Apple CEO Tim Cook is set to join Amazon CEO Jeff Bezos, Alphabet/Google CEO Sundar Pichai, and Facebook CEO Mark Zuckerberg in an antitrust hearing held by the House Judiciary Antitrust Subcommittee next Monday, but a new report by The Information takes a look at Cook's reluctance to participate in the hearing and how he and Apple have tried to navigate a polarized political environment.
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Some two weeks after the other tech CEOs had agreed to participate in the hearing, Cook was still holding out for fear of getting caught up in issues more relevant to those other companies than Apple.
There was a simple reason for his holdout. According to people familiar with his thinking, Cook was firm in his belief that Apple didn't belong with a group of companies increasingly viewed as antitrust malefactors by lawmakers and regulators, including Amazon, Facebook and Google. What’s more, Cook had spent much of the last four years mostly avoiding the kind of toxic political environment that has engulfed the CEOs of those companies over everything from privacy to censorship to treatment of workers.
But under the pressure of a potential subpoena from Representative David Cicilline, chairman of the committee and a critic of Apple's App Store policies, Cook ultimately agreed to participate in the hearing.
The report indicates that Cook has spent the better part of a month preparing for the hearing, which may touch on a wide range of subjects from App Store policies to Apple's disputes with the FBI over providing methods for law enforcement to access locked devices to Apple's relationships with China.
The full paywalled report goes into much more detail about how Cook has delicately balanced relationships on both ends of the political spectrum, trying to stay above the fray largely by keeping quiet. That approach has helped Apple maintain stability in turbulent times, winning exemptions from tariffs on many of its products and avoiding much of the scrutiny that has been aimed at other tech companies.
Still, Apple and Cook aren't completely immune to criticism, and it remains to be seen whether next week's hearing will lead to any action on antitrust and other fronts.
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Top Rated Comments
This is a concept that really matters when it comes to violations of Section 1 of the Sherman Act or Section 7 of the Clayton Act. With Apple's App Store situation, it's more likely that it will have a problem with Section 2 of the Sherman Act - so this isn't a concept that's as relevant to this discussion.
Section 2 of the Sherman Act deals with monopolization. It's a violation to (1) have monopoly power and (2) engage in exclusionary conduct which is causally connected with that monopoly power.
Section 1 of the Sherman Act relates to agreements with other parties in restraint of trade. It might be illegal for Ford and GM to agree to do certain things. That would be a horizontal agreement. But it might also be illegal for Ford and car dealers to agree to do certain things. That would be a vertical agreement. Both can be antitrust violations, though the different kinds of agreements are analyzed differently. Some kinds of agreements are per se illegal, some are analyzed using the rule of reason.
Section 7 of the Clayton Act relates to anticompetitive mergers. Such mergers can be horizontal or vertical.
My personal opinion is that Apple's App Store does have a high cost of doing business, and those costs will be either be eaten by the developer or passed on to the consumer. I as a consumer have two choices, 1. use the Apple ecosystem which tacitly tells apple that I am okay with these practices or 2. switch to another platform in protest.
I have to weigh if there is value in the possible extra costs brought on by the App Store cut. But that decision is a personal choice, a choice for which I have an alternative. It is my assessment that since I have a choice to enter and leave this ecosystem at will, that it should not be subject to monopoly inquiry; however, I'm not a legal scholar, I've not studied the law, and for all I know the App Store practices may well still fall under anti-trust regulation.