Apple is a monopoly like Community Chest
The smartphone market is not competitive. Whether or not Apple holds an anti-competitive monopoly is a matter for the courts to decide, but it seems clear that the smartphone market is designed to lock buyers into one brand, and that is bad for everyone.
Take a look at the list of the best phones published by many tech websites, like CNET. There is usually a best iPhone and a best Android phone, and never the two shall meet. Our own TechRadar list of the best phones you can buy in the US includes a best overall phone, but we may not bother with that superlative for much longer.
After all, if you have an iPhone now and you come to our list of best phones, would you really consider switching to a Samsung phone just because I said it was the best? Would you drop-kick your Apple Watch and your Apple AirPods Pro and trade in your iPhone 14 Pro Max for a Galaxy S24 Ultra? Probably not.
Apple doesn’t think anybody is switching, that’s for sure. If you try to buy a new Apple iPhone 15 Pro and trade in your old Samsung phone, the latest Samsung phone that Apple includes on its drop-down trade-in list is the Galaxy S22 Ultra 5G. That phone is two years old. Apple hasn’t felt the need to update its trade-in list for two years. There is not a single Galaxy Z Fold or Galaxy Z Flip on Apple’s list, not even the Galaxy S23 Ultra.Measuring competition in the US smartphone market
The market is entrenched. While Apple can make disclaimers about holding only a small portion of the global market, in fact, the way an economist measures market competition, Apple is excruciatingly dominant.
When economists measure market competition, they start with a simple measure called the Herfindahl-Hirschman Index (HHI). The HHI gives every market a score. To find that score, you take the market players and you square their market share. Then you add them all together.
If there is only one company in a market, that company has a 100% share of the market. The square of 100% is 10,000, and therefore a 10,000 score on the HHI is the absolute maximum.
If there are ten companies and each company has an equal 10% market share, that means each company adds 100 to the HHI, and the total HHI for the market is 10 X 100 = 1,000.
When the US government is considering whether or not to allow a corporate merger, it looks at the HHI for the competitive market. If the HHI for a market is 1,500 or lower, it is considered competitive.
