Antitrust in the Consumer Platform Economy: How Apple Has Abused its Mobile Platform Dominance

Abstract

Consumer tech platforms such as Apple, Amazon, Google, and Facebook form indispensable parts of the modern economy. While their growing dominance increasingly threatens competition and consumer welfare, the outdated thinking behind current American antitrust law impedes enforcement against their abuse of power. The story of how Apple, which controls a critical gateway to the digital economy, has leveraged its dominance over the smartphone platform market to harm competition and deter the rise of future platforms provides salutary lessons and calls for special antitrust scrutiny for powerful tech platforms. This Note analyzes Apple’s violations of American antitrust law to inform ongoing litigation and investigations. It traces how Apple has abused its control of the App Store and the smartphone platform market through illegal tying and monopolistic refusal to deal, both hitherto under-studied issues. In forcing a supra-competitive 30% tax on third-party apps, blocking competitors, and favoring its own apps over rivals’, Apple’s anti-competitive practices have not only raised smartphone app prices and stunted innovation, but have also prolonged and expanded its monopoly by deterring future platforms from emerging. Using a Less Restrictive Alternative approach, the Note shows claimed benefits of Apple’s conduct are either pre-textual or unnecessarily restrictive. This Note also updates antitrust law by examining how the consumer platform economy has upended assumptions underlying traditional antitrust doctrines. Building on modern economics literature, it finds consumers and small businesses’ resource limitations, ecosystem lock-ins, and multi-layered networks create extraordinary information and switching costs, which give tech platforms immense power that their market share numbers belie. They also give platforms strong incentives to leverage their monopoly power outward, causing irreversible harm. These findings challenge traditional antitrust assumptions about rationality, market efficiency, and lack of entry barriers, which give an overly charitable view of dominant firms, and call for a rethinking of the current regime. The Note closes by proposing changes to current antitrust doctrines and enforcement. It is high time that courts reconsidered their hostility to monopoly leveraging and refusal to deal claims. Adjusting class action threshold to account for the diverse impacts of platform abuse of dominance will be critical to ensure private enforcement viability. Federal antitrust enforcement agencies will also need to step up with their resource and incentive advantages to aggressively push for evidence-finding, expanding antitrust doctrines, and helping small players where private plaintiffs fall short.