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- inactive, on 08/05/2008, -31/+764 reasons Apple is not a Monopoly.
Every time I go on the internet, I see line of idiots rushing in to say that Apple is a monopoly because they are the only one who can make Macs and because they "tie" their operating system to their hardware. Let me explain why this isn't true.
1) MONOPOLY: That word doesn't mean what you think it means.
First of all, let me define "monopoly." Most dictionaries define monopolies as: the exclusive possession or control of the supply or trade in a commodity or service. A commodity is a raw material or primary agricultural product that can be bought or sold, such as coffee or copper. A service, on the other hand, would be something like eletricity or cable. Utilities are services.
In the eyes of the government, monopolies in themselves are not illegal. Antitrust law prohibits anti-competititive BEHAVIOR. People love to compare Microsoft to Apple, but it must be said that Microsoft didn't get sued simply because of Internet Explorer. Microsoft was sued for threatening PC manufacturers with revoking their licenses to distribute Windows if they removed the Internet Explorer icon from the desktop. Due to this restriction, Microsoft was able to kill Netscape, a competitor in the PC space where Windows has de facto monopoly status. It also must be said that Microsoft made it impossible to uninstall Internet Explorer from Windows itself, a practice that continues to this day. Apple, on the other hand, allows you to easily delete its native internet browser, Safari.
2) You CAN NOT have a monopoly on your own product, if there are substitutes available.
Read that line above again, slowly. Okay, now that that is clear, let me point out that Macs compete in the PC market. While many people compare Macs to Windows, they should really be comparing Macs to the PCs made by such companies such as HP, Dell, and Sony. So just so we have a clear understanding of this, Apple would only have a monopoly if they were the only company making computers or if Macs had a majority of the computer market. And no, Macs do not have a market all to themselves. Yes, OS X certainly separates Macs significantly from PCs, but it is this very distinction in which Apple competes with other PC companies.
3) Apple is NOT vertically integrated.
People confuse Apple's tying of OS X to their hardware as vertical integration. Vertical Integration occurs when a company controls the entire supply chain. The best example of this is John D Rockefeller's Standard Oil, which owned the oil fields, the railroads that transported the oil, the refineries that refined the oil and the gas stations that sold the converted oil at the very end of the chain.
To be vertically integrated Apple would have to own the companies that make their Logic Boards (Asus), hard drives (Seagate, Maxtor), chips (Intel) and every components that goes into a Mac. Yes, it is true, Apple designs their operating system, and sells the computers containing that operating system in Apple retail stores, but this doesn't fit the definition of vertical integation. As Apple haters are quick to point out, Macs seem to be nothing more than glorified PCs under the hood. Of course, this isn't entirely true since Apple designs the case and Logic Boards (motherboards for PC people), but the fact remains that it is companies like Asus that actually build the boards and other components for Apple. Because of this, Apple doesn't own the entire supply chain and as a result, do not fit into the classification.
4) There are no laws restricting the integration of software and hardware.
It must also be noted, that the integration of software and hardware was standard operating procedure for computer companies such as IBM prior to the dominance of Windows. The fact that Microsoft introduced a new business model that separated software from hardware, does not automatically make this old practice illegal. - inkswamp, on 08/06/2008, -7/+30I think Apple may have some problems stopping Psystar with this. Psystar isn't technically selling machines with OS X installed. They're selling the machine and OS X (in the box) separately and charging an additional fee to install it before shipping.
Now, correct me if I'm wrong on any of these following points.
- It's legal for a company to sell OS X in the box.
- It's legal for a company to sell PCs they have assembled.
- It's legal for a company to open and install shrink-wrapped software on a PC prior to shipping if purchased by a customer.
So, what exactly is Psystar doing that is so illegal here? And if you come back with some comment about OS X licensing or its EULA, bear in mind those things are applicable to the end-user of the software, not the retailer. - TheTallest, on 08/06/2008, -6/+24Now I am not an anti trust lawyer (nor a lawyer) but the way I see it is the problem with this asserition is that it is a Anti-trust suit, not a 'Monopoly' suit.
This means they are suing Apple because they are tying the the software to the hardware (which can be bought seperatly and are thus seperate products) by insisting that 2 seperatly sold items (in that the use of OSX is conditional on owning a Mac not because of technical issues but because Apple says so.)
