and wealth in trying to bring democracy in the muslim countries. Now we may not be able to protect Taiwan from China.

    4
    February 4, 2022
  6. Jeff Galanti said:
    I wonder how many of these Senators feel the same about the government’s attempts to become a monopoly in the student loan business. It is fair to say that they don’t see the comparison or the conflict.

    I just have a hard time believing that there is a groundswell of aggrieved app consumers out there feeling like they are being ripped off by these stores. The more likely driver of this is uninformed elected officials lumping real frustration with privacy issues under the umbrella of “Big Tech Regulation.” They intend to get some scalps but aren’t exactly sure why.

    2
    February 4, 2022
  7. Michael Goldfeder said:
    Using this idiotic standard then tell me why “Costco and Sam’s Club” stores aren’t a duopoly? How about “Home Depot and Lowes?” Such groundless drivel.

    1
    February 4, 2022
  8. Ken Cheng said:
    “Consumers, if you are watching, you pay more because of the monopolist rent fee that is charged to you as a result of their monopolistic power,” he said.

    How has Blumenthal determined what a “monopolist rent fee” is? Before Apple, app store fees charged by wireless carriers for Symbian apps were far higher.

    If Blumenthal wants to look at “railroad monopolies who own the means for other companies to get their products to market.”, why isn’t he looking at the elephant in the room, Amazon?

    4
    February 4, 2022
  9. Rodney Avilla said:
    I wish every senator involved in these proceedings is required to read PED3.0. I sure hope some of the questions raised here are being discussed there.

    1
    February 4, 2022

Leave a Reply