THE APPLE ANTI-TRUST SUIT, PART 1

Which is More Poisonous: Apple’s App Store’s Policies, or the Media’s Narrative?

An exploration of technology, publishing, and economics

This week, I did a deep dive on Medium’s algorithms and how it impacts your ability to make money as a writer on this platform.

As I continued to explore the top writers on Medium, I stumbled upon a popular article about Apple’s antitrust law suit published by OneZero.

Context is everything in a world where it’s impossible to tell the difference between data, reporting, fake news and secret agendas.

After reading the article, I have to ask the following questions:

Was the article popular because it is well written and presents a logical argument about the merits of the case?

Was the article popular because an expert in the field brought a unique perspective to a story filled with insider knowledge we common people would never know?

Or was the article popular because it appeared in a publication created and owned by Medium itself, which means they can pimp their writers on a 24/7 basis?

OneZero might be a wonderful collection of tech and futurist articles, but the description of the publication slapped me so hard upside the head, I decided to do another deep dive.

Here is the note in the “about” section of OneZero:

“This forward-looking, original tech and science brand by Medium will cover our accelerating march into the future, tell you what’s next, and provide you with a road map of what’s around the corner.

You’ll find context here you won’t see anywhere else about the powerful forces shaping our world.”

— OneZero’s mission statement

Wow, talk about exciting. OneZero sounds like a goddamn crystal ball*, the tech equivalent of that sports almanac Biff stole in Back to the Future, Part II.

OneZero sounds like a goddamn crystal ball*, the tech equivalent of that sports almanac Biff stole in Back to the Future, Part II.

But what is the context that we “won’t see anywhere else about the powerful forces shaping our world?”

What’s important to consider is the difference between a news source and an opinion piece. And it’s safe to say that predicting the future falls into the second category.

If OneZero positions itself as a news source, I’m going to doubt the accuracy of everything written, while it appears that thousands of other readers (based on their reaction to the article in question) regard it as an information resource.

The roster of writers run the gamut from journalist to experts in their field to bloggers. Assuming the real writers maintain their standard of journalism and the bloggers are easily identified as talking heads, what happens when experts write stories? Are they playing the role of journalist, expert, or opinion maker?

And what happens when experts write about areas outside their discipline? Are we going to discern that difference or swallow whatever story is being sold as the truth?

There’s no doubt that the article below was successful. Remember, how a Top 1% article requires 2,000 claps? (Per our data geek buddy who collected data on almost one million Medium articles.)

This tech bro got over 8,000 claps in 11 days, and it continues to grow in popularity. Here’s the article in question, written by a developer and tech writer with 38,000 followers.

While I’m not challenging the man’s ability as a developer or someone who is at the edge of the latest technology — you don’t get 38,000 followers without knowing your core subject — I can challenge him in the areas where I have a certain amount of expertise.***

Williams’ complains that Apple’s policies on the App Store hurt developers and consumers alike, and claims they are a monopoly that needs to be broken up.

Let’s find out if he is correct.

I’m going to approach this issue from a number of perspectives, so think of it as my version of Steve Martin’s unforgettable “20 something betters” from the movie Roxanne. Enjoy this clip before you join me on this deep dive.

#1: How does Apple function as a monopoly?

Here is business dictionary’s definition of monopoly:

Market situation where one producer (or a group of producers acting in concert) controls supply of a good or service, and where the entry of new producers is prevented or highly restricted. Monopolist firms (in their attempt to maximize profits) keep the price high and restrict the output, and show little or no responsiveness to the needs of their customers.

Let’s break down each part of this definition and see if it is true or false.

