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Thursday, November 08, 2007

Monopolized, and loving it! 

Per this response to something I didn't read (which I learned about at Daring Fireball, I thought I'd comment. Because I am smart and all those full-time pundits are not! Arrogance is fun!

At the risk of getting pedantic, the iTunes Music Store (whoops, now it's just the iTunes Store) has de facto "exclusive control" of the downloadable music market. Given their market share, I don't think you can deny that.

Here's a primer on US antitrust law.

Of course, what causes government intervention in these cases is not monopoly control of a market, but rather abuse of monopoly powers to consumer disadvantage.

Apple's profits largely exist on the iPod side of the business, and Apple's monopoly power largely exists on the iTunes Store part of the business, inasmuch as using iTunes-purchased music on non-iPods is tricky (but far from impossible).

Of course, the fact that Apple has been working hard with its suppliers to REDUCE the restrictions on using Music Store content (ie DRM-free iTunes+ songs) and the fact that you can use many, many other sources (CD, any other DRM-free music source) to get music onto the iPod both grossly undercut cries of abuse of monopoly power.

The hilarious irony with Apple's situation is that they didn't get where they are because they used the iPod to leverage the market position of the Store (you do remember that the iPod predates the iTMS, right?), but rather because (and I'm pretty happy with this assertion) both the iPod and the iTunes Store were best-of-class products in their respective categories. Were, and still are.

Besides, if legal relief is sought on this matter, the first thing Apple will suggest is that its store be required to turn off DRM on all songs. And about the only thing anyone could want them to do on the iPod side is to open up the sync interface. Of course, the former is forced upon them by their record label contracts, and the latter, well they just do that because they want to. It's the only place, arguably, where Apple would be vulnerable to an accusation of abuse of monopoly market share.

Hands up everyone who thinks these changes would cause a noticeable drop in either iTunes Store or iPod sales. Zero? All 20 of my readers are very smart!

Comments:
I was hoping you'd point to my 3rd year paper on the DOJ-MS antitrust case instead. I got a 92 on that one and ended up with the highest overall grade in that class.
 
Oh I totally would have, but I couldn't find it.
 
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