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On running out of words

John Gruber’s subscription to Wiktionary expired:

At just 20 percent of unit sales, Apple isn’t even close to a monopoly. At 92 percent profit share, they have a market dominance that rivals any actual monopoly the tech industry has ever seen. We don’t even have a term for this situation, it’s so unusual.

We do have a term: monopoly will do just fine. Gruber says that Apple “isn’t even close to a monopoly”, but you don’t need to have all or even most of the unit sales in a market in order to be able to act monopolistically. An entity (or a cabal) only needs a big enough share of the sales in order to be able to set prices independent of the other competitors in the market. (Working at big telecoms companies has the effect of teaching you specifics of market economics, but then so did those economics classes I took at University.)

That 92% profit on 20% sales is indicative, rather than contraindicative, of a monopoly. And there’s another word we could use, too: monopsony. Let’s say that you’ve made an iOS app, and now you want to sell it. Do you create a storefront on your website to do that? Do you contact Sears and see how many boxes they want? Speak to some third-party distributor? No, you can only sell to Apple, they are the only buyer for iOS apps.

The thing it’s important to remember about monopolies or monopsonies is that they are not inherently bad: badness happens when an entity uses its dominant position in a market to set prices or other terms that are not considered fair, and that’s a pretty woolly situation. When the one buyer in your market decides that your contribution is “amateur hour” (sucks to be a hobbyist, I guess), or that your content is “over the line”, and doesn’t want to buy your product, you have no other vendors to sell it to: is that fair?

This is an argument that relies too much on legal details and nuance to be able to answer as a novice, so I’ll spare you my “amateur hour” pontification. I would imagine that a legal system that did explore this question would consider analogous environments, like the software market of the 1990s. Back then, Microsoft bundled a web browser and a media player with their operating systems and used their market power (which let them act as a monopoly even though competitors existed) as an operating system vendor to make it hard to sell competing browsers or media players. It might be an interesting thought experiment to compare that situation with today’s.

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