Apple Inc: A victim of its own digital revolution?
It once led a digital revolution but now stands accused of monopoly abuse by the US Justice Department. Has Apple’s dream of empowering ‘the rest of us’ gone against our interests?
Are most revolutions doomed to become the very thing they sought to overthrow? In the world of business, this question arises in the case of Apple, widely seen as the world’s top brand. It began with a mission to bust the paradigm of centralized big-frame computing by empowering “the rest of us” with personal computers of our own. This was the story captured by 1984, a TV commercial it aired that year which showed it taking on Big Brother of George Orwell’s novel by that name. Directed by Ridley Scott, this ad-film was 60 seconds of fantasy iconoclasm that made an icon of Apple, although the ‘knowledge byte’ of its logo also projected it as a champion of digital democracy. The company’s real revolution, though, was wrought more than two decades later, and not by virtue of an easy-to-use computer, but a hand-held gadget called the iPhone that gave us access to the internet’s wonders at the swipe of a thumb. Instead of one giant screen looming over everyone in an Orwellian metaphor for central authority, we have billions of little screens ready to run apps for us in a triumph of individual liberty. Or so it may seem till we consider the power that Apple wields over the apps we use and online spaces we reach. Is Apple Inc the Big Brother of our cyber lives today?
In India, such a charge may sound odd, since most smartphones are Android devices, loaded with Google’s rival operating system. In the US, however, where Apple’s iPhone has over two-thirds of the market, the Department of Justice (DoJ) last week charged the company with abusing its monopoly by acting in ways that throttle rivals and thwart innovation. Denying the charges, the iPhone-maker said it will defend itself in court. At the core of the dispute is the ‘walled garden’ of apps curated by the company. It’s a diverse place, no doubt, and iPhone users who spend much of their waking lives there arguably do have reason to thank Apple for keeping it safe from bugs and other menaces. Yet, Apple’s role as gatekeeper not only means that some apps are barred, those granted entry are charged a sizeable chunk of in-garden payments as service fees. As handsets are the dominant man-machine interface now and every business must get past that gate to reach the world’s 2 billion iPhone users, or risk being left hard-to-reach, both aspects have drawn protests from app makers. As the DoJ’s case alleges, among those kept out are superapps that serve multiple ends and gaming apps that use cloud resources. On the face of it, this seems motivated less by safety concerns than by the profit potential in reduced rivalry for its own software services and hardware. The company is also alleged to make non-Apple gizmos sync so poorly with its phones that we need Apple’s costly accessories. The matter of its chunky fee has attracted scrutiny beyond the US too. The EU’s recent Digital Markets Act forced its walled garden open to apps with parallel payment systems. All in all, given Apple’s undeniable dominance of rich-world markets, it has become harder for it to argue that none of the $97 billion it made last year on revenues of $383 billion was from rent earned off its fabled garden.
Many expect an AI inflexion to curtail Apple’s power and the market to correct itself. If so, maybe antitrust authorities needn’t intervene. The big problem of the digital age, however, is its winner-takes-all tendency. This makes every revolution vulnerable to its own success.