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POV: Have Gun, Will Nudge
by Ayn Rand | March 1962
It's Not the Unions — It's the Labor Laws
by Doug Altner | March 19, 2014
Regulatory Strangulation
by Steve Simpson | March 13, 2014
Obamacare creates a new class of free riders
by Rituparna Basu | January 23, 2014
Obamacare Is Suffocating An Already Sick Health Insurance Patient
by Rituparna Basu | January 22, 2014
The Broken State of American Health Insurance Prior to the Affordable Care Act: A Market Rife with Government Distortion
by Rituparna Basu | January 21, 2014
Obamacare is Really, Really Bad for You, Especially If You're Young
by Rituparna Basu | August 21, 2013
Justice Department should let US Airways & American Airlines merger proceed
by Tom Bowden | August 16, 2013
Why Is Apple Inc. On Trial? For Good Behavior, It Turns Out
by Tom Bowden | June 20, 2013
The Forgotten Man of the Minimum-Wage Debate
by Doug Altner | June 19, 2013
Why Delivering Beer Isn’t Easy
by Doug Altner | June 11, 2013
What Explains GM’s Problems With The UAW?
by Doug Altner | May 20, 2013
What Are The Search Results When You Google ‘Antitrust’?
by Tom Bowden | April 18, 2013
To Protect the Defenseless, We Must Abolish the Minimum Wage
by Don Watkins | March 27, 2013
I’ll Buy My Own Contraception, Thanks
by Rituparna Basu | November 13, 2012
Why The Glass-Steagall Myth Persists
by Yaron Brook | November 12, 2012
Why Ayn Rand’s Absence From Last Thursday’s Debate Benefits Big Government
by Yaron Brook | October 15, 2012
Changing the Debate: How to Move from an Entitlement State to a Free Market
by Don Watkins | July 02, 2012
3 Things Everyone Needs to Know About the Apple Antitrust Case
by Don Watkins | April 10, 2012
What's Really Wrong with Entitlements
by Don Watkins | February 21, 2012
The Entitlement State Is Morally Bankrupt
by Don Watkins | September 13, 2011
How Important Is the Obamacare Litigation?
by Tom Bowden | August 12, 2011
Atlas Shrugged: With America on the Brink, Should You “Go Galt” and Strike?
by Onkar Ghate | April 29, 2011
The Road to Socialized Medicine Is Paved With Pre-existing Conditions (Part 3)
by Yaron Brook | April 06, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions (Part 2)
by Yaron Brook | March 10, 2011
In Defense of Finance
by Yaron Brook | February 15, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions
by Yaron Brook | February 10, 2011
The Avastin Travesty
by Tom Bowden | December 12, 2010
Apple Now Targeted for Success Like Microsoft Was in the 1990s
by Tom Bowden | October 04, 2010
The Un-American Dream
by Don Watkins | August 27, 2010
What About Private Health Emergencies?
by Tom Bowden | April 08, 2010
What’s Really Driving the Toyota Controversy?
by Don Watkins | March 26, 2010
Anti-Smoking Paternalism: A Cancer on American Liberty
by Don Watkins | March 06, 2010
Apple vs. GM: Ayn Rand Knew the Difference. Do You?
by Don Watkins | March 02, 2010
Smash the Labor Monopolies!
by Tom Bowden | September 15, 2009
America’s Unfree Market
by Yaron Brook | May 2009
Atlas Shrugged and the Housing Crisis that Government Built
by Yaron Brook | March 2009
The Green Energy Fantasy
by Keith Lockitch | February 25, 2009
Stop Blaming Capitalism for Government Failures
by Yaron Brook | November 13, 2008
The Resurgence of Big Government
by Yaron Brook | Fall 2008
The Government Did It
by Yaron Brook | July 18, 2008
From Flat World To Free World
by Yaron Brook | June 26, 2008
How Government Makes Disasters More Disastrous
by Tom Bowden | April 29, 2008
Life And Taxes
by Yaron Brook | April 17, 2008
War On Free Political Speech
by Yaron Brook | March 21, 2008
To Stimulate The Economy, Liberate It
by Yaron Brook | February 14, 2008
Exploiters vs. Victims in the Grocery Strike
by Elan Journo | January 30, 2004
Prescription Drug Benefits Violate the Rights of Drug Companies
by Onkar Ghate | July 24, 2002
Drop the Antitrust Case Against Microsoft
by Onkar Ghate | March 17, 2002


Government And Business in Voice for Reason
Government & BusinessRegulations

Apple Now Targeted for Success Like Microsoft Was in the 1990s

by Tom Bowden | October 04, 2010

Apple Computer, which for decades played second fiddle to Microsoft, has achieved the unthinkable. Not only has it surpassed Microsoft as the nation’s biggest tech company (in terms of market capitalization), but it’s now poised to displace Exxon Mobil as the nation’s largest company.

