The executive arm of the European Union government imposed a fine of nearly $2 billion against Apple Computers for abusing its “dominant position” on music streaming in its app store. Spotify was the bruised competitor that complained against Apple under the EU’s antitrust laws. (“Apple Fined Nearly $2 Billion in Europe Over Music-Streaming Apps,” Wall Street Journal, March 4, 2024; and “Apple Hit With €1.8bn Fine for Breaking EU Law over Music Streaming,” Financial Times, March 4, 2024.)
The argument against antitrust laws can be briefly summarized as follows. Perfect competition is a positive model in economics: it simplifies reality to explain it. It is true that some economists—notably the 20th-century welfare economists—gave some normative significance to the model. But even if perfect competition is desirable, there is no reason to believe that politicians and bureaucrats could move the economy there. Moreover, as many economists (including famously Joseph Schumpeter in his book Capitalism, Socialism and Democracy) have observed, large firms that develop on free markets bring benefits to consumers. In the absence of government-built obstacles to market access (such as regulations and protectionism), large firms are anyway pushed to behave much like perfectly competitive ones, lest they lose their customers and market to new entrants. (A good introduction to the elementary theory of monopoly can be found in David Friedman’s book Hidden Order: The Economics of Everyday Life, Chapter 10.) Politicians, bureaucrats, and their courtiers seem to ignore these considerations; it is often in their interest.
One wonders why EU bureaucrats and politicians don’t go and create their own Apple–indeed, why they haven’t already done so. And why isn’t Spotify able to compete on the free market, without shouting for Big Brother’s help? Nobody in the world is forced to use Apple products and services.
Yet, many think that governments may legitimately force successful firms into their questionable competition mold, however monopolistic these governments themselves are. Spotify executives and shareholders, as well as developers of Apple apps, think it is ethical to win politically the success they are not able to achieve through competition for consumers’ patronage. Some think that this dirigisme can be consistent with the rule of law, provided that comply with laws formerly adopted by democratic assemblies and committees, and with regulations adopted by bureaucrats hired under such a system. Much questioning and unlearning is required on these topics.
I would argue that the best word to encapsulate the EU government’s decision against Apple is: extortion.
One irony is that private high-tech companies used to think that their friendly and benevolent governments were ideologically and politically on their side. The assault against high tech, in China, America, and Europe, revealed the illusion.
Another dimension of the issue is the apparent belief of politicians, bureaucrats, and their admirers that any cost can be imposed to the producers of the marvels of civilization and that the production will automatically continue as before. These believers resemble José Ortega ‘s barbarian mass-men, who think that the conveniences of modern life are “the spontaneous fruit of an Edenic tree.”
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The featured image of this post, also reproduced below, was created by ChatGTP 4. I gave “him” a series of commands around the theme “Generate [an image of] an Apple computer as it would look like if it had been designed by politicians and government bureaucrats.” My more discrete prods included that the computer be “sustainable.” The images produced by our artificial friend were not overly original; this one was among the best. (PL)
Apple computer as politicians and bureaucrats would conceive it. Source: ChatGTP