It dosen't matter if Apple is a Monopoly or major market share holder or not this is anti-competitive behaviour. - inkswamp, on 08/06/2008, -2/+16The EU in EULA stands for "end user." That doesn't apply to the retailer.
- MaxD, on 08/06/2008, -0/+13No, it's like filing an anti-trust suit against Chevy because they shut down your business after you went to all the hard work to develop a method for attaching Chevy engines to Toyota transmissions... The case you present is analogous to OS X not working on PsyStar's hardware - which is just dumb (in the sense that there would be no case).
- inkswamp, on 08/06/2008, -1/+14Do you know what "monopoly" means? Do you know that it's not illegal to have a monopoly?
What *is* illegal is when you use your monopoly power in a particular market to eliminate competition unfairly. That's why I suspect this fight isn't going to be so easy for Apple. In pursuing this, they are getting dangerously close to using monopolistic-like situation to eliminate competitors. - virtualonliner, on 08/06/2008, -7/+19At the heart of it all, it seems like, is the Mac OS X licensing agreement, which prohibits OS X to be installed on non-Apple hardware. I am no legal expert, and I do not know if it will hold in court of law. But I certainly wish it should not. It's akin to some car company saying "You can buy our tires, but you cannot run any other brand car on it". (Gosh, I love car analogies).
- Naidel, on 08/06/2008, -3/+14Welcome to the world of fanboyism.
- inactive, on 08/06/2008, -4/+14Im thinking that is the part Psystar is going after. That is pretty clearly in violation of anti-trust statutes (you dont have to be a monopoly to run afoul with anti-trust) as least as explained by the wiki page. On the wiki they don't cite specific court cases, but they do suggest that the SCOTUS has ruled against arrangements exactly like this over the past three decades.
http://en.wikipedia.org/wiki/Tying_(commerce) - Four20, on 08/06/2008, -5/+15don't forget to breath
- spaceddaisy, on 08/06/2008, -1/+11- It's legal for a company to sell OS X in the box.
From what I understood it's only if they have a reseller's license.
And didn't Psystar mess with OS itself to make it work on their hardware? I know you had to download seperate patches offered by Psystar, becasue Apple's updates could break the OS. Now that sounds very modified and basically copyright infringement. - cbeach, on 08/06/2008, -0/+9How can a tiny company that has sold a relatively trivial number of budget PCs afford to take on Apple using an expensive law firm like Carr & Ferrell?
Psystar has a big brother. - inkswamp, on 08/06/2008, -3/+12It's amazing to me that my comment is being buried and yet nobody digging it down has responded to how any of those things I listed are illegal. No responses to that? Just want to bury it?
I'm a Mac user too, but this kind of thing reminds me of when kids put their hands over their ears and shout "I can't hear youuuuu!" Very childish. - kingfoot, on 08/06/2008, -2/+11the mere fact that there are other devices on the market that play mp3s and videos, means they aren't "monopolistic."
the fact that they tie the iPod to iTunes (both products and intellectual property of Apple), is also not as you say, monopolistic. the zune for example, was tied into its own (***** ***** *****!) software. AND you need windows to use that software. whereas Apple allows itunes on BOTH major platforms. SO, with basic reasoning and logic skills learned in the 2nd grade, either Apple ISNT a monopolistic company as you claim, OR your implied love for Microsoft is false and infact a hypocritical claim of affection. Take your pic, doesn't matter to me. - Reziarfg, on 08/06/2008, -1/+9The way I understand it, copyright(trademark?) dictates that you can use the term in association with the corporation that owns it. Therefore I could write a book about OS X and be completely in the clear. Lots of people do it. When you start saying, I created OS X, or I'm copying what OS X does, then you get in trouble.
- NSResponder, on 08/06/2008, -2/+10"Apple DOES have a monopoly, and yes, it very much means what I think it means"
A monopoly with less than a double-digit market share? That's one for the history books.
-jcr - atdigg, on 08/06/2008, -9/+17This is silly, every company is a monopoly when it comes to THEIR product, but in the sense that matters to law, Apple is not a monopoly, there are other OSes that the Psystar is free to preinstall, including Windows, Linux, BSD, etc.
