The antitrust arguments that could hobble the tech giants


Apple adds 5 new vice presidents to its executive lineup
Apple could be the potential recipient of an antitrust investigation.
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Assistant Attorney General Makan Delrahim has laid out some of the potential antitrust arguments that could be made against tech giants.

Delrahim’s office is reportedly in charge of investigating Google parent company Alphabet, as well as a potential investigation into Apple.

In a speech delivered in Tel Aviv, Delrahim listed some of the questions that will be asked of tech companies.

One involves instances in which a company makes an acquisition or other move to harm competitors, rather than for “economic sense.”

Another involves price inflation. However, notes that even companies which offer free or cheaper-than-expected services (think Google and Amazon) won’t necessarily get off the hook. “The Antitrust Division does not take a myopic view of competition,” he said. “Many recent calls for antitrust reform, or more radical change, are premised on the incorrect notion that antitrust policy is only concerned with keeping prices low. It is well-settled, however, that competition has price and non-price dimensions.”

Another potential area is diminished quality, which can indicate lack of sufficient competition. Another is exclusivity. This can be used to “prevent entry or diminish the ability of rivals to achieve necessary scale, thereby substantially foreclosing competition.”

Delrahim said: “Generally speaking, an exclusivity agreement is an agreement in which a firm requires its customers to buy exclusively from it, or its suppliers to sell exclusively to it. There are variations of this restraint, such as requirements contracts or volume discounts.”

In all, he suggests that the law is well equipped to tackle tech giants. “We already have in our possession the tools we need to enforce the antitrust laws in cases involving digital technologies,” Delrahim said. “U.S. antitrust law is flexible enough to be applied to markets old and new.”

Tim Cook defends against accusations

Tim Cook, unsurprisingly, has hit back at claims that Apple is in any way a monopoly. Earlier this month he told CBS News that, “I don’t think anybody reasonable is going to come to the conclusion that Apple’s a monopoly. Our share is much more modest. We don’t have a dominant position in any market.”

A look at the list of antitrust criteria would suggest that Cook is quite right. Apple’s prices for devices like the iPhone have crept up, but there are plenty of alternative cheaper phones on the market.

The only one of the list that could cause any degree of concern is exclusivity. As the owner of the App Store, Apple has a dominant position in this market, which has at times prompted criticism. However, as with the smartphone pricing issue, there are other alternative app stores people can sell or buy through.

To defend itself against this point, Apple recently launched a new web page defending its App Store practices.

Investigating the investigator

Probes into Google and Apple haven’t taken place yet, but Makan Delrahim has already come under criticism. This week, Senator Elizabeth Warren asked the antitrust boss to recuse himself from investigating Apple and Google due to a possible conflict of interest.

According to Warren, Delrahim was hired by Google in 2007 to lobby federal antitrust officials. He was also reportedly hired by Apple in 2006 and 2007 to lobby regarding patent reform issues.

“As the head of the antitrust division at the DOJ, you should not be supervising investigations into former clients who paid you tens of thousands of dollars to lobby the federal government,” said Warren.

Source: CNBC


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