Is there a model anywhere for this having been tried, successfully or otherwise?
The obvious hesitation I have is just that some companies really do benefit from a lot of vertical integration. Could Apple be Apple if they were forced to spin off the phone business, or the chip design house, or the OS?
What would it mean for the startup ecosystem if getting bought by a conglomerate was a less plausible exit?
How would regulators enforce that the split off entities were truly independent vs faking it and then having exclusivity deals that meant they were basically still the same singular entity?
Not so much because then, for example, you become Qualcomm and have 50 different customers all asking for different things from your chips and you reach a local optimum where you solve everyone’s issue a little bit but don’t actually do a good job. There’s a reason that Apple’s chips are so much better in terms of performance and energy efficiency. Similarly, it’s why Apple did the W1 first and it took a very long time before any competitor figured out how to do the same thing. And you’ll see the same with VR where FB will struggle to make HW with comparable specs while Apple’s chip gives their SW a leg up.
TLDR: it’s complex, but successful vertical businesses have fairly different products, efficiencies, and outcomes.
Apple made better chips than Qualcomm because Qualcomm is a monopolist, and thus doesn’t need to actually compete. The moment a competitor sprung up, they got their ass kicked.
Yes, no other company but Apple could have pulled that off, but that’s only because Apple themselves are a monopolist with the market power to fight another monopolist.
That’s not a good thing. The solution to monopolies isn’t more monopolies. A much smaller company than Apple could have theoretically created a better processor than Qualcomm, but it just couldn’t happen due to multiple anti-competitive factors. Like how Qualcomm has a patent portfolio that gives them a monopoly on 4G modems, and can use that to force companies to purchase other components from them if they want a modem.
I ask this every time it comes up, but what exactly does Apple have a monopoly in? They don’t control majority of anything in any category that they participate in. They are a major purchaser of high end fab processes, but that doesn’t allow them to control PC, phone, steaming, messaging, audio, home integration, or any other market.
They are one of the most vertically integrated large companies, but they are allowed to monopolize their own products. There is no iPhone market - that’s a product within a huge market of other mobile devices that anyone can join.
These types of discussions on this site are pointless. I can tell that no matter what I say, you’re going to end up moving the goal posts. Why do I know this? Because you non sarcastically are trying to say that Apple doesn’t have a monopoly. The amount of mental gymnastics is takes to frame it that way is only possible if someone cares more about defending the honor of their favorite megacorp than finding any kind of truth.
And if I’m completely wrong about you, then I apologize. My patience for these internet arguments isn’t what it used to be. To answer your question, there are no doubt thousands of comments on this website about that topic. Ignore the ones that seem to come from Apple fanboys, and you’ll find the right answers.
I think about this topic often and am also curious, but not an Apple fanboy, unless we end up talking about the 8 and 16 bit 6602, 65816 based computers. :)
The way I see it, Apple has targeted a very specific kind of customer. And these people have a few things in common:
Value privacy
Value great hardware
Willing to recognize and pay for all the ways Apple adds value: packaging, UX, etc...
And there are some more, but I feel listing more won't add value here.
I do like the Apple M1 computer I own. And I like the older 8 and 16 bit ones too. The reasons are very different with the older machines being open and hackable and the M1 being fast with crazy good battery life given the overall performance.
However, I flat out won't own an Apple phone. Too closed down, and the UX is not well aligned with how I prefer to do things.
I disagree strongly with many things Apple does and feel their products often are too restrictive.
But, I do not have to use anything they make either.
Some have argued that Apple has serious lock in on their products. Yep. Except for the computers, I agree! That is why I won't use any of their stuff.
Yet lots of people want it that way and Apple delivers it to them and asks those people to pay right up, and those people do pay up and a whole lot of those people are happy having seen good value for their dollar.
I was being genuine. I lived through the Microsoft antitrust trial and like several of the companies they obliterated with their anti-competitive practices (specifically Be). They had 90+% desktop OS market share and they used that to prevent PC manufacturers from selling competitor’s operating systems, bundle a free browser that destroyed an entire industry of browser companies, and other behaviors that made it impossible for others to compete.
