Editor’s note: Tom Snyder is executive director of RIoT, a multi-state Internet of Things users group. WRAL TechWire asked a number of Triangle area thought leaders to discuss the possible implications of Epic Games’ lawsuit against Apple and the battle over mandatory fees charged by Apple’s app store.
RALEIGH – All companies are built on a fairly small number of global technology platforms. There are only a few global cellular operators. A limited number of global cloud providers. A small number of semiconductor suppliers, computer manufacturers, global package distributors and internet service providers. In the United States, and most countries around the world, there are legal protections to prevent any single company from getting too much market strength.
Currently there is a lot of debate about whether the technology sector has achieved too strong a monopoly power. One of the bigger debates is right in our backyard, as Epic Games and Apple battle over fees levied on Apple’s software distribution platform. Apple has monopoly control over what applications operate on its hardware platforms. Are they unfairly charging customers for that service, or taking a fair fee to cover the costs of maintaining the platform and ensuring cybersecurity across the applications?
Epic Games vs. Apple: Why this big lawsuit is important to all emerging companies – and us
Often we think of antitrust in a relatively narrow view of direct competition. Are there enough automobile manufacturers, for example, to give consumers sufficient choice that free market principles apply and competition creates fair prices in the market? Competition does not only create low prices, but also drives innovation as multiple competitors try to differentiate from each other. Competition is good.
At RIoT, we work every day with companies large and small that are leveraging technology platforms to solve interesting problems across healthcare, agriculture, manufacturing and other market sectors. We are connectors, helping entrepreneurs to connect directly to multinational technology providers to build strong partnerships. We regularly advise startups to not reinvent the wheel. In almost every case, it is not wise to build your own cloud infrastructure or a new wireless communications network or manufacture semiconductor devices when these are globally available at extremely low cost.
This is good advice. But with the limited number of technology giants, this advice feeds the “strong get stronger” problem present in the tech sector. And as we see the Internet of Things expand, connecting more and more products and services to the internet, the simple assessment of antitrust in the narrow view of direct competition may not be sufficient.
Tom Snyder, RIoT executive director
In recent years, we have seen significant verticalization in the tech sector, which makes the evaluation of monopoly practices more complex and difficult. Taking net neutrality as an example, there is considerable debate over whether it is wise to let an internet communications provider like AT&T to also own a content creation company like WarnerMedia. The risk is that consumers will not have access to great content unless they also use the underlying communications platform or pay additional fees to use a competitor platform. An internet provider with monopoly access to content has an unfair advantage against one that does not.
This is the same fundamental situation in the Epic/Apple case. Should Apple have vertical control over their device, and the entire 3rd party content market of applications that could run on it. In other words, is Apple’s market share large enough to demand “net-neutrality-like” access to Apple hardware?
Historically, antitrust laws have evaluated competition horizontally. There are multiple mobile phone providers, so Apple certainly doesn’t have a monopoly. Likewise, there are multiple app stores or channels for game designers and other content companies to sell products. But there is only a single channel for delivering content to Apple devices specifically. In that aspect, we do not have a free market driving the competitive principles that free markets create.
Our advice to entrepreneurs and startups remains the same. It is better to partner collaboratively with established technology platform companies. We need global technology platforms to effectively distribute the intellectual property developed in the startup and small business community. IP that solves big challenges in agriculture to healthcare. From energy to entertainment. But we must demand that those technology platforms are interoperable and open to ensure the competitive principles of free markets.
It is time to re-evaluate antitrust law to more tightly regulate the verticalization of tech giants so they do not have such monopoly control over adjacent markets. We have a front row seat to the rare instance of two market giants – Epic Games and Apple – who may well shape the future of antitrust across the entire sector.