With Apple’s crowd-pleasing success has come antitrust scrutiny. Both the Justice Department and Federal Trade Commission are investigating Apple’s business practices. News reports of antitrust enforcers’ “keen interest” in Apple are reminiscent of how Microsoft was targeted back in the 1990s, for the sin of packaging Web browsers and media players with its popular Windows operating system.

Said one former FTC official: “Apple is playing right out of Microsoft’s playbook — and it’s one they complained about a lot.”

Why is one of America’s most admired and successful companies caught in the prosecutorial cross hairs? Apple is being targeted for business practices that date back to the company’s earliest days.

In the personal computer arena, it has long been notorious for maintaining tight control over hardware and software. But so long as Microsoft’s more “open” licensing and software policies enjoyed vastly greater market success, antitrust authorities swarmed around Microsoft and left Apple alone.

Nowadays, however, Apple’s tight quality controls are helping generate breakthrough sales of iPhones, iPods and iPads, devices that customers love to load up with useful “apps.” Some apps are educational, some entertaining, some commercial.

To maintain quality control, Apple issued take-it-or-leave-it terms to outside software developers. These contract terms required that Apple’s own software tools be used in creating apps. As a result, certain apps created with competing software, such as Adobe’s Flash program, were not allowed on Apple devices.

Such practices, it was whispered, are “anticompetitive.” Antitrust investigators fanned out in search of jealous competitors and disgruntled software developers who could help legally demonize Apple’s money-making business practices (as Apple itself previously did to Microsoft).

Right on cue, Adobe ran full-page newspaper ads accusing Apple’s policies of “taking away your freedom to choose . . . what you experience on the Web.” Just last month (in response to this antitrust pressure?), Apple relaxed its rules on development tools, so long as the resulting apps don’t download code.

Meanwhile, antitrust storm clouds are gathering around iTunes (Apple’s copy-protected online music service since 2003), the iPad (Apple has been warned against making exclusive contracts with publishers of electronic books), and iAd (a mobile advertising service to compete with Google). In each case, Apple’s chief offense seems to be its innovative touch — its ability to create cool new products, expand the market by attracting loyal customers, and make a pile of money in the process.

We are told that antitrust regulators safeguard consumers against “anti-competitive” behavior from companies like Apple. But in reality, this is what competition looks like.

Apple is buffeted at every step by a competitive whirlwind, surrounded by talented rivals waiting for the slightest stumble (witness the recent “Antennagate” kerfuffle). Because Apple cannot force customers to buy its products, the company has no power to stop the competitive process. If Apple ever stops offering superior consumer value, its market share will fall accordingly.

Antitrust law gains adherents by conflating government monopolies with companies that earn their dominant market position. But unlike the Post Office, whose plodding inefficiency is shielded by a legal monopoly on delivering first-class mail, Apple’s success is not a product of government coercion.

On the contrary, Apple profits from the free choices of individual consumers applying their own standards of excellence. Instead of Apple’s iPod, customers could have bought Microsoft’s low-selling Zune music device. Instead of Apple’s iPhone, they could have flocked to Microsoft’s failed Kin smart phone. Instead of Apple’s iPads, they could have bought one of Microsoft’s tablet computers.

Can it be that antitrust prosecution of Apple would serve no purpose other than punishing the company for its success? The evidence points in that direction.

If prior antitrust proceedings against industry giants are any indication, Apple stands to lose hundreds of millions of dollars in employee time, lawyer fees and government penalties — not to mention the lurking possibility of criminal prosecution and jail time. And then there’s the impossible-to-quantify loss of innovative ardor — the nonexistent profits from devices that will not be invented if Apple is forced by antitrust exposure to keep a low profile.

Here’s a radical thought: What if there were no antitrust laws for government and struggling competitors to use to threaten the success of innovative companies like Apple?

About The Author

Tom Bowden

Analyst and Outreach Liaison, Ayn Rand Institute