- tnoy, on 08/06/2008, -3/+10There is one area that Psystar has a small chance on against Apple: Tying. Its been deemed illegal in the past for a company to tie two of their products together--in the case that a desired product requires the purchase of an undesired one. Pystar will try to argue this using the Sherman Act. Courts ruled against Xerox under the Sherman Act when they required people to purchase service when they purchased the copiers, same with Microsoft when they tied MS-DOS and Windows 3.0. Psystar will also have to make the case that the products are separate, that the software and hardware have different markets and a significant number of people would purchase the OS. Software and hardware can be tied, though. e.g. The BIOS on a motherboard is software, but can be legally tied to the hardware as the BIOS would not normally be sold separately. Also in the case that the software is tied to hardware because of the hardware being proprietary in nature. The fact that Apple uses generic Intel hardware will work against them in this case.
Apple's lawsuit against Psystar may end up hurting them if this is the case, Apple ended up making the claim that no full version of their software is available for retail purchase--this brings them further into the murky area of violating the Sherman Act. Psystar could get the courts to rule that Apple then must sell a full retail copy of the OS. Apple wouldn't have to explicitly make it available to run on ALL computers, just sell the software as-is separately.
Its also illegal under the Sherman Act to use market power in one market to expand presence in another. This happened to Microsoft when they tried to include IE with Windows. They were using their dominance in the OS market to expand the market in web browsers. Psystar could try to make the case that Apple is abusing the rapid growth in their OS maketshare to expand their hardware sales.
One area that Psystar will lose quickly though (in Apple's case agaisnt them) is if they are in fact providing any copywritten software that is not included on the installation CD for Leopard. They'll also be in hot water if they're modifying code: circumventing DRM could be in violation of the DMCA - falafelkiosken, on 08/06/2008, -0/+7iRiver?
- Wolfie351, on 08/06/2008, -0/+7The word Monopoly was not used ONCE in that article. Before you go on your rants, you may want to read a bit more carefully. Antitrust suits and full blown monopolies are two different things.
- Kelmon, on 08/06/2008, -1/+7Bugger me, it's Rumpole Of The Bailey!
You'll excuse me if I don't take your comment as legal advice. - mtappenden, on 08/06/2008, -1/+7Okay but hang on a minute, my washing machine manuacturer makes their own operating system, and they won't sell it to me and allow me to put it on another washing machine, which kinda pisses me off really, since I want to be able to take advantage of their great washing machine functions without the cost of their hardware.
- JorgeGT, on 08/06/2008, -0/+6See my comment below, you can't tie two of your products, just think printers + ink. They can't force you to use their ink, you can use ink from any third party, and it has been ruled so by US courts. Now think, you buy OS X: they can't force you to buy a PC from Apple, you can use a PC from any third party!
It's the same situation except the crazy EULA that most software has, but remember, any term of a contract against the applicable law it'sjust void, they play with your fear/ignorance of the law. Software is like any other product or service!
Edit: As pointed by B1663r, this unlawful practice is called tying. - r3zonance, on 08/06/2008, -0/+6Psystar's legal defense is probably being funded by larger companies who would like to be able to enter the Apple clone market.
- nationalist, on 08/06/2008, -1/+7ANTI-TRUST NOT MONOPOLY GODDAMNIT
- wyrdness, on 08/06/2008, -2/+8Good point. I can go into an Apple Store and buy a shrink-wrapped copy of OS X. It has a license that says that it can only be installed on Apple hardware. I guess that the question is whether that license is actually enforceable.
- MWeather, on 08/06/2008, -0/+6It's because monopolies don't have to control 100% of the market, just the vast majority.
- Kelmon, on 08/06/2008, -2/+7No offense, but do you actually know why Microsoft were found guilty of anti-trust breaches and fined in the first place? It wasn't because they bundled software with the Windows OS, but rather because you couldn't remove it or use alternative software as your default. While the Mac OS comes with the usual applications you can remove them easily (or request them not to be installed in the first place) and set 3rd party applications as defaults. Microsoft effectively got done for relegating software from other vendors on the Windows platform to second class citizens and therefore were abusing their position as manufacturer of the OS.
Yes, Apple has a monopoly on Macintoshes but, as has been pointed out, many companies have a monopoly for their own products. Just because Apple makes a computer does not mean that they need to license the OS. No one seems to be demanding that HP licenses HP-UX and that's the same situation.
The locking of the iPod/iPhone to iTunes isn't unusual either. This is quite normal across many devices that require software by the hardware manufacturer to manage it. The only real issue here is the DRM that won't work on players by other manufacturers and which effectively locks the customer to Apple. - EVILTHETURTLE, on 08/06/2008, -1/+6Wrong. The installer has to be modified to work on non apple hardware.
