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The Government vs. Big Tech: Arguments Each Side -2-

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09/09/2019 | 02:55pm EDT

After Amazon reached a deal to allow Apple to sell iPads, iPhones and other devices on Amazon, third-party vendors who sold refurbished Apple products say they were removed.

"I was doing 40 to 50% of business on Amazon," said John Bumstead, a reseller of refurbished MacBooks who said he was kicked off Amazon and spoke to the FTC in July. "That chunk of business evaporates."

Amazon's Defense

--Amazon's growth has been fueled by a determination to offer consumers low prices and it has competed fairly and legally against rivals.

The company has invested in supporting third-party sellers and wants them to succeed. That approach has benefited consumers "in the form of competitive pricing, great selection and unprecedented convenience," Amazon associate general counsel Nate Sutton told a House antitrust subcommittee in July.

Amazon also is far from a retail monopoly, Mr. Sutton said, because 90% of U.S. retail sales still take place in bricks-and-mortar stores. Amazon says it doesn't use seller-specific data in creating its own private-label products, and offers fewer private-label goods than many of its retail competitors.

The Potential Case Against Apple

--That Apple has used its platform for iPhone apps to favor its own products and services over rival offerings.

A Wall Street Journal analysis published in July found that in the Apple App Store, Apple's own mobile apps routinely appear first in search results ahead of competitors'.

Music streaming service Spotify has complained to U.S. antitrust authorities and filed a complaint with the EU's antitrust arm claiming Apple made it difficult for rival subscription services to sell to users without using Apple's payment system, which generally takes a 30% cut of transactions.

--That the company charged inflated prices in its App Store because iPhone users are prohibited from buying apps elsewhere.

This requirement prompted a private antitrust suit that was given the green light to proceed by the Supreme Court. Consumers are stuck with the company's terms because it is expensive to switch to a rival device, this argument goes.

Apple's Defense

--Apple doesn't have a monopoly in anything -- iPhones have less than a 50% market share in the U.S.

--Apple says its closed platform protects consumers' data. By requiring iPhone users to buy exclusively from Apple's store, Apple ensures the software is safe and won't compromise users' iPhones with viruses or spyware.

And if Apple favoritism has crippled rivals, then why have consumers downloaded Spotify 300 million times in the App Store?

--Apple is under no significant legal requirement to give competitors a leg up.

"Even if, as Spotify alleges, Apple has monopoly power and has suppressed competition in its App Store, the government would still have a difficult time making a case under current doctrine as interpreted by some courts," said former FTC lawyer Michael Kades, a director of competition policy at the Washington Center for Equitable Growth.

Still, Apple has run afoul of antitrust authorities before. In 2012, the Justice Department sued the company for conspiring with publishers to raise the price of e-books. Courts ruled Apple's actions were anticompetitive, and the company was ultimately compelled to pay $450 million.

--Ryan Tracy contributed to this article.

Write to Brent Kendall at brent.kendall@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET -0.72% 1229.84 Delayed Quote.17.69%
APPLE -1.46% 217.73 Delayed Quote.38.03%
FACEBOOK -0.11% 189.93 Delayed Quote.44.89%
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