Apple’s Market Power in the Digital Market
Introduction
Market power, also known as pricing power, refers to a company’s ability to influence market prices for its products or services (Investopedia, 2020). In the digital market, Apple Inc. has been the subject of scrutiny regarding its market power. This article examines Apple’s market power in the digital market, drawing upon relevant sources.
Apple’s Market Power
Apple holds a significant market share in the smartphone and app markets, granting it substantial market power (European Commission, 2022). The company’s control over its iOS operating system and the App Store allows it to set the rules for app developers and consumers.
Allegations of Anti-Competitive Behavior
The European Commission has accused Apple of abusing its market power by preventing competitors from accessing the iPhone hardware and software necessary for mobile payments (European Commission, 2022). This has allegedly given Apple Pay an unfair advantage over rival mobile payment systems.
Epic-Apple Lawsuit
The Epic-Apple court case in the US shed light on the issue of market power in digital markets (Kluwer Competition Law Blog, 2022). While the court ruled that Apple is not a monopolist, it found that the company engaged in anticompetitive conduct by restricting alternative payment systems in apps.
Lock-in Effects
The court also recognized the presence of lock-in effects, where consumers are tied to Apple’s App Store due to monetary costs and convenience (Kluwer Competition Law Blog, 2022). This further strengthens Apple’s market power.
EU’s Digital Markets Act
In response to concerns about market power in digital markets, the EU has introduced the Digital Markets Act (DMA) (Kluwer Competition Law Blog, 2022). The DMA aims to eliminate lock-in effects by requiring phone makers to allow the installation of multiple app stores and providing equal treatment to external payment systems.
Conclusion
Apple’s market power in the digital market has been a subject of debate and regulatory scrutiny. The company’s control over the iOS ecosystem and the App Store has raised concerns about anti-competitive behavior and the potential for consumer harm. The Epic-Apple lawsuit and the EU’s Digital Markets Act represent significant developments in addressing these concerns and promoting competition in digital markets.
References
- European Commission. (2022, May 2). Apple ‘abused’ market power to boost Apple Pay: EU. https://nypost.com/2022/05/02/apple-abused-market-power-to-boost-apple-pay-eu/
- Investopedia. (2020, December 16). What Is Market Power (Pricing Power)? Definition and Examples. https://www.investopedia.com/terms/m/market-power.asp
- Kluwer Competition Law Blog. (2022, February 17). A Bad Apple in the Basket? Market Power in Digital Markets Illustrated by the Epic-Apple Case. https://competitionlawblog.kluwercompetitionlaw.com/2022/02/17/a-bad-apple-in-the-basket-market-power-in-digital-markets-illustrated-by-the-epic-apple-case/
FAQs
Does Apple have market power?
Yes, Apple has significant market power in the digital market, particularly in the smartphone and app markets.
How does Apple exercise its market power?
Apple exercises its market power through its control over the iOS operating system and the App Store. This allows it to set the rules for app developers and consumers.
What are the concerns about Apple’s market power?
Concerns about Apple’s market power include anti-competitive behavior, such as preventing competitors from accessing the iPhone hardware and software necessary for mobile payments, and the potential for consumer harm due to lock-in effects.
What is being done to address Apple’s market power?
The EU has introduced the Digital Markets Act, which aims to eliminate lock-in effects and promote competition in digital markets. Additionally, the Epic-Apple lawsuit in the US has brought attention to the issue of market power in digital markets.
What is the impact of Apple’s market power on consumers?
Apple’s market power can lead to higher prices for consumers and reduced innovation, as competitors may be unable to compete effectively.
What is the impact of Apple’s market power on app developers?
Apple’s market power can make it difficult for app developers to distribute their apps and reach consumers, as they are dependent on the App Store.
What are the potential antitrust concerns related to Apple’s market power?
Apple’s market power raises antitrust concerns related to monopolization, abuse of dominance, and anti-competitive behavior.