Yesterday, I read the two Epic Game complaints against Google and Apple. They are, as you might expect given the lawyers involved, quite well done but I do have some related conceptual questions about the claims raised. (1/)

Call these static monopoly and business model questions. I think that they are related. Start with Apple. I think that everything that Epic is complaining about was baked into the App Store when it opened in July 2008. (2/)

Epic really would like open access to the iPhone (just like on computers as they note) with competing ways of selling apps/software for the iPhone. That would get around the 30% commission rate, though that would not address nondiscriminatory access to APIs and the like. (3/)

Apple launched the 3G iPhone and the app store at the same time at a point where they almost certainly didn’t have any market power. This was just another product competing in a very crowded market place. (4/)

That product hasn’t change as Apple has risen, or at least the parts that Epic’s complaint is about hasn’t changed. That is what I mean by a static monopolization theory. (5/)

This isn’t, for example, the Microsoft case, where Microsoft had achieved a monopoly and then changed its behavior aggressively in response to the Netscape threat. (6/)

The question is whether U.S. antitrust law does/should have a static conception of monopolization or whether Section 2 does/should require some distinctive act of monopolization? (7/)

And the tension there is in part with the Alcoa vision that we don’t turn on successful competitors when they have won and yet a static monopolization charge seems to do just that. (8/)

Do we use Section 2 to force companies to redesign products/business models that have achieved their position through legitimate competition in the marketplace? (9/)

I think that framing really goes back to cases like IBM (1969) and AT&T (1974), though I need to go back and look again at the complaints in those cases. (10/)

Note of course that the government dismissed the IBM case after 13 years, though IBM did “voluntarily” implement the key unbundling remedy sought by the government early in the case. (11/)

And the AT&T case was resolved through an agreed breakup of the company and the merits part of the case was never fully litigated. (12/)

Take that to the Android case. Android is, in many ways, really a game console model. I assume the Android handset market is reasonably competitive, that Google isn’t making real money there and that that was never the plan. (13/)

And Google gave away Android, or at least it did so before the European Commission moved to disrupt another successful business/model product that succeeded in a competitive market. (14/)

Back to game consoles. The game console market is about selling the console at a loss to build up a customer base and then selling access to game developers to those customers. (15/)

I have seen 30% as the standard fee there—and even Epic itself originally had a 30% royalty in the market it runs—where the fee is about selling access to the audience that you have created through losses on the console. (16/)

Google gives away Android with the plan of making money on Search but also on Play, but this really is just a software version of game consoles. You can’t give away (sell at a loss) all of that software if you can’t make money elsewhere. (17/)

These will be terrific cases with capable lawyers on both sides. The other day, I called these the Carterfone cases of the smartphone era and I think that description is right. (18/)

I do think the Epic cases against Apple and Google raise some basic questions about how we should think about static theories of monopolization. (19/19)