  1. One producer (or a group of producers acting in concert): In case you haven’t noticed it, the competition between Apple, Google, Samsung, LG, Microsoft is fierce. Android phones continuously innovate, publicize their features that are superior to Apple, and offer their products for less money. Apple has less than a 20% share of smartphone sales each year, and iOS has a 36% share of the market. If the big manufacturers were acting in collusion, you would see the same changes in tech prices that OPEC did to gas prices. Rating: FALSE.
  2. …where the entry of new producers is prevented or highly restricted: How are new producers being prevented from entering the smartphone market when Apple sells such a small overall percentage of smartphones? How are iOS users being forced to use iOS, when they can easily change smart phones and then switch over to Android, which has a 64% share of the market? Current number of apps available in the main app stores: iOS (2.1 M); Adroid (2.7 M); Windows (0.66 M); and Amazon (0.48 M). How are developers being prevented or restricted from entering the market, and why are no developers acting as plaintiffs in the law suit? Rating: FALSE.
  3. Monopolistic firms (in their attempt to maximize profits) keep the price high: While it’s true that Apple charges more for its devices and ecosystem than other companies, how exactly are they changing the prices for the entire smart phone industry? Charging high prices for water when you have the only oasis in the desert is a sign of monopoly. Charging high prices for your brand’s water in a supermarket is not. Regardless of whether your water is really better or not, consumers have a choice. Rating: FALSE
  4. …and restrict output: Digital products have an original development cost after which you can sell an infinite number at zero additional cost. Depending on the sweet spot, a seller might lower prices to sell the greatest number of units possible. This is also the basis for the freemium model for apps: get everyone to use the app, where revenues are generated by third party advertising, and then offer premium upgrades for additional revenue. If you want to screw consumers by restricting output, you close down power generating plants for bogus reasons, cause black outs and then manipulate the futures market to drive up electricity prices. This part of the monopoly definition as applied to Apple is so absurd it deserves three falses. FALSE. FALSE. FALSE.
  5. …and show little or no responsiveness to the needs of their customers: And this is proven by the facts: Apple sells all the data they collect from customers to third parties; allows third party developers to put buggy, or infected software in their ecosystem; unlocks their iPhones to allow the government to access users’ private information; and their fucking smart phones explode in people’s pants, a problem for which Apple refused to accept responsibility. And I forgot that Apple’s tech support is terrible, certainly not the best in the industry. Oh wait… all of that shit happens in the Android universe. Rating: FALSE

Oh wait… all of that shit happens in the Android universe.

To sum it all up: there are reasonably priced alternatives to Apple, they don’t restrict developers from entering the ecosystem, they don’t set prices for third party apps, they don’t restrict output, their products don’t cause fires, their tech support is rated #1 every year, and they make fixes when they do screw up. For some reason, enough people keep paying a premium for Apple’s products and services to make them the most profitable public company in the world. And it drives their competitors and critics insane.

For some reason, enough people keep paying a premium for Apple’s products and services to make them the most profitable public company in the world.

And it drives their competitors and critics insane.

#2: Past cases of a tech monopoly

When I look at technology and economics, I like to reduce all the theory and jargon to simple human situations and layman’s terms. Here are a couple examples:

  1. Buy the patent of a medication that has been in use for years, and jack up the price by 5000%: monopolistic behavior by a scum bag.
  2. Create an electricity crisis through strategic plant closures and manipulating the energy market, costing $40–45 billion in economic damage and coercing California to sign long term contracts at four times the going rate in order to prevent continuous black outs: collusion by a large group of corporate criminals and scum bags.
  3. More recently, we had an actual case involving Apple and five huge book publishers. The publishers wanted to raise book prices by excluding Amazon from selling their books more cheaply, which would have given Apple an unfair competitive advantage as the exclusive book seller. The publishers all settled out of court, but Steve Jobs was arrogant enough and stupid enough to take the case to trial and lost.

Now, let’s take a famous technology case and explain it with the use of a simple analogy. Let’s say you have a popular bakery (N), that is doing fantastic business. Down the street is a competitor (M), whose product is lousy and they can’t get many customers, but they own the construction company that does all the road work for the city.

The next morning, as you arrive to open up your bakery, you find the street and the entire sidewalk in front of your shop has been torn up, fenced off, and surrounded by signs which read “bakery this way” with arrows pointing to Bakery M.

You scream about it, call city hall, call your lawyer, and go to court, but the road block is never removed, so all of your loyal customers begin to go over to Bakery M. New customers that heard about you go to Bakery M, and never notice the difference. There’s a tiny service entrance in the back of your bakery, but it’s extremely difficult to reach, so almost no one ever comes into your bakery, and you finally shut down.

Well, that’s basically the story of Netscape and Microsoft. Microsoft used their complete dominance in the PC industry (95–97% of computers used the Windows operating system) to destroy their superior competitor. When people installed a new version of Windows on their computers, it automatically installed Microsoft Explorer, made it the active web browser, and de-installed Netscape. Only a small number of tech savvy people could figure out how to reinstall Netscape once this happened. Netscape went from having a 90% share of the web browser market to Explorer ending up with a 95% share of that market.

