Apple and Lina Khan’s Antitrust Antics

FTC Chairwoman Lina Khan should read Shuhart’s article but don’t hold your breath. Apparently, she doesn’t know the sordid history of FTC’s anti-antitrust enforcement. Would you expect Samsung to have been pressing Khan to take on its Apple case? I’d bet on it.

Khan should remember as she reads the piece that Shughart actually overstates Apple’s competitive “market share of 35 or 40 percent” by covering only Apple’s external competitors. Its measured share (by the FTC) overlooks that Apple itself is its biggest, most dominant “competitor.”

Apple’s iPhone models are “durable,” which means current owners can always keep their current phones at a price of $0.00 if they don’t want to fork out several hundred dollars for any newly introduced model. Apple must innovate and control its prices to attract its own past buyers to new models. My iPhone is currently two or three generations old.

The DOJ made the same market-share miscalculation in its 1998 Microsoft case. Microsoft was pressed in the mid-1990s to integrate a browser into its dominant desktop operating system to stay competitive, which is one reason Microsoft’s major competitors at the time pressed the DOJ to hobble Microsoft’s aggressive competitiveness with an antitrust suit.

Richard McKenzie is the Walter B. Gerken Professor of Enterprise and Society Emeritus in the Paul Merage School of Business at the University of California, Irvine.
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