iSuit

I always thought it was odd that Microsoft got targeted for an antitrust suit while Apple, which does a lot more in the way of "bundling" (all Macs, after all, run MacOS) than MS. But that doesn't mean that this new suit filed against Apple for selling tracks on iTunes that only play on the iPod, makes much more sense. The claim (emphasis below mine) is that:

Apple has unlawfully bundled, tied, and/or leveraged its monopoly in the market for the sale of legal online digital music recordings to thwart competition in the separate market for portable hard drive digital music players, and vice-versa.

Apple has a monopoly in portable digital music players? That'll be news to all the folks I know who own a Rio or one of these. And iTunes is a monopoly too? Funny, since the article goes on to mention:

Apple's online music store uses a different format for songs than Napster, Musicmatch, RealPlayer and others.

The customer filing the suit seems to have an idiosyncratic definition of "monopoly." Maybe he's thinking different.

UPDATE: D'oh, right. And as commenter AJS notes, you can always burn the tracks you bought off iTunes to a CD, then rip 'em to whatever format you like to put on your non-iPod portable. Which is admittedly a pain in the ass, but it means it's not even true that you need to buy an iPod to make your iTunes tracks portable.

Comments

[joe]

"I always thought it was odd that Microsoft got targeted for an antitrust suit while Apple, which does a lot more in the way of "bundling" (all Macs, after all, run MacOS) than MS."

You can't be a trust unless you control all, or nearly all, of a market. Actions that are legal when carried out by small fries become illegal when done by the big fish.

Whether you agree with this doctrine or not, it doesn't do much for your credibility to pretend you don't understand it.

[Sulla]

I recently bought a DVD player from Sony and the remote doesn't work on my Zenith VCR. If that's not bad enough my VCR remote can't work on my Panasonic TV and my TV remote isn't compatible with either of the other two machines. If I could just figure out who to sue for all this bundling I'd make a mint. Don't even get me started on my garage door.

[Josh]

The customer filing the suit seems to have an idiosyncratic definition of "monopoly." Maybe he's thinking different.

I've noticed this a lot -- there's a tendency to define a market so narrowly that anyone can be called a monopoly if you don't like their pricing structure or product. I can't wait to be told that Anheuser-Busch has a monopoly on Bud Lite.

[wellfellow]

"The customer filing the suit seems to have an idiosyncratic definition of "monopoly." Maybe he's thinking different."

I've encountered this a lot lately as well. Maybe it's something going around.

[Mmmmm, Beer!]

Josh said:
"I can't wait to be told that Anheuser-Busch has a monopoly on Bud Lite."

For which we are grateful, lest the swill leak out and pollute other breweries.

[Sandy]

Bundling isn't the issue--it's a monopoly using its bundling to drive out competition who would otherwise do just fine that's illegal.

If Microsoft pursued Apple's strategy of only only licensing Windows to themselves for their own manufacturing, and your only chance for a PC were to buy a Microsoft PC, then their market share would resemble Apple's (or possibly less) and their monopoly would be over -- and they could bundle as much as they want.

Of course, since the penalties for it seem to be nonexistent, I don't know what you are whinging about.

[Sandy]

That should read "your only chance to buy a Windows PC would be to buy a Microsoft PC".

[Skip Oliva]

"I've noticed this a lot -- there's a tendency to define a market so narrowly that anyone can be called a monopoly if you don't like their pricing structure or product. I can't wait to be told that Anheuser-Busch has a monopoly on Bud Lite."

Coincidentally, I've spent the morning drafting an angry comment to the DOJ over its attempt to divide the market for sardines into three smaller markets for antitrust purposes.

[Gimme Back My Dog]

Has anyone else noticed themselves agreeing with joe more and more lately? I have and am wondering whether he is changing or if it is me?

But on this latest post, I dont think Julian is feigning ignorance of the law, I think he is referring to the paradox that companies that behave like they are monopolies see their market share dwindle to the point where their behavior is legal, whereas, companies that continuously seek to improve value to the customer run the risk of raising their market share to the point where they are targets of anti-trust action.

[AJS]

This guy is a bonehead. You can download tracks from iTunes, burn a CD (without DRM) and then re-import them in whatever format you like. I don't see how that constitutes any form of monopoly. Even better, you can use another competing service if you want, that supports WMA, Real, MP3 or other codecs. The market appears to be working pretty well in this case. Apple have been able to capture a large chunk of the market on the back of having the best (IMHO) music player on the market as well as a pretty damn good end user experience with the music store. They didn't invent online music, they just made it better.

