The whole idea of attending a university is for students to be exposed to other aspects of the world beyond a specific major or degree. When I was in college I took an argumentation and debate class that altered how I view what I read.
My professor could present plausible arguments, pro and con for four or five minutes, on any subject from the debate handbook. It was a marvelous look into how one side or the other could be viewed from different perspective, but his example taught me we could easily take sides for or against any issue with too much ease. How about this one? Apple should be broken up.
Breaking up large and influential companies is a time honored tradition from America history. Some companies get too big and exercise a monopolistic restraint on the market. Phone companies have been busted up in decades past, only to rise from the ashes and become predatory again.
There have been calls for Apple to be broken up, or, at least, to divest itself of the iPhone. This week I read an interesting article about breaking up Amazon, Facebook, Google, and, yes, Apple. Why? Because they’re “contributing to the U.S. economy’s most persistent ailments.”
Uh. OK. Paula Dwyer explains:
Alphabet Inc.’s Google gets about 77 percent of U.S. search advertising revenue. Google and Facebook Inc. together control about 56 percent of the mobile ad market. Amazon takes about 70 percent of all e-book sales and 30 percent of all U.S. e-commerce. Taplin pegs Facebook’s share of mobile social media traffic, including the company’s WhatsApp, Messenger, and Instagram units, at 75 percent.
No mention of Apple. Yet.
Monopolies of the past often damaged competition by selling their goods at prices lower than the little mom and pop store down the street, and that was considered monopolistic and predatory behavior.
What about the titans of the tech industry today?
They don’t engage in the predatory behavior of yore, such as selling goods below the cost of production to steal market share and cripple competitors. After all, the services that Facebook and Google offer are free (if you don’t consider giving up your personal data and privacy rights to be a cost)
Hmmm. I see. If something is free that definitely creates a barrier to entry for competition. But still, Windows came free with every personal computer that wasn’t a Mac, and ended up with a monopoly and was convicted of monopolistic practices here and there, and Microsoft’s punishment was to get complacent and miss the mobile device revolution completely, so there’s that.
No mention of Apple. Yet.
However, academics have documented how these companies employ far fewer people than the largest companies of decades past while taking a disproportionate share of national profits. As they grow and occupy a bigger part of the economy, median wages stagnate and labor’s share of gross domestic product declines. Labor’s shrinking share of output is widely implicated in the broader economic growth slowdown.
So, being an efficient maker of anything makes it dangerous for the rest of the economy?
Uh. OK. What about Apple?
Market concentration has many parents. One of them is surely the so-called network effect, a key antitrust argument in the Microsoft case. That doctrine says the more people use a platform—say, the iPhone or Facebook—the more useful and dominant it becomes. The iPhone, for example, is popular in large part because of the voluminous offerings in Apple Inc.’s App Store, and the app store is popular because developers want to write programs for popular smartphones. Network effects can create what Warren Buffett calls “competitive moats.”
There we go. Apple is efficient at making profitable products, so should be broken up into a smaller entity because competition is good. If I remember correctly, the U.S. government fined Apple for presenting competition to Amazon’s ebook business.
Somehow that came out as “Apple bad, Amazon good.” I see a problem with that one. Who else has a lock on something valuable to the marketplace? Guess. Just guess.
Google collects web-surfing and online-purchasing data from more than a billion people. It uses that to send personalized ads, video recommendations, and search results. The monopoly control of consumer data by Facebook and Google on such a scale has raised antitrust questions in South Korea and Japan.
I’m in favor of Google being broken up (ad business vs. search engine). Amazon, too (data collection vs. online sales vs. cloud services). Even Facebook (ad sales vs. fake news).
The whole article lumps Apple with such offenders as Amazon, Facebook, and Google (even Microsoft got a hefty mention), but Apple is mentioned only three times, including once in the sub-heading below the title. Here’s one.
According to data compiled by Bloomberg, Alphabet, Amazon, Apple, Facebook, and Microsoft made 436 acquisitions worth $131 billion over the last decade. Antitrust cops made nary a peep.
OK, what did Apple spend on acquisitions over the past decade? There’s $3-billiion for Beats. And, a few hundred million here and there, but all added up comes nowhere close to the tens of billions each that Alphabet (Google), Amazon, Facebook, and Microsoft spent to protect their cash cows, create barriers to entry to said cows, and still the U.S. government thinks Apple colluded with publishers to harm consumers. Methinks Apple was lumped in there because Apple has an outsized influence on the technology market, is the most valuable tech company, and worthy of link bait. But Apple makes money the old fashioned way. It builds products that people buy.
Somebody is doing this wrong.