- r3zonance, on 08/06/2008, -0/+5Because of the wording in the licence (i.e. OS X can only be installed on an Apple branded computer). OS X retail boxes are effectively "upgrades" (not full versions) as you can only purchase an Apple branded computer with Mac OS (of one version or another) already installed on it.
- Kelmon, on 08/06/2008, -0/+5That's slightly correct. Apple are being investigated for the lock-in between the iPod and iTunes Store by the EU Competition Minister so it will be interesting to see what happens there. Aside from that there isn't anything wrong here. There's plenty of competition in the MP3 player market and there's obviously nothing wrong with requiring dedicated software to operate your device as this practice is pretty normal.
Apple could only be describes as a monopoly if they were the only game in town and if they actively prevented competitors from entering the market. Given the high volume of competing products to the iPod, it seems difficult to describe Apple as monopolistic. I think you have confused "monopoly" with "market leading". - Spuy767, on 08/06/2008, -1/+5Apple's OS requires certain functions of EFI to function in its retail state. To be installed on non-apple, non-EFI hardware, which PsyStar is doing, the software MUST be modified. If these machines are leaving the "factory" with a running copy of OS X on them, then PsyStar has broken laws according to the DMCA.
- MrSkills, on 08/06/2008, -2/+6What? iTunes does encode music with DRM by default. In fact, it does not do it AT ALL. (Although there is DRM on music download from the iTunes *store*, which is a different thing).
Also, AAC is *not* Apple's proprietary standard. It is just another standard like MP3. - wuvamber, on 08/05/2008, -9/+13Very nice.
- Archer007, on 08/06/2008, -1/+5Actually, most EULAs specifically prohibit reverse-engineering or decompiling.
- Spuy767, on 08/06/2008, -1/+5Reverse-engineering, especially by a corporation is a direct violation of the DMCA.
- wonderbriefs, on 08/06/2008, -0/+4Um, I'm fairly sure that any time a piece of hardware has been developed, it has been up to the decision of the manufacturer to say what software may be run on it, and vice-versa. Nintendo would only allow each developer to release five titles for their system back in the days of the NES, and this was to combat the glut of worthless games that had been developed. They wanted to ensure that only high-quality games were being produced.
Now look at the fact that running an emulator and a ROM are illegal unless you own an NES and the cartridge from which the ROM was developed. This is an example of the software being limited to run on proprietary hardware. This kind of thing is completely legal under a EULA. Under this circumstance, I could see owning a Psystar being legal, but only if you also owned the Mac equivalent.
Personally, I'd love to own a Psystar because it's cheaper. And I just like screwing with hardware to run software that wasn't approved. I have two hacked PSPs. But I'm not trying to argue that I have the right to do this. It's about fooling the system. - streak, on 08/06/2008, -0/+3@wyrdness, the license is enforceable, but it is up to Apple to see that it's enforced. The task is difficult and not absolute, but to some degree it is doable. Apple's suit of Pshyster is an effort at enforcement. By "enforcement" perhaps you were questioning the legality, though. I am not a lawyer, but I have read that the courts do allow manufacturers to restrict usage of their software under copyright law. The fact that the details of Apple's license aren't known until the box is opened would seem to be a weak argument, if only because the outside of the box plainly says a Mac is required, Mac is a trademarked name that no clone manufacturer has been allowed to use, and the license in the box allows for the return of product with a refund.
Tying hardware to the OS is not illegal. I believe IBM successfully defended this practice many decades ago, when clones of the IBM 360 and 370 were not allowed to run an original IBM OS. IBM had a much more dominant position in the mainframe market than Apple has now in personal computers, so being a monopoly would seem irrelevant. To avoid the restriction, clone manufacturers simply ran a non-IBM OS that enabled them to run applications written originally for the IBM mainframe. - deadmoo, on 08/06/2008, -0/+3antitrust claims =/= monopoly claims
- mrsteveman1, on 08/06/2008, -0/+3The installer does some basic checks of the hardware, but the reason it can't boot on a PC is because BIOS can't read the HFS filesystem on the CD and can't run EFI binaries, which is what boots first on the cd. Those EFI emulators allow it to boot and don't violate any sort of copyright or DMCA restriction.
The kernel though, will run just fine on a PC as long as some EFI tables are given to the kernel at boot time so it doesn't crash, and that's a compatibility issue, not an intentional protection.