[David McElroy]

The problem that some people have when they see Apple as a monopolist because only Apple determines what the Mac OS runs on is that they are seeing the industry through the lens of the Microsoft model. (I'll also point out that Mac hardware can run other operating systems, including Linux, BSD or any OS you'd like to write for it.) The MS model is one of supplying an OS to various hardware makers, but that isn't a reason to force Apple or other computer makers to use the same model. To Apple, the hardware and OS are an integrated whole which form a product. (I happen to like such an integrated approach, but you have the MS way if you'd like to buy ala carte.)

Software operates a lot of the things that we use today, but almost nobody sees the OS which runs a car's computer as being a different product from the hardware on which it runs. The fact that MS happened to pursue that model (quite successfully) doesn't mean that other companies have to split their own products in a similar fashion. Anyone who thinks that Apple is a monopolist in the computer field isn't thinking rationally. I would make the same argument about the music player market, too, since other choices are readily available. Of course, I'm opposed to antitrust law in general, but in this case I can't even see any violation of the law.

[Dynamist]

All Macs can run MacOS, sold as a bundle. MacOs isn't necessary to use an Apple computer, but an Apple computer is necessary to run MacOs.

For most I think the OS and the hardware are seen as an integrated package anyway, people buying the combination that runs the applications they hope to use. MS was under scrutiny for bundling and integrating one of those applications (MSIE) with Windows OS, which was then further bundled with various hardware by the hardware makers. It was thought that the application bundling was unfair, different from the OS/hardware bundling.

Remote controls are part of electronics hardware, not application software.

And...Bud Lite sucks.

[M1EK]

"Companies that continuously seek to improve value to the customer" does not describe Microsoft, or their behavior, back then they had OS competition from IBM, or browser competition from Netscape. It's a great failure of our media that anybody thinks they did - they did very little in the interest of consumers at the time; the security holes infesting IE for the last 5 years are largely an artifact of them having driven Netscape out of business and thus losing any incentive to work on their browser.

[Gimme Back My Dog]

M1EK,

I only said that they seek to improve value to the customer. I know enough people who work at MS to know that this is true. You can argue how successful they have been at providing this value, but the fact that they went from zero to owning the spreadsheet, word proc, and browser market speaks to their superior execution.

I was, at different times, a card carrying member of the Lotus 123, WordStar, and Netscape fan club, but switched from all of them because MS simply had a better product.

The security holes in IE are in other browsers as well, it is just that no one cares enough to look for them because what is the fun in infesting

[isildur]

""Companies that continuously seek to improve value to the customer" does not describe Microsoft, or their behavior, back then they had OS competition from IBM, or browser competition from Netscape."

This always pushes my buttons.

I was a loyal Netscape user, and sneered at IE as an inferior browser. Netscape was faster, had more features, and was a better user experience.

Then IE got its act together, and I switched to it. Not because I LUV MS, not because I was mind-controlled by Gates, not because it came with Windows. Because it was a better user experience.

Last month I finally broke down and installed Firefox. Now I have switched to it at home and at work, because it is a better user experience.

I'm deeply tired of the ZOMG MIND CONTROL theories about Microsoft's success in the browser market. They did not succeed because they sent out ninjas to kill Netscape users. They succeeded because they provided a better user experience. Netscape failed because it did not. Firefox is gaining market share because it does.

On the original topic: I am right now listening to my Creative Zen Xtra. I know that if I want to use iTunes I need an iPod. But I don't want to use iTunes, it has no music I can't get elsewhere, and so I don't need an iPod at all.

The real question to ask about a monopoly: is there a reasonable way for consumers to fulfill the same need the supposed monopoly satisfies elsewhere? For iTunes, the answer is an obvious 'yes'. For all the villification Microsoft receives, the answer for both browsers and operating systems is also 'yes'. There have always been comparably priced feature-rich alternatives to both IE and Windows, and there always will be.

I don't know why it's so hard for people to accept that Windows has the market share it does because it's... popular. I've enjoyed fooling around with MacOS, and I've enjoyed fooling around with RedHat, but in the end, the games I want to play are all on Windows.

[joe]

isuldur,

Why do you suppose all the games you want to play are on Windows?

[Gimme Back My Dog]

D-Mac,

Well, that is the whole problem with AT laws- It all depends on how you define the markets. But if the Justice Department can define computers running GUI OS on Intel uProcs as a market, then I can define computer HW and SW as separate markets.

If you can accept these as separate markets, then Apple was behaving as a monopolist in the late 80's. MacOS was clearly superior to MS-DOS and they tried to use that advantage to force people into using their inferior HW.

[clarityiniowa]

Some of you may remember that Apple at one time tried licensing out its OS to other hardware purveyors, and, for various reasons, pulled back. The MS model simply doesn't work if your aim is to create an optimum user experience. MS has pretty successfully commodified personal computing, and more power to them, but some of us simply prefer a more gourmet offering. In fact, Apple would have nothing to compare itself to if it were not for WinDoze, just as organic food producers would not be able to charge the premium prices they do if not for commercial farming.

