Money: What would history’s Sherman have to say about Google and Apple app stores?

By JJ Rosen August 4, 2021
John Sherman Apple Google

This article originally appeared in The Tennessean.

John Sherman is not a household name.

Born in 1823 in Lancaster, Ohio, it’s fair to say that most of us have never heard of him.

From 1855 until 1898 Sherman served as a U.S. congressman, senator, secretary of state, and secretary of the treasury. He was deeply involved in post-Civil War politics, yet outside of hardcore economists, lawyers, and history buffs, his vast impact on America’s history is not well known.

Nevertheless, over a century later, his signature bill is more relevant now than ever.

I faintly remember learning about the Sherman Antitrust Act of 1890 in my American history class in high school.  At the time, it was just one of the hundreds of things in a textbook that I simply needed to memorize to pass the final exam.  Sherman’s bill passed unanimously in the House and 51 to 1 in the Senate before being signed into law by President Benjamin Harrison.

At its core, the purpose of the law was to promote economic competition and fairness by prohibiting companies from becoming monopolies.

Born out of the “Gilded Age” of massive economic growth after the Civil War, Sherman’s bill was largely a reaction to the total control that only a few companies had over the hot technologies of the time: railroads and oil.

Fast forward to 2021, the risks to capitalism that Sherman was trying to mitigate are still with us. The technologies of the day may have changed since the 19th century, but the challenge of ensuring fair competition against tech’s oversized influence on the health of the economy still exists.

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Amazon, Microsoft, Apple, Google, Facebook—arguments about whether these big tech companies qualify as monopolies continue to this day, with reasonable opinions on both sides.

The “big tech” monopoly debates that make the headlines are usually centered around Facebook’s dominance of social media, Google’s dominance of search, Microsoft’s control of the desktop, or Amazon’s hold on eCommerce.

But, over the past couple of months, a different Sherman Act issue is beginning to bubble up to the top of the fair competition debate.

The UK and Australia have both begun to investigate the complaints from smaller businesses around the hold that Apple and Google have on the market for mobile apps.

If you are one of the six billion of people in the world who have a smartphone, you can only go to two places to buy or download an app: Apple’s App Store or the Google Play Store.   And if you are a mobile app development company, you only have two places to deploy your product.

Because of this “effective duopoly,” as the UK’s Competition and Markets Authority labels it, the concern is rising that two companies essentially control the entire mobile app market worldwide and that this will ultimately hurt billions of consumers.

Although there are millions of mobile apps available, Google and Apple control the shipping lanes.   They charge up to 30% commission for in-app purchases, making it hard for all but a small percentage of mobile apps to make enough money to survive.  They have the right to reject an app at any time, guaranteeing it will never see the light of day.  And they control the timing of iOS and Android updates, making it difficult for smaller development companies to keep up.

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Apple and Google have a valid counterargument. With a never-ending supply of cybersecurity threats, they point out that their gatekeeping keeps billions of consumers safe from malicious apps that could wreak worldwide havoc.

So, where will this all land?

Ideally, the market itself would break the mobile store duopoly on its own.  But failing that, it’s a safe bet that the ghost of Sherman will be calling (or texting) soon.

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