Stanley Sporkin

Does Apple have a monopoly?

February 16, 2011: 7:58 AM ET

You could argue that it has several, depending on how you define the market


It was only a matter of hours after Steve Jobs announced the terms of Apple's (AAPL) new subscription service Tuesday morning that commentators started dropping the A word -- "antitrust."

"My inclination is to be suspect," Shubha Ghosh, an antitrust professor at the University of Wisconsin Law School, told the Wall Street Journal that afternoon. And then he laid out the two key questions we are likely to hear a lot about in the weeks ahead:

Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting "anticompetitive pressures on price."

The answer to the second question, according to Rhapsody, a music streaming service that offers a free app on Apple's iTunes Store, is clear. The company issued a sharply worded statement Tuesday describing Apple's demand for a 30% cut of the 20% it gets from each sale as "economically untenable," adding that it "will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."

The answer to the first question, whether Apple has sufficient control over a particular market for regulators to even ask whether its behavior has been abusive or coercive depends on how you define the market.


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