The only case where something must be decrypted is the protected binaries, and Apple hands out the key for those with every mac, unprotected. - jkgm, on 08/06/2008, -1/+4Quoted from Mark Munz on Ars Technica boards:
You guys are missing the most obviously flaw in Psystar. They incorrectly believe that OS X 10.5 is a full retail copy of Apple's Operating System. It isn't.
Clearly $129 is not a full retail price for an OS (ask Microsoft). It's more in the range of an upgrade price.
Since Macs all come with some version of Mac OS installed, all OS X copies are actually upgrades to that OS. Psystar is basically claiming that it should be legal to take a Windows upgrade license, or an Adobe upgrade license, hack it and use it to run as a full retail copy. I think you see where this is going.
If Psystar somehow won, companies would not be allowed to offer upgrades. Instead, we would have to pay the full retail price on each and every product because a company would no longer be able to give discounts to existing users.
Psystar bought an upgrade, hacked it, then claimed it was a full retail license and sold it with their hardware. If they would have done that with Vista, Microsoft would have sued them too.
I, for one, do not want to see Apple move in the direction of Microsoft by requiring activation or other draconian measures. Sadly, the Psystars of the world may bring that about and then everyone loses. - JorgeGT, on 08/06/2008, -0/+3That was my point. Software is like any other product: You would't accept tying in case of printer ink, or any part of the PC you're building, why with software? Just because software has crazy contracts? They are void if they're against the law. A PC artificially locked to an OS or an OS artificially locked to a PC is the same stupid thing!
- Kelmon, on 08/06/2008, -0/+3Well, it's about the only defense the company has. The sad part is that, win or lose the case, Psystar is finished. If they lose the case then that's it. If they win the case then the clone floodgates will probably open and they'll lose what little market they have to the big boys. Dell, for example, has gone on record to say that they'd like to sell computers with the Mac OS installed on them.
- inactive, on 08/06/2008, -2/+5Can anyone explain to me why Microsoft is considered a monopoly? There are other products in the market like OSX, Linux etc so it can't be considered a monopoly. (For the same reason people claim iPod is not a monopoly because there are other mp3 players in the market.)
- r3zonance, on 08/06/2008, -2/+4"Tying. Its been deemed illegal in the past for a company to tie two of their products together"
However, Mac OS has always been tied to Apple/Apple-authorised hardware. It's not like they were artificially tied together after the fact. They have always REQUIRED the tying. - Spuy767, on 08/06/2008, -1/+3@r3zonance: as does hacking OS X to run on non-apple hardware.
- mrsteveman1, on 08/06/2008, -0/+2By opening the box and installing the software, they are effectively the end user. There isn't any sort of retailer license they have been granted, nor any contracts etc.
I don't know if the EULA is binding or not, i hope it isn't, but thats the situation. - deadbaby, on 08/06/2008, -8/+10I think the fundamental fact in this case is that Apple never licensed their operating system freely to generic hardware OEMs so there was never any Mac clone free market for them to have a monopoly on. When they did license their OS it was under a very tight, restrictive, license. This is as silly as suing Nintendo because they have a monopoly on Mario games. These guys are going to get laughed out of court.
- inactive, on 08/06/2008, -1/+3False premise: Monopolies are illegal
True premise: Monopolistic PRACTICES are illegal !!
False premise: Apple manufactures its own hardware
True premise: Apple manufactures cases/configurations and adds same generic hardware like every other PC maker.
True premise: Apple locks down OSX to use their generic hardware setup only
False premise: Apple practicing this monopolistic PRACTICE has the right to.
True premise: Apple is NOT vertically integrated
False premise: Apple cannot practice monopolistic practices if NOT vertically integrated
True premise: There are no laws restricting the integration of software and hardware.
False premise: That you can restrict the integration of software and hardware to one vendor when you're hardware is NOT YOUR OWN!
Let's make it easy and give an example:
If MICROSOFT started making their own PCs and decided to lock down Windows to only be usable on those PCs. THAT WOULD BE A MONOPOLISTIC PRACTICE!!!
MS does not have this right and Apple should not have this right either.
End of story - tnoy, on 08/06/2008, -0/+2So? The fact that it has always been that way has nothing to do with it. That just means that no one has successfully brought suit against Apple under the Sherman Act.
Apple's switch to generic Intel hardware changes the case entirely. They're no longer protected under the clauses that allow tying due to proprietary hardware. -
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