Saturday, November 1st 2014
 

Apple: Don’t Hate Us Because We’re Popular & Our Customers Love Us…We Earn It

Apple is everywhere!  The company seems to have endless launches, updates, and changes.  The following are just a few of the most recent in Apple activity:

  • Apple launched the long awaited iOS 4 for iPhone on June 21, 2010.
  • Apple will release the iPhone 4 on June 24, 2010.
  • Apple will introduce the iAd System on July 1, 2010.

As Apple enjoys continued growth and popularity, it is confronted with the attention of regulators fueled by competitors’ complaints.  The Federal Trade Commission (FTC) launched an investigation into Apple’s position in the mobile software market and the potential for illegal harm to its competitors.

The investigation is a result of complaints from Adobe over Apple’s refusal to allow Flash on its iPhone and iPad.  Developers are also voicing their concerns over Apple’s amended development agreement including in-app advertising rules.  Apple CEO Steve Jobs banned “third party analytics software” from iAd, the software that will deliver ads inside iPhone and iPad’s apps.

Perspectives:

  1. Monopoly Perspective: belief that Apple has created a near monopoly in the mobile software/advertising market with its in-app advertising restrictions.
  2. Legal Perspective: look to the legality of Apple’s activities.  It is not illegal to create a monopoly if it is based solely on the superiority of a product.
  3. Increased Federal Involvement: the FTC investigation of Apple is just one in what is becoming a long list of Federal oversight activities in the fast growing market of online advertising.

A monopoly, as defined by the FTC on its website at www.ftc.gov, exists when one company controls a product or service in a market.  If it’s because they offer consumers a better product at a better price, that’s not against the law.  But a company that creates or maintains a monopoly by unreasonably excluding other companies, or by impairing other companies’ ability to compete against them, raises antitrust concerns.  In the case of Apple it seems to be a better product that consumers are willing to pay a premium in order to obtain.

The Apple investigation comes not long after the announcement that FTC is closing its investigation of the Google AdMob Deal.  The end result was FTC approval of Google’s acquisition of AdMob.  If the FTC were to allow the Google-AdMob deal and then oppose the Apple-iAd developer agreement some believe it would be a serious case of inconsistency.

As seen in the diagram to the left there is quite a bit of healthy competition in the mobile advertising market.  The size of Apple’s market share doesn’t dominate the mobile advertising market thus Apple is not a dominant power in the market.

Under U.S. Law it is legal to create a monopoly if your dominance is based solely on the superiority of your product.  Steve Jobs and Apple are successful because they produce a great product and sell it at a premium to both advertisers and consumers.  These practices are completely legal and do not point to any violation of the FTC Antitrust Laws.

Refer to Competition Counts a comprehensive resource detailing the specifics of antitrust laws and the implementation of such laws.  The information is provided through the FTC website www.ftc.gov.

To dive deeper into the Adobe versus Apple ongoing disagreement access this stellar infograph.

Following the very recent release of iOS 4 there have been inquires about how iAd will impact consumers when it goes live July 1, 2010.  Apple provides instructions accessible through their website so consumers can opt out of interest-based ads from iAd network.  Refer to the following link to access these instructions opt out option.

Posted by Jenn S. on June 29, 2010 at 11:01am.

One Response to “Apple: Don’t Hate Us Because We’re Popular & Our Customers Love Us…We Earn It”

  1. avatar Gwen Williams says:

    Great article, succint and on point! Thanks Jenn!

Leave a Reply

 
 

Advertisement

Social Media Tools

 
 
 
 
 

Advertisement