An antitrust lawsuit against Apple and growing calls to break up Facebook highlight renewed interest in using antitrust law to address a host of problems with the largest technology companies.
Yes, but: The fate of those cases will hinge in large part on the legal intricacy of how regulators and courts define each tech company's market, Axios' Scott Rosenberg reports.
Driving the news: The U.S. Supreme Court ruled Monday that a class action suit by users charging Apple's App Store with monopolistic behavior could move forward.
The big picture: Here's why "market definitions" are so central to antitrust fights: Say you run the only restaurant in town — do you have a monopoly?
- If the market is defined as "restaurants" or "dining out," then you do.
- If the market is defined as "meals" or "food," well, people can buy groceries and cook, right?
- One way, you're a monopolist — the other, you aren't.
In the App Store suit, users charge that Apple, by forcing developers to sell iPhone apps only through Apple's storefront and taking a cut of those sales, drives up prices.
- Apple has argued that, among other things, users can access software and services via the web browsers on their phones, and that the majority of apps accessed from the App Store are free downloads that don't earn it a penny.
If you define the market as "iPhone apps," Apple looks a whole lot like a monopolist — it maintains complete control over the space.
- You can't put a non-App Store app on an iPhone without "jail-breaking" it, tampering with the operating system in a way that violates Apple's terms and voids the warranty.
If you define the market as, say, "smartphone apps," you get a different outcome.
- That's because users are free to buy Android phones and access a very different universe of apps. Users have choice — presto, no monopoly.
The same principles apply in the debate over breaking up Facebook or Google.
- If you place Facebook in the "social networking" category, as co-founder Chris Hughes does in his call to break up the company, Facebook is easy to cast as a monopoly. But if it's seen as "messaging," then it has competition via Apple, Snapchat and cellphone providers.
- Similarly, it's easy to argue that Google has a monopoly in the search market, and many countries do. But if you define the market instead as "online information," the case is a lot murkier.
Our thought bubble: In tech, market definitions are unusually fluid because hardware evolves quickly and software is infinitely malleable.
- Lawsuits and antitrust cases move slowly, and by the time they reach a decision, the markets often have already mutated.
- But the tech giants' power has grown so vast that many critics see antitrust remedies as the only way to rebalance the industry's game.