The Antitrust Case Against Apple

36 Pages Posted: 15 Jun 2020

See all articles by B Kotapati

B Kotapati

Yale University

Simon Mutungi

Yale University

Melissa Newham

KU Leuven; German Institute for Economic Research (DIW Berlin)

Jeff Schroeder

Yale University

Shili Shao

Yale Law School

Melody Wang

Yale University

Date Written: May 20, 2020

Abstract

This article explores several potential antitrust claims against Apple - namely tying, essential facilities, refusal to deal and monopoly leveraging. We argue that the Apple ecosystem's large revenue share in terms of app transactions, lock-in effects and consumers' behavioral bias in online markets give the iPhone maker monopoly power as a mobile platform. Apple has exploited its market power to illegally tie the distribution of digital goods to its proprietary in-app purchase system to impose a 30% tax and extract supracompetitive profits, leading to higher app prices and reduced innovation. Moreover, Apple has excluded rivals and favored its own apps by downgrading competitors' discovery and promotions, blocking certain rivals entirely from the App Store, and limiting others' access to key APIs, in some cases right after copying their apps. In conjunction with the discriminatory application of the 30% tax, Apple's conduct towards major multi-homing apps such as Spotify reduces cross-platform competition with Android. These anticompetitive practices prolong and expand Apple's monopoly at the expense of competition.

Keywords: Apple, digital platforms, App Store, IAP, tying, essential facilities, monopoly leveraging, self-preferencing, US antitrust law

JEL Classification: D42, K21, L12, L40, L86

Suggested Citation

Kotapati, B and Mutungi, Simon and Newham, Melissa and Schroeder, Jeff and Shao, Shili and Wang, Melody, The Antitrust Case Against Apple (May 20, 2020). Available at SSRN: https://ssrn.com/abstract=3606073 or http://dx.doi.org/10.2139/ssrn.3606073

B Kotapati

Yale University ( email )

New Haven, CT 06520
United States

Simon Mutungi

Yale University ( email )

New Haven, CT 06520
United States

Melissa Newham (Contact Author)

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Jeff Schroeder

Yale University ( email )

New Haven, CT 06520
United States

Shili Shao

Yale Law School ( email )

127 Wall Street
New Haven, CT 06510
United States

Melody Wang

Yale University ( email )

New Haven, CT 06520
United States

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