The U.S. House Judiciary Antitrust Subcommittee has been investigating tech companies for their antitrust behavior. The subcommittee has now released a 450-page report in which it has called these tech giants as monopolies that were last seen in the “era of oil barons and railroad tycoons.”
The committee also makes recommendations in its report that will help promote fair competition and strengthen laws related to mergers and monopolization. The report notes that all tech giants should make their services compatible with their competitors to allow for easy data transfer. It further states that while these tech giants are different, they have common business practices. This includes being a gatekeeper to a key distribution channel i.e. something like the App Store which allows them to “pick winners and losers throughout our economy.” They use this dominant position to charge exorbitant fees and impose unfair contract terms on developers and businesses. They also use this position to maintain its market position and power.
The subcommittee report also highlights how Apple acts as a gatekeeper for the distribution of apps on iOS devices.
In contrast, Apple owns the iOS operating system as well as the only means to distribute software on iOS devices. Using its role as operating system provider, Apple prohibits alternatives to the App Store and charges fees and commissions for some categories of apps to reach customers. It responds to attempts to circumvent its fees with removal from the App Store. Because of this policy, developers have no other option than to play by Apple’s rules to reach customers who won iOS devices. Owners of iOS devices have no alternative means to install apps on their phones.
Apple has already issued a statement against the report saying it strongly disagrees with it. The company also claims that it does not have a dominant position in any of the categories where it does business. It is planning to give an in-depth reply against the antitrust subcommittee report in the coming weeks but for now, it has issued the following statement to MacRumors:
We have always said that scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions reached in this staff report with respect to Apple. Our company does not have a dominant market share in any category where we do business. From its beginnings 12 years ago with just 500 apps, we’ve built the App Store to be a safe and trusted place for users to discover and download apps and a supportive way for developers to create and sell apps globally. Hosting close to two million apps today, the App Store has delivered on that promise and met the highest standards for privacy, security and quality. The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem. Last year in the United States alone, the App Store facilitated $138 billion in commerce with over 85% of that amount accruing solely to third-party developers. Apple’s commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces. Competition drives innovation, and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so.
The subcommittee has just made the recommendations and it is up to the U.S. government to adopt them, though if that happens, it will impact the four tech giants in a big way.[Via CNBC]