

Apple is not part of the settlement talks with DOJ










Source: Reuters

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Tip of the Iceburg
By lightfoot on 4/11/2012 11:40:52 AM , Rating: 3
The problem is that Apple now uses its dominant size and market position to dictate terms to other companies. Apple no longer negotiates with anyone. When AT&T sells an iPhone, Apple gets all the profit. When AT&T sells a similarly priced Android (or any other phone OS) AT&T takes a large chunk of the profit and the manufacturer gets almost nothing. Android sales now effectively subsidize iPhone sales.

How is it possible that Apple has negotiated such contracts without abusing its dominant position? They didn't.

And this extends to every supplier in their supply chain. In order to get Apple's business they have to be willing to shift nearly all the profit to Apple. If you don't get Apple's business you have to close up shop.

If this reduced profit was then passed on to the end user this could be portrayed as benefiting the market and the consumer. The fact that Apple just pockets the money does not benefit anyone, and thus is an abuse of their market power. Suppliers get harmed, customers get harmed and competition gets harmed. Only Apple wins, and they win because they cheat by manipulating the market.

The only solution I see to this problem is to break Apple into two companies. A software/services company and a hardware company.

So long as Apple controls both sides, competitors can not enter the market, and they simply can't compete.

