Apple’s Monopolistic Control Over the
Tech Industry
Andy Liu, Simon Fraser University
Abstract
This paper was originally written for Dr. Jacqueline Nelson’s CMPT 105W course
Social Issues and Communication Strategies in Computing Science. The assignment asked
students to write a persuasive essay addressing the social, and/or ethical issues
associated with topics related to technology that is chosen by the students. The
paper uses APA citation style.
Apple, a brand known worldwide for its electronic products, has become one of
the biggest companies in tech. Its international dominance within the tech
industry has led its business practices to be continually scrutinized. Many deem
the company’s methods of maintaining its success as monopolistic because of the
unfair control that it holds over its customers and certain areas of the industry. An
opposing argument can also be made with the competition that Apple faces and
how it prevents the company from exhibiting monopolistic control. However, this
paper argues that Apple does exhibit monopolistic behaviour in the tech industry
by examining Apple’s treatment of its customers and competing brands. The
documented examples within news articles and journals of Apple demonstrating
its control provide a new perspective of the company that many are unaware of.
Introduction
Apple, a brand recognized for its computer software and consumer electronics, is
one of the most powerful tech companies worldwide. Established in 1976, its
continued success has made it one of the Big Five American tech companies
alongside Microsoft, Amazon, Facebook, and Google (Dow Jones & Company,
2021). Its control over the App Store as well as its loyal consumer base has
enabled it to grow to its current size. Coupled with the constant acquisitions of
other companies, Apple has come to dominate the tech industry and exhibit a
monopolistic influence over it. These practices are defined as monopolistic
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because it “tries to control as much of an industry as it can and does not allow fair
competition” (Monopolistic, n.d.). Alternatively, some argue that Apple does not
exhibit monopolistic behaviours because of the competition that it faces.
However, this becomes irrelevant when considering both the power and wealth
that Apple has over these companies. Contrary to Apple’s popularity, many of its
customers are unaware of its influence within the industry. Therefore, consumers
should understand that tech giants like Apple exhibit monopolistic behaviours
through the App Store, controlling its consumer base, and eliminating
competition.
The Monopolistic Behaviours of the App Store
As the sole provider of apps on iOS, Apple’s App Store holds complete control
over not only app developers who choose the platform but consumers and their
access to apps as well. Developers on iOS are charged a percentage of their
revenue from their apps to continue operating on the App Store. Upwards of
30% of profits made through in-app purchases must be given to Apple forcing
developers into either driving up costs for consumers or decreasing funds
invested in new innovations (Albergotti, 2021). This monopolistic control that
Apple exerts on third-party apps extends to major companies on the App Store as
well. Spotify, a music streaming competitor to Apple Music, has raised issues
about the App Store. Due to Apple’s mandatory in-app subscription charges,
Spotify raised its costs eventually leading the EU to charge Apple with antitrust
violations and anti-competitive behaviour (Wakefield, 2021). This controlling and
suppressive behaviour exhibited by Apple through its percentage cut is
problematic for not just developers, but also consumers on the platform.
Users of iOS are completely restricted to the App Store to access apps
allowing Apple to freely manipulate charges. The 30% cut that it takes forces
businesses to increase costs for the customer to sustain their profits. In 2014,
Spotify’s monthly subscription cost increased from $10 to $13 on iOS to account
for the extra fee (Nicas, 2020). Additionally, Apple’s regulations restrict
information displayed within apps to control the consumer’s purchases.
Developers are forbidden from mentioning in their app any alternative non-Apple
payment methods that are oftentimes cheaper (Manjoo, 2021). Using restrictions
imposed on both developers and consumers, Apple demonstrates the control it
has on its services. However, not all are convinced of the company’s monopolistic
behaviours in the tech industry.
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Apple’s constant competition with other companies like Samsung and
Microsoft is one claim against Apple’s monopolistic control. For example, within
the smartphone industry, Samsung has a greater global influence than Apple. In
the 2nd quarter of 2021, Samsung’s global smartphone market share was 18.8%
compared to Apple’s 14.1% (O’Dea, 2021). Along with this, Microsoft’s OS for
desktop PCs also has a greater market than that of Apple. As of June 2021,
Microsoft Windows OS had a global market share of 73% (Liu, 2021). These
factors both contribute against Apple exhibiting monopolistic control but are
irrelevant when considering the power that Apple holds. Although Samsung’s
global market share of smartphones is greater than Apple’s, it is important to
consider that Samsung has copied the innovations of Apple multiple times. In
2012, Samsung was forced to pay $1.05 billion for infringing design patents of
Apple to which Samsung deemed a loss of choice and innovation for the
smartphone industry (BBC, 2012). This was not the only occasion, however, as six
years later Samsung was forced to pay $539 million for once again infringing
Apple’s design and software patents (BBC, 2018). Apple’s controlling behaviour
and power are not only shown in the market it occupies but also in its overall
brand value. Both Microsoft and Samsung have much lower brand values which
describes the wealth and “capabilities of a brand to conduct its business” (Gupta
et al., 2020, para. 2). Currently, Apple stands as the most valued brand in the
world at upwards of $263 billion compared to Microsoft at $140 billion and
Samsung with even less (Statista Research Department, 2021). Plenty of
competition exists within tech, but Apple still emerges as the most dominant
force in the industry.
