Why did Microsoft get in trouble for bundling Internet Explorer with Windows, yet Apple is allowed complete control over iOS software? That is the question posed by whackyplague on AskReddit and the following shed light on the answer:
FountainofR explains:
The antitrust concept at play is called tying.
That is when a company uses its monopoly power in one product segment to leverage its power in another market segment, which hurts consumers because it stifles innovation and competition in the second product market.
Microsoft had near monopoly power in the consumer desktop operating system market through Windows. It used that power to advance Internet Explorer by choking out any competing browsers like Netscape. It did that by making it harder for consumers to choose and use other browsers, and by getting PC manufacturers to only load IE rather than other browsers.Another key part of antitrust law is defining the market, which can sometimes be a gray area. Take satellite radio: in connection with the merger of XM and Sirius: is the market satellite radio services, or is it all radio stations.
Although Apple is dominant in the portable music business (IPODs) it does not have monopoly power because there are other alternatives out there (i.e. other MP3 players). The same with I-Phones.Consumers have readily available choices when it comes to anything Apple makes and sells.
bme00 notes the separation of product that no longer exists today:
There is are legal exception to tying, however. A court must take into account whether in fact there are actually two separate products and the efficiency of having the two products together. For example, at a football game you want to purchase a hot dog without a bun, but you are not allowed to pay the $ it costs for just the hot dog and subtract the $ the bun costs. A hot dog vendor cannot be sued for a tying violation (market power aside). A hot dog is not considered two separate products- a bun and the meat. It is simply more efficient to have a hot dog in a bun to eat, instead of having a floppy piece of meat in your hand.
When Microsoft was sued, internet browsers were still considered a separate product that could be purchased in stores as software. Today, a court would probably find differently. When you purchase a computer, you expect it to have an internet browser. They are not two separate products anymore. They are one in the same. The same argument can now be applied to Apple and its IOS system. When you purchase an iPhone, you expect it to have the operating system installed. It is simply more efficient to do so, and furthermore, the IOS system cannot be considered a second product. Can you purchase IOS separately without an iPhone or iPad and have any use of it?
Also, to have a tying violation, the company selling the products must have market power as someone discussed above. It can be argued that Apple does not.
Surf314 on the nature of tech monopolies and the distinctions between them in the market:
The other factor is the way tying is being dealt with in court. The Supreme Court was the strictest on tying in Kodak where they allowed a single product to be a market for calculating market share under the “lock-in” theory. Basically copiers were so expensive that consumers are not likely to change, so Kodak had a monopoly in products and services tied to their copiers even though they had no where near a monopoly on copier sales. Apple would probably lose if nothing had happened since, but there was a lot of criticism of Kodak and the law has backpedalled since.
Now they use the “freedom to contract” theory in these cases a lot. If the company lets you know upfront what will be tied to your purchase then you have the freedom to accept those terms. Apple keeps no secret that they tie iTunes and all the other crap to their product so if you buy it and are unhappy it is your own fault. So unless you have monopoly power in the original market and you are open with all tied products you probably won’t get in trouble with antitrust laws.
Fazookus says Microsoft used its monopoly in server operating systems to make it impossible for a competitor to exist:
I think partly because you’re referring to Apples’ OS on phones and tablets… Apple does not in any way have a monopoly on the market for full fledged computer operating systems and in fact OS X obviously has a far smaller market share than Windows.
If you wanted to build a PC back in the day you pretty much had to make a deal with Microsoft to resell Windows and do whatever Microsoft said to do… today if you want to make a smart phone or a tablet you not only have a choice but one choice is free… Android, though you can also buy a Microsoft product. And Blackberry is still hanging in if you want something other than Android, Windows and iOS.
And another issue people don’t think about is that Netscape’s business plan didn’t really revolve around giving away their browser: obviously you can’t run a company solely based on giving something away.
Netscape’s business plan revolved around selling their web server, “Netscape Enterprise Server”, which they made to run under Windows and (I believe Linux and some flavor of Unix).
Since Microsoft had a virtual monopoly (or a real monopoly) on server operating systems Netscape had to sell their product to people running Microsoft’s server product.And Microsoft simply included a web server as a mandatory part of a mandatory service patch for NT server… so why would someone pay money for a web server from Netscape when their OS suddenly included one for free???
Answer: nobody bought Netscape’s product and Netscape was effectively prevented from making a profit… and that’s the major issue in the anti-trust actions against Microsoft.