So when people say Apple has a monopoly, I want to know what market they control so entirely that they are able to eliminate any competitors should they choose to behave anti-competitively. People often say they have a monopoly on iPhones, but that’s not a market, it’s a product that they make and sell. If 90% of mobile devices were iPhones, I’d agree, but they’re not, so Apple cannot have a monopoly in that market.
Sometime people suggest they have control over mobile development. Targeting iPhones is profitable because iPhone users spend money. It’s no different from console development (PS5, Switch, Xbox) where all software goes through a gatekeeper who takes a cut. How does that control mobile development when they’re in the minority in the market?
They have a huge market cap and pile of cash, that still doesn’t make them a monopoly. They don’t have price control in any market segment. Sticking with phones, you can get Samsung and Pixel phones for higher and lower cost.
AFAICT they don’t meet any common or legal definition of a monopoly so I am interested in what industry people think they control.
You’ve not said why you think they’re a monopoly, so I can really only assume the common things I see people complain about. A company having business practices that might be considered hostile does not make them a monopoly though. That word has a specific meaning.
To play devil’s advocate, I’d say having something like 85% of the profit in the mobile space despite only have ~13% market share is probably a good start in terms of classifying as a monopoly. Do you really have competition when you’re the only one making money and the rest are being subsidized by your competitor? That’s also a good case Apple has that they’re fighting the Google monopoly of flooding the market with their own.
I’m sure we’ll hear more about that this fall. Google certainly has a monopoly on web search and I would argue used that to unfairly compete in several other markets where they could lose money for extended periods (indefinitely?).
Is profit in a market a measure that’s ever been used to identify a monopoly? Apple has no method of controlling prices in the mobile market, so what difference does it make if they are one of the few profitable companies? That’s why I mentioned buying out fab processes, but that might be anti-competitive, but still not monopolistic.
By definition monopolies dominate a market so thoroughly that they can prevent equivalent products from being offered at lower prices. Apple does not have the power to keep mobile device prices high, despite their fab dominance (and there are other fabs that offer substitute processes).
There are dozens of cheap mobile devices that, despite low profitability, still dominate the market. Despite Jobs’ claim that the iPhone was guarded by patents, competitors with essentially the same features were available within a year of the iPhone’s release.
Does Apple have some anti-competitive practices? They’ve been found to in the past (employee recruiting between companies), and may or may not now, but that is separate from being a monopoly.
I haven't seen recent numbers but I expect if you look at phone marketshare for households over $100k, it will indeed be 90%+ iPhone, maybe more like 95%.
Saying Apple doesn't have a phone monopoly because of cheap Android devices is like saying Microsoft didn't have one because doing work on a piece of paper was still a thing.
“These types of discussions on this site are pointless.” So you’re a troll then. Don’t start shit if you don’t want to engage. If you really think it’s pointless don’t bring it up.
As you say, many people disagree with you. It is very possible they have more of an argument than then just being idiots or shills or whatever disparaging label you want to give them. The question you are responding to is a legit one. People will continue to ask for justification whenever you proclaim Apple a monopolist. The fact they haven’t been convinced by the thousands of comments means your position isn’t as self evident as you think.
My first thought is that the "apple Qualcomm" that would come out would have incentives to make better chips without needing to also sell phones (competing with other chip manufacturers) but I can understand that the chip industry is very costly and risky, I can see how without integration they can't compete with any current player - too expensive and risky.
Substantially less opportunities for your private data to be hacked and leaked all over the web.
I think Apple’s long term privacy and e2ee pushes and googles recent attempts at the same would not exist across a pile of medium sized companies. iCloud Photos leaking would continue to be a thing.
> What would it mean for the startup ecosystem if getting bought by a conglomerate was a less plausible exit?
I guess going public would be the move realistically. I would prefer to see a shift toward startups aiming for solvency though, which I believe would make better companies. Companies that fit a role in society better. Free market capitalism isn't really happening if consumers aren't paying for anything and the money rains in from the VC heavens instead.
The obvious hesitation I have is just that some companies really do benefit from a lot of vertical integration. Could Apple be Apple if they were forced to spin off the phone business, or the chip design house, or the OS?
What would it mean for the startup ecosystem if getting bought by a conglomerate was a less plausible exit?
How would regulators enforce that the split off entities were truly independent vs faking it and then having exclusivity deals that meant they were basically still the same singular entity?