Fear Not the Monopoly for the Market Shall Come, Part II
May 28, 2021
By: Dylan Ratigan
A few weeks back, I wrote about monopolies. I went into a discussion on the Truth or Skepticism podcast arguing monopolies not only exist, but need breaking up. I then had my lunch handed to me with multiple examples of how disruptors were the most effective and efficient monopoly busters. Amazon, now considered a monopoly by many, disrupted Walmart and in time, someone will disrupt Amazon. Facebook took out MySpace. Google replaced Alta Vista. Just trust the market to course correct on its own. It was a valid argument. Or was it?
The question is what happens when a company buttons down the hatches in such a way the market can’t, or will take too long to, break up a monopoly? That’s the question at the core of the Epic Games vs. Apple litigation. If you want to offer your product on an iPhone, you need to do so through Apple’s app store. Yes, I understand there are some exceptions to this and ways to get around the app store; however, they’re cumbersome and create an obstacle for developers.
Therefore, if you want to quickly and easily reach customers, you’re more than welcome to list your app in the store for just a mere 30% of your revenues. That’s revenues. Not profits. Forget what it cost to develop the app. Forget the risk entrepreneurs took to develop an application. Forget the cost of education that may have gone into learning how to code. Forget the salaries and benefits you may be paying. Forget the fact the $10 app you’re selling may be costing you $9 to produce, Apple is taking their $3.
It’s true that the market will likely one day disrupt Apple and their app store. But there’s no getting around the fact that until then, Apple enjoys a monopoly. That monopoly contributes to things like growing wealth disparity which in turn leads to identity politics and social unrest. It’s an example of why, since 1979, productivity in the US has increased more than 65 percent but median compensation has only risen a paltry 6%. If the cost of entry is set at levels too high for small developers to participate, ingenuity and competition are stifled.
No economic system is perfect, but capitalism and free markets are the best option. To borrow an idea from Winston Churchill, I believe capitalism is the worst economic system, except for all the other forms. Market forces and the invisible hand usually do correct for inefficiencies. Most of the time. Sometimes; however, in the absence of fairness we need to facilitate a balanced playing field that encourages competition and allows the market to grow.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.
tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.
Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.
Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.