[The White Anglo-Saxon Protesta]

I have a Rio and an IPod. I used the Rio exclusively for Audible content until Apple came out with the 5 gig IPod and contracted with Audible. There is no comparison, even between a third generation Rio and a first generation IPod. Apple simply has a better product, and, since Rios apparently still sell, how in the WORLD can anyone whine about monopoly?

[jason]

I don't think this issue can be separated from the fact that it is ultimately about access to music, which is, of course, copyrighted. Having a copyright is the same as having a monopoly.

So, I think the response should be, yes, this is a monopoly, but the monopoly has to do with what the record companies choose to do with the music and does not have to do with Apple. The record companies, the owners of the copyright, have choosen to give Apple to ability to sell the music in a format that works best on Apple products. Those are the soils of owning the copyright. Whether or not the iTunes files can be heard on other products is not really the point.

I think that is right, anyway.

[Gimme Back My Dog]

Clarity,

The problem that Apple had was that by the time they started toying with letting others build their boxes, MS had come out with Windows and Apple's OS advantage had largely disappeared. And I don't think they ever opened up their internal bus, so peripherals remained more expensive for Apple vs. PCs.

Had they made the same move in 1989....

[The White Anglo-Saxon Protesta]

jason -

I think you have something there, bearing in mind that the copyright is supposed to be a temporary economic advantage to the artist who creates a substantially original work in order to encourage such creation. I'm afraid copyright laws themselves have become more egregious than industrial monopolies ever were, leading to organizations such as RIAA indicting college students, for cryin' out loud, for ripping and sharing music.

As a sometime musician myself, I respect the artist's right to make a living, but it is interesting that geezers like Metallica, who have already made their pile, are in the forefront of copyright protectionsists while indie musicians and burgeoning artists see swapping music files over the internet as a great way to market.

In short, you are correct, music hardware/software is simply the conduit. What is coming through the pipeline is what it's all about.

[clarityiniowa]

GBMDog -

You're right about the market timing of that period, plus the fact that Umax and Power Computing, which licensed the MacOS, generally failed to live up to the standard of at least making their boxes appear innovative. Selling MacOS in a beige box pretty much ended with the second generation Power PC. Style, as well as improved substance, plus getting Jobs back, saved Apple's ass. Their market share still sucks, but what a pile of cash they're sitting on.

[jason]

I meant to say, "those are the spoils of owning the copyright," rather than "soils," but it seems appropriate either way.

Yeah, I'm not arguing that the copyrights are good or bad, just that it is the copyright that enables whatever so-called monopolist practices are going on here.

[David Innes]

I'm a moderate-to-conservative Democrat, not a Libertarian, so I may be wrong about this, but it seems reasonable to assume that in an ideal Libertarian system parties would be expected to be judged not by standards imposed by a central (government) body but by the standards they themselves accept, advocate, attempt to impose (contractually or otherwise,) or actually impose on others.

In the 1990s Apple, along with Sun, IBM, Netscape, Oracle, and others, argued semi-successfully (more so in public opinion, less so in court) that Microsoft had a monopoly in an very narrow portion of the software market (basically the market for non-Macintosh, non-Linux/Unix/BSD, non-server, non-mini/mainframe, non-industrial/switching/telecommunications/engineering/manufacturing/automotive/embedded operating system market.)

I think an excellent case can be made that Microsoft had no enforceable monopoly. (For instance what monopoly power then or now forces ordinary Chinese, Thai, and Singaporese to use pirated Windows when for the same price -- basically the cost of media duplication -- they could instead use Linux?) Unfortunately Apple didn't make that case, preferring instead the DoJ's extremely narrow look-at-it-sideways-and-squint-your-eyes definition. If they find themselves in a homologous situation with iTunes and iPods they may now regret the standard they advanced.

Too bad. Unless Libertarianism means only "law for thee but not for me" or maybe "he who has the gold makes the rules," Julian's correct to imply they should be held to the same standard, regardless of its admitted idiosyncracies.

David Innes

[Drawingblood.com]

Microsoft products kind of suck. This is an interesting problem for the libertarian, though, since clearly no organization or group could mobilize a superior PC OS without large scale development and funding. It's been Microsoft vs. Mac, with Linux if you like constantly reconfiguring Linux (most people don't). Good defenses of Microsoft have been offered, but they're pushing they're goddawful WMA copy-protected formats and apparently configuring Longhorn to be totally piracy-free, sheerly with the free-market zest of the massive weight of their market dominance (umm...is this a rumor? Hate to spread it if so? Anyone?). Anyway before windows encounters an error I should like to post this.

I hope and suspect Microsoft will shortly be raped by user-friendly alternatives.

[Nike Dunk Low]

thanks