Ahead of his appearance before the US House Judiciary Antitrust Subcommittee later today, Tim Cook has released the prepared statement he will read.
The statement, which is available on the House website, adopts a tone that veers between conciliation and defiance. It is full of fascinating insights into Cook’s business philosophy.
“I share the Subcommittee’s believe that competition is a great virtue,” he writes, observing quite reasonably that it promotes innovation and offers customers more choice. Yet he does not see a lack of competition in any of the markets where Apple operates – at least, not as a result of Apple dominance.
“Apple does not have a dominant market share in any market where we do business,” Cook insists, pointing to the fierce competition in the smartphone market and the successes of Samsung, LG, Huawei and Google.
“As much as we believe the iPhone provides the best user experience, we know it is far from the only choice available to consumers,” he adds.
This all sounds good, and Apple certainly isn’t the sort of company to snatch 80% of a market and dominate the lower, middle and top ends. That’s not its style. It prefers to take a relatively small share (albeit still vast in absolute terms) of the premium end, then leverage a big margin on the products it sells in that space. That’s a system that works well, as the firm’s profits make clear.
But “any market”? Is it true that Apple isn’t dominant anywhere?
The problem with statements like this is that they sound definitive but are actually vague. A firm’s dominance of a market depends on how you define the limits of that market.
If you look at the number of smartphone units sold in a given year, Apple doesn’t seem to dominate. If you look at the profit made from smartphones, or the active install base, or the money spent on apps, or a key subsection of the market, the picture starts to change. As the analyst/pundit Benedict Evans has pointed out, more than 80% of US teenagers have an iPhone. What’s that, if not dominance?
In the end, of course, this isn’t about phones, and we should beware red herrings. This investigation is about locating the power in the relationship between platform owners and the developers and users of those platforms, and establishing whether further regulation is needed to balance it out. The App Store is the only place from which non-jailbroken iPhones can purchase and install software, and this (arguable) monopoly means Apple holds a lot of power. Often the only way for developers to get any leverage at all is to attack Apple’s PR and do battle on social media.
Fortunately, Tim Cook’s statement is not the end of the discussion, and I’m sure the committee members will have lots of questions. Having been postponed from a planned start on Monday, the hearing starts today at 5pm UK time – that’s noon Washington time. You can watch live on YouTube.
The list of witnesses is given in alphabetical order; if the same order is used for their appearances, Cook will be second on the bill, after Jeff Bezos (and presumably a fair amount of preliminary waffle). We’ll be watching intently and, assuming Cook does make an appearance today, will post a review of the highlights on Macworld tomorrow.
