Platforms Are Digital Monopolies, Apple App Store is Modern Day Standard Oil – U.S. Supreme Court

Apple lost big yesterday – nothing to do with America-China trade war. The problem: the App Store is a modern day monopoly, says the United States Supreme Court.

Justice Brett Kavanaugh, in the majority opinion, said that when “retailers engage in unlawful anticompetitive conduct that harms consumers,” people buying those companies’ products have the right to hold the businesses to account.

“That is why we have antitrust law,” Kavanaugh wrote. The court’s four liberal justices joined Kavanaugh in the 5-4 decision.

The Supreme Court opinion notably does not accuse Apple of violating antitrust law: It holds that consumers have the right to sue the company for monopolistic behavior, because they purchase apps directly from Apple.

Yes, consumers can sue Apple for antitrust violations because the App Store constitutes a monopoly. The claim by Apple that it was just an intermediary was thrown out.

People, this ruling doesn’t just affect only Apple. Everything we know of Facebook, Amazon, Google Play Store and the whole nexus of platforms with the positive continuum of network effect will change. Simply, you cannot attain pure competitive advantage in markets only on the power of platforms. Yes, if you build one, you must make it wholly fair for other players to use same to serve market frictions. The era of walled-off virtual technology storefronts is largely over. I can see the trial lawyers sharpening their spears and swords with the ruling.

When you think of Apple App Store, you can refer to Standard Oil and how U.S. broke the empires of Rockefeller. I can tell you that the tech world has changed.

By 1880, Standard Oil owned or controlled 90 percent of the U.S. oil refining business, making it the first great industrial monopoly in the world. … Rockefeller and his associates decided to move Standard Oil from Cleveland to New York City and to form a new type of business organization called a “trust.”

Yet, the ruling is very narrow: this was a lawsuit from consumers to a company and not a company against a company. The way the justices looked at the issue may be different if a company had sued Apple. Of the three nexus in technology – making current use cases far improved, inventing new use cases, and pioneering new business models – platforms powers the last nexus, anchoring it on the unbounded distribution of the Internet, and in the process creating disruption through new basis of competition. Nothing has changed except that consumer rights are more enhanced now.

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