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Against Monopoly

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Monopoly corrupts. Absolute monopoly corrupts absolutely.





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Apple patent on "interface supporting application switching" = more evil monopoly

Matt Yglesias link here picks up a story on patents from Steve Landsburg link here.

The patent covers a "portable electronic device with graphical user interface supporting application switching". The effect of the patent seems to preclude any other smartphone maker from doing the same thing.

Landsburg avoids coming to a judgment about this patent, and asks the readers to argue the question. Yglesias has a more reasoned judgment:

"Sometimes critics of over-patenting lean too heavily, I think, on the idea that these abusive patents are somehow overly broad or trivial but I don't think that's the real issue here. The issue is that there's just no sound public interest case for granting monopolies over certain features to the first-to-market firms in this industry. Apple has already gained a very large competitive advantage from the fact that they were the first people to deploy a working touchscreen smartphone and even without patents clearly has a strong financial need to continue investing in improving its product lest lower-margin Android-powered phones eat away at its profits."

But I don't think that goes far enough in this case. We now have an industry dominated by two or at most three huge firms (counting Google). The many small firms are sources of innovation but are simply bought up by the biggies when they are very innovative and successful. The lawyers are running rampant.

The big three should be broken up as dangerous with their dominant market power.


Comments

Yglesias's post is confusing with respect to the industry dominated by two or three huge firms. He is speaking of the operating systems for smart phones versus the manufacture of smart phones. In the United States, Google, Apple and RIM have the 92.6% of all operating systems, from largest to smallest in terms of size.

Globally, the Android operating system accounts for 53% of all smart phones, followed by Symbian with 17%, the iOS with 15%, and RIM with 11%. The bulk of smartphone sales are in Asia, with most of those in China, where software patents are not recognized.

Samsung, Apple, Nokia, HTC and RIM are the largest smartphone manufacturers globally, accounting for 69% of the market.

Given that much of the world does not recognize software patents, and given that the United States is only about 20% of the worldwide market for smart phones, it would appear that the above Apple U.S. patent is unlikely to have any significant negative effect on either innovation or sales, if it has any negative effect at all.

Merely breaking up companies does not mean that the market will become more diversified. When AT&T was broken up the goal was to increase competition. Competition declined and the cost of telephone service skyrocketed. Then telephone companies began merging again because the regional telephone companies were not competitive. True competition only began when cell phone service emerged.

Just breaking up "The Big Three" as you call them is not necessarily a recipe for making a "Big Four," a "Big Five," or any other number. Experience says that government mandated divestitures just lead to higher prices, inefficiencies, and some of the split-offs end up in bankruptcy.

It's worth noting that the personal computer OS space is even less diverse, with just two companies, Microsoft and Apple, having a combined market share of about 95%.
Good point, Beeswax. Either good or bad, the market has accepted the dominance of these two PC OS systems with nary a blink. Though the open OS has made some minor inroads, its growth rate seems to have slowed. Further, open OS has barely broken into corporate markets.
If you mean Linux/BSD/etc., those're common on the server side in corporate markets, just not on the desktop and laptop PCs.

On the other hand, even if the free *nixen collectively acquired a sizable PC OS share, there are many different distros and not all of them are associated with for-profit corporations, so there would probably not be new companies with large PC OS market share -- just a great reduction in the strength of the Apple/Microsoft duopoly there. The pie would have those two fat wedges still, but a lot of little thin ones, none perhaps individually particularly big, summing to another fat one.

AFAIK the current frontrunner *nix on PCs is Ubuntu, but Debian, *BSD, and others are significant as well. But that may be somewhat out of date.

Beeswax:

Yes, your statement is precise. I did neglect the server market, where open OS has a significant market share. If I understand your comment correctly, the open OS market is shared by a lot of companies/sources rather than being dominated by a single one, but collectively open OS accounts for a significant piece of the server pie.

The desktop and laptop PC markets continue to be dominated as you described.


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