My friend Ashish got me spinning wheels on this one. Now we all know about Microsoft’s antitrust case about bundling internet explorer with windows and that being restrictive and anti competitive. So Ashish’s query which looked simple at first, why is not Apple tying up an exclusive contract with AT&T not restrictive policy? The simple answer to this without digging too deep is the Herfindahl Index (showing off my MBA knowledge). Microsoft reached the dominant market share according to this index and forced its product along with a dominant market share product. Whereas both Apple and AT&T have probably not reached the dominant market share threshold as suggested by HFL.
Ashish being Ashish, simple explanation was too shallow for him and he digged deeper and asked me “but as a TMobile user suppose in the US, am I not restricted and forced to switch to AT&T just because I want an I-Phone... or the only other choice is not to have an I-Phone... where in as Windows users, people can download and use whatever browser they want... and vice versa - if I have a different system... I still can use IE as a browser... can't I?” His prod follows easy to understand rationale and sounds so logical. However, I was quick to jump to this comment by explaining that AT&T and Apple have a legal, enforceable contract which happens to be an exclusive contract between two companies, with revenue and expense sharing arrangement. It isn’t like I am piling Iexplorer free of cost to the end user because of my dominant market share. If Apple were to now offer free IPod with purchase of MAC products then it might be a case of anti trust. Well this is all good, but however this got me thinking more and more about it. Doesn’t Apple club I phone along with the IPod functionalities? My I phone specifically has an icon which says IPod and I am assuming so does everyone else’s. Isn’t this a restrictive policy? Isn’t IPod being bundled along with I phone for free? Moreover Apple doesn’t allow the use of other music players on its website. Look at another common example of bundling products and restricting usage. Google the search engine giant, doesn’t it offer Google maps and other products along with its dominant market share search engine for free?
Ashish I salute you for asking these tough questions. Can someone help us out here?