As a result of their dirty deeds, Microsoft was slapped with a major antitrust suit that threatened to break up the company, just like Bell Telephone had been broken up 20 years before. The only reason Microsoft survived is that 1) they invested heavily in Apple to save the company from going under, so they could claim there was still competition in the operating system industry, and 2) Bill Clinton got his dick sucked by an intern.****

The only happy note to the story is that the guys who created Netscape came back to create Firefox, eating Microsoft’s lunch and making Internet Explorer obsolete.

#3 The effect of Apple’s policies on consumers.

Since consumers decide on the functionality and quality of the apps they want, let’s look at the way the App store affects the consumer experience.

CHOICE: There are now 2.1 million iPhone apps that help people do their banking, take photos, play games, monitor their health, their home security, purchase all manner of items with the most secure payment system to be found, protect private information, play video games, learn languages, etc. etc.

COST: Of those apps, 90% are free, and the average cost of an app is 99¢. Consumers don’t notice or care about the costs incurred by developers to make products that follow Apple’s standards, but they may be aware

SECURITY: the App Store’s standards minimize the risk of getting scammed or picking up a virus.

Do you know the best way to fuck up your iPhone with a virus? Jailbreak your phone so you can download some cool third party app that is not vetted by Apple.

Let’s summarize:

  1. Consumers can still change smart phones and leave the iOS ecosystem.
  2. Consumers still get tons of free shit, in a safe, secure market place.
  3. Consumers can still buy certain products (Spotify, Netflix, etc.) directly from the web for less money.

So what is the issue here? How has Apple in any way decreased consumer benefits?

Okay, that was a lot to cover. You’ve earned whatever form of entertainment or mind numbing medication you choose, if you got this far.

In Part 2, we’ll look at how Apple’s policies affect developers, the meaning of the Supreme Court decision, the actual lawsuit, possible effects if Apple is forced to change their policies, and a few other NSWF tidbits.

Footnotes:

*I once got 78 claps for a 2,700 word article that not only analyzed my subject matter from a number of unique perspectives, but correctly predicted a future outcome based on my analysis.

Now, that is goddamn crystal ball.

And I made $11.02 for my efforts. I have to wonder how much 1,000 times more claps must be worth.

**The economist John Kenneth Galbraith noted that “trickle-down economics” had been tried before in the United States in the 1890s under the name “horse and sparrow theory”, writing:

Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy — what an older and less elegant generation called the horse-and-sparrow theory: ‘If you feed the horse enough oats, some will pass through to the road for the sparrows.’

***No, not basketball. And not tennis (where I am almost like one of the Gods of Medium, with my Top Writer status and 217,000 views per month , except for the fact that I don’t make any money).

My expertise comes from having a degree in economics, running my own businesses for 30 years, and watching the truth become more and more marginalized since Reagan started the ball rolling with “ketchup is a vegetable,” “we have no involvement in Nicaragua” and supply side economics** (aka “trickle down economics,” renamed after horse and sparrow economics was dismissed as horse shit, both literally and figuratively.)

****Ken Starr was a lawyer for the tobacco industry, At a time when the government was pursuing serious legal action against the tobacco industry for their actions to increase the addictive nature of cigarettes in the 1950s while at the same time lying about it and the link between smoking and cancer.

He did not reveal his conflicts of interests when he was being interviewed by a three judge commission to appoint the Independent counsel to head the Clinton Whitewater investigation, and spent the next six years and $70 million to find something with which to charge Clinton because he lied trying to hide his affair with Monica Lewinsky.

Now you know who the real cocksucker was.

Every dirty deed done by Ken Starr and his task force (which included Brett Kavanaugh) pulled attention away from the tobacco trials and reduced the effectiveness of Clinton and the Democrats. By 2000, the stench of the Clinton impeachment gave voters enough pause to make the Bush-Gore election close enough to be stolen by Florida’s dirty election tricks, and validated by a partisan Supreme Court that committed a crime for which there is no statutory definition, according to Vincent Bugliosi in his book The Betrayal of America.

After the new president was inaugurated, the Microsoft antitrust suit mysteriously faded away, like so many other betrays of public trust committed by the Bush-Cheney crime family.

Written by

Ad agency creative director, writer & designer at https://guttmanshapiro.com. Former pro tennis player and peak performance coach for professional athletes.

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