Apple’s Control Over its Loyal Consumers
Apple’s monopolistic control over the loyal consumer base it has accumulated has
helped it to maintain its success and influence over the tech industry. Their loyalty
to the brand and Apple’s power over them has made it difficult for other
competing companies to surpass Apple’s success. A survey done on 169 college
students reports that 46% of respondents would agree to continue purchasing
Apple products despite competing deals and another 44% strongly agreed (Pinson
& Brosdahl, 2014). A recent report done on iPhone users in Indonesia also helps
to show the brand loyalty that iPhone has attained. Of the 155 participants
questioned, 95.5% said that the benefits from an iPhone are worth the money
spent and another 65.2% planned on purchasing a new iPhone within the next 3
years (Natalia et al., 2021). Furthermore, the research group CIRP, Consumer
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Intelligence Research Partners, found that Apple maintained a loyalty rate of 90%
over the past three years compared to Samsung’s 70% (AppleInsider, 2021).
These consumers who consistently purchase Apple’s products have allowed it to
stay relevant and influential within the industry.
As positive as Apple’s brand loyalty may seem, much of it is due to the
restrictive ecosystem that Apple has created around its products. The House
Judiciary antitrust subcommittee stated that its brand loyalty and confining
ecosystem make it unlikely for users to switch from iOS and for new companies
to successfully contest iOS’s dominance (Leswing, 2020). If consumers were to
consider switching, the high costs accompanied by that decision prevent many
people from doing so. Paid content like apps and music bought through Apple
devices are exclusive. Access cannot be transferred to competing platforms such
as Android. This allows Apple to control the user and the marketplace with its
power over its supply of services and essentially “own the customer”
(Montgomerie & Roscoe, 2013, para. 14). However, consumers are not the only
ones subject to Apple’s monopolistic behaviour, as other businesses within tech
also feel the company’s dominance.
Buying Out the Competition
Apple’s continuous acquisitions of companies are great examples of the
monopolistic control it exerts over tech. The company has made consistent
purchases of other brands to control potential competition and innovations
within the industry. According to Feiner (2019), Tim Cook, Apple’s CEO, stated
that Apple purchases a company every two to three weeks. Mobeewave, a
company focused on near-field communication technology (NFC), was purchased
by Apple for $100 million to progress its own developments (Gurman, 2020).
Although this is a comparatively smaller purchase for the company, it used the
new technology to launch its own credit card and insert itself into an entirely new
field. Often, Apple is not interested in continuing the businesses of the acquired
companies but instead focuses on the technical staff that is absorbed (Leswing,
2021). This becomes problematic since smaller companies involved in tech have
difficulty developing into actual competitors and innovators within the industry.
They are instead absorbed by Apple due to its wealth and power.
These acquisitions that Apple has made extend to larger companies as
well. Big brands that pose a threat to Apple’s influence in certain industries
become at risk of being acquired. Apple Inc. closed a $3 billion deal for Beats
Electronics LLC to eliminate competition to iTunes (Calia, 2014). This is its
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largest acquisition to date but not its only major one. Apple’s voice recognition
software SIRI originated as an independent company called Siri Inc. To further
advance its speech technology, Apple purchased Siri at an estimated $200 million
reflecting its strategy of preventing competition by absorbing the innovations of
other companies (Reiff, 2021). Through the acquisitions of small and big
companies, Apple once again demonstrates monopolistic behaviours by
eliminating fair competition to control the industry.
Conclusion
Apple, one of the most well-known brands in the world, has grown from its
establishment in 1976 and become an extremely powerful tech company. The
monopolistic behaviours that it exhibits are made evident by the App Store,
controlling its consumer base, and elimination of competition. For iOS, the App
Store is the sole provider of applications giving Apple full control over both
developers on the platform and users. With this power, Apple takes substantial
cuts from developer profits and restricts information given to users on non-Apple
payment methods. Some argue that Apple does not exhibit monopolistic
behaviours because of the competition it faces. However, even with competition,
Apple manages to demonstrate its power through successful lawsuits to suppress
other companies and its overall brand value. Additionally, its consumer base stays
very loyal to the brand making it difficult for other companies to surpass its
success. Even when users consider switching, the restrictive ecosystem it has
created bars people from doing so with high costs. Further monopolistic
behaviours are exhibited through Apple’s elimination of competition by making
consistent purchases of small companies. These acquisitions extend to large
companies as well, many of whom Apple deem as threats to the success of their
brands. Apple’s monopolistic behaviours have allowed it to dominate the tech
industry and will continue to do so unless more regulations are set.
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By submitting this essay, I attest that it is my own work, completed in accordance with
University regulations. I also give permission for the Student Learning Commons to
publish all or part of my essay as an example of good writing in a particular course or
discipline, or to provide models of specific writing techniques for use in teaching. This
permission applies whether or not I win a prize, and includes publication on the Simon
Fraser University website or in the SLC Writing Contest Open Journal.
This work is licensed under a Creative Commons Attribution-
NonCommercial-NoDerivatives 4.0 International License.
© Andy Liu, 2021
Available from: https://journals.lib.sfu.ca/index.php/slc-uwc
SLC Writing Contest – 2021
