Critique of Has Apple Finally Become a Monopoly Like Microsoft?

The growing concern among faithful Apple users is that the company is becoming a monopoly. Many people think that the concept of a monopoly is a good thing; the board game “Monopoly” declares the player with the most money and control of the board as the winner. The definition of a monopoly is the situation that occurs when a single company has complete control of a market for a certain type of good or service. This company with absolute market power has no competition which creates a barrier for other firms who want to enter the market. Monopolies, by definition, produce a lower quantity of goods and charge higher prices for their goods than those firms who are in perfectly competitive markets.

This article first discusses the fact that Microsoft is a monopoly in the operating systems market. Even though being a monopoly is not considered to be illegal, using the status of being a monopoly to force smaller companies out of business and out of the market is illegal. In order to keep a company as a monopoly, the operations of the firm must be approved by the government or monitored to make sure a fair amount of competition remains in the market and that the firm is not breaking any laws. The question everyone wants answered is if Apple is considered to be a monopoly. The fact that Apple controls over 80% of the digital music player and digital content delivery market suggests that they are in fact a monopoly. Apple dominates these markets because they produce the highest quality experience for the lowest total cost (total cost = fixed cost + variable cost). The author, however, believes that “true competition is the only way to ensure superior products in the years to come” (Stoup, 1).

So according to the author of this article, it would be in Apple’s favor to have other competitors emerge in the market. When there are no other competitors in their line of business, it’s hard to constantly drive to improve their products when there isn’t any outside competition to motivate them. It would be in Apple’s best interest to lose some market share and have less power and control in the market. In class, we learned how to calculate the level of competition in two ways: the concentration ratio and the HHI. To calculate the 4-firm concentration ratio of the digital music player and digital content delivery market, we would take the top 4 successful firms in a specific market and add together their market shares. To find the HHI, we would determine how many firms are in the market, square each firms market share and then add those numbers together. Fewer firms in a market mean that there is less competition so each firm has more power in the market. So I agree with the author of the article when he says that “best deal for consumers is to hope that Apple loses market-share… the time could come soon enough when consumers might wish for a few more options in this ever more profitable market” (Stoup, 1). If Apple thinks it is in their best interest to lose some market share so that other firms would be able to enter the market and gain market power, then Apple would be able to lose their label of being considered a monopoly.