Explainer: Should Big Tech fear US antitrust enforcers?
But first top story our continued look at the US government's antitrust investigations into big tech, and we're looking at one market dominated, in particular, by apple, and Google, specifically, abstainers combine, they run the world's two biggest apps stores counting for more than one hundred billion dollars last year. Apple has about forty five percent of the market and Google at twenty five percent and according to censor tower the to control more than ninety five percent of all mobile app spending by US consumers. Now apple CEO, Tim cook denied that his company has any sort of monopoly telling CBS news that quote, I don't think anybody reasonable is gonna come to the conclusion that Apple's monopoly our share is much more modest. We don't have a dominant position in any market. You know, our share of smartphones in the US typically the high thirties, or so mid thirties on PC's. It's much lower than that. Joining us in San Francisco to discuss. John, berkey, the CEO, and founder of Brighton is software companies specializing in artificial intelligence for Thomas vehicles, and before that he served on the Syria. Advanced development group at apple Jim, great to have, you know, we've been talking about the apps store. I let's take a step back, and walk me through why these companies have been monopoly and make your case for why they should be broken up, of course. So I think the market share numbers are really interesting. Within the enterprise mobile market, which were a lot of this value is the EPA market share. If you sort of Google it, it's quite a bit higher than thirty percent. When I did my research it was eighty five ninety percent. I'm not a satisfaction. But these are big numbers, and I think also we have to look at thirty percent. There's no cost bases to thirty percent, and you have to ask yourself why Google and apple both have the same rates. Are they really competing or sort of an agreement that we're just going to charge thirty percent? Everything's gonna be good as you know, they're making big money out of this in until this moment. Nobody's really pressed very hard. And John talk me through, what is the standard if you will. I mean, even on the government's website, they say being monopoly is not a legal and these companies have every right to pursue aggressive pricing in order to maintain a monopoly and really only till consumers get hurt. Is this a problem our consumers hurt? These prices are free. Amazon arguably has been lowering prices for consumers. What is that? Like. Good question. I think to your point Amazon is another thing I think. Google and Facebook and those kind of companies that are a little different to those are more like advertising companies. But I think talking about apple. I think the thing is, is that they didn't, you know, they've done really well back in the old days when I was the first time we were almost dead. It was the mid nineties and Steven just come back. And a lot of the guys are still there from those moments. And they've done really really well. And I think a lot of the way the reason why this is complicated for them emotionally is used to be dominant position. The question is, is for a company like Spotify, should they be paying apple probably more than they pay the US government. Right. Because apple gets thirty percent revenue not thirty percent profit, there's no deductions right. It seems. If you're Spotify, seems rough to compete with your competitor and hand them thirty percent of your cash. So I think that's sort of put a fine point on it. I think there's some cases like that. I think in terms of customers being harmed without putting two point in this not a lot of companies like Netflix rearranged, their whole way to charge customers, just to get around the apple tax, and that's kind of strange, right? I think we all want to concentrate and making great products for the customer. And if apple didn't have that big tax net flicks the other companies would make it much easier to purchase their products while giving your history and experience with apple. You know, I have to ask, what does sort of an apple break-up look like to you is it separating hardware, and software. How does the apps store come into play? What are the concerns of how apple could be split up? If at all. Yeah, you're gonna make me really popular with my friends. Apple. That's our job here. Right. Of course. So I think, as you know, in these kind of cases, I think, is a lot of remedies. You can imagine. For example. After some discussion, these companies just agreeing to lower their prices lower there percentages. Or you could say. Does really need to have the app store. Right. Apple could be asked to let go the app store and be the platform company. Just not do the store. Right. And not charge that percentage, and then they could have some other model, right? You can see that can happen. I don't think that would be particularly damaging to apple. And in fact, if there's a market for apps stores that these super interesting, I think one of the things that we noticed, when we use the app store is it's not particularly good at what it does. It's hard to find products. If you don't know what you're looking for, and you can imagine if there were more specialized apps stores, actually might be a better place. So John, generally speaking, what does this mean for the future of innovation and thinking of a small company who expects that in a few years, they could be looked at being bought out by a big company like an apple or an Amazon? Does this make them a little bit more nervous about developing that big innovation if there, isn't a good exit path for them? Good question. I honestly I think both companies that you are talking about. We'll never not in the foreseeable future. Have an issue with cash, you may remember their fears ago during one of America's financial crises apple had more money in the Bank than states of America. So I think that it will still be true that they'll be plenty of money to purchase startups. I think on the other side with a couple of changes, maybe it'd be more open markets for smaller companies. Some of the things that apple does as part of its muscle memory to protect, which is a really good muscle memory. I think one of the things I want to say about this week is apple came out really strong about privacy, and I'm personally, probably did that because, as you know, not everybody does that in. This is really clearly in Tim's DNA. So I think that's really good. So I think some of that muscle memory though, is a bit overprotective. We all do that with our children other things. Right. So apple could open. A little easier to do some of these things. There's a bunch of cases, that are some of them are kind of technical around services and apps and things, but you could actually have more innovative place. John, I spoke with Scott Galloway professor over at NYU and studied a lot of these big tech companies, he may sort of, bold, prediction that within the next five to ten years. Instead of these big four, we really could see smaller six to ten companies through your research, and analysis, any idea of how many companies, this could be a we looking at what could potentially up to ten different companies. I think it's a good question. I think when you look at the remedies for a company like Google or Facebook, you can easily see those being split up in several companies along with some remedies around, I think, in Facebook, you could see. Digital accounting, stepping in a company like TWA or some other companies stepping in and providing audits, so that their user data's handle better and then you could see that maybe that would be split. I think we have to begin with the end in mind. What do we want? You know, I think we want. We're proud of these amazing companies. They're big part of America's so strong today. But we don't wanna wreck that right? But we also want to continue to have innovation, right? And I think also, we're all struggling America with the digital divide, not just inner cities and others, but also mainstream America that's out in the middle of Iowa somewhere, you know, so part of the stuff we're talking about here is how to make that continue to be better. Right. Because we know that one of the things we're worried about with companies like Amazon is that old thing. We used to call the wal mart effect, right. Which is these big companies can accidentally make small main streets worse. Right. They can accidentally shut down some stores. They don't mean to do these things. So part of the remedies that we've seen in the past as well are things like. The cable companies. The phone companies are forced to run lines out to the country. Right. So every American gets a chance. Right. So you could see that happening with some of these things too. So you can see splitting off from the big four big five you can see. Yes, sure, you can see eight ten and then you can see, though, second level. You know, maybe you have four or five companies, maybe you have maybe AWS is no longer part of Amazon. Right. You know who knows? But I think. All of us Americans do like capitalism, right all of this. But capitalism's a good thing, generally. And so what we wanted to work, right? We know that we have stories from our history books where a big company too powerful. Right. As I said, apple is, I think, one of those cases where they've done really well, which let them have a victory lap, and then we should find a way playing checkers with your kid, and you're doing two wells sort of back off, you know. So some of those cases are for apple they can just change the field a little bit. Make it a little more open. Well, wonderful insights, and thank you. That was John berkey CEO of Brighton. Good insights