Saturday, March 23, 2013

iPhone and iPad distribution practices under fire in Europe.

This is a good article outlining the European investigation into Apple's distribution practices. Apple is being investigated over complaints regarding its contract terms with cell phone companies (at least that is what it appears to be limited to at this point, although not much information is known).

The companies pay Apple in exchange for discounted prices on the iPhone and iPad. The companies then sell those devices to customers at discounted prices and tie them into multiple-year contracts. Market power is at the core of why Europe is investigating Apple, but the U.S. is not. Basically, market power consists of market share and a company's ability to influence pricing in a given market. Market power is an essential component of a monopoly. You cannot be a monopoly without market power.

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