Hnrs. Micro Economics
November 17, 2014
Econ In the News Part 4 The article describes how the apple iPhone monopoly being challenged by its customers. Back in 2007, when Apple first started to release their new phone, called the "iPhone", they made an exclusive deal with AT&T. That deal was a 5 year deal that solely allowed AT&T to provide the service for all of apples phones. Apple created a monopoly by refusing iPhone customers being allowed to choose their mobile carrier. Apple at one point back in 2007, released a software update which disabled iPhones being used by a separate carrier. Before the update people were buying the iPhones separately, unlocking them, then bringing them to their own provider, and having them activated under a different cell phone provider. However with that update, it disables all the phones that were not covered by AT&T. The new update essentially made all iPhones at the time, bricks. The lawsuit against apple is simply asking them to remove the update and to allow its consumers the right to choose their cell phone provider. Currently in class we are learning about monopolies. A monopoly is a single firm that eliminates all other forms of competition. This is exactly what apple did. They put up a block, that disabled any of the phones being covered by a different provider, other than AT&T. The main barrier in this example would be that AT&T has a large demand, that other providers wish to have. However since other companies are now starting to use these hacked phones, an update came out disabling that option. This is an example of a technology monopoly, because Apple has exