Apple . EU competition watchdogs would be wise to watch out for Apple’s growth
- Written by The Conversation
Apple’s market value has reached a record-breaking US$700 billion, far outstripping its nearest rival. In a year of superlatives, the company’s shares have risen by 60% and it made its largest ever acquisition, paying US$3 billion for Beats Music. But, with Europe voting to break up Google, Apple’s growth raises some questions on whether they too could be getting too big and if regulators would want to step in.
Apple follows in the footsteps of Microsoft and Google in a bid to maintain its household name in the constantly evolving digital business landscape. But both Microsoft and Google have learned to their expense that being dominant in their respective markets can attract the attention of the competition authorities, such as the EU Competition Commission.
The European Economic Area is the largest in the world and any global business such as Apple is interested in maximising their international trade in this lucrative market. And, Europe too, with its prioritisation of the digital economy through the development of EU Single Market rules for the digital era under its Digital Agenda is eager to attract global players such as Apple.
But, as Apple looks intent on challenging Spotify’s dominance of the music streaming market, with reports that its Beats music service will feature in future versions of Apple’s operating system, this could attract competition commission regulators' attention.
The original purchase of Beats was announced in May 2014 and approved by the European Commission (EC) in July, and later by the US regulators. The two product markets that the sale affects are the hardware market for headphones and the market for streaming music.
The headphone market is much simpler than that for streaming. While individuals are easily satisfied with one or two sets of headphones, streaming provides potentially infinite numbers of subscribers and therefore a huge market. This is where the strategic purchase for Apple has the highest potential rewards. Plus, the delivery of an electronic good such as a song has lower overheads compared to the cumbersome packaging and supply chain arrangements needed for shipping and storing a set of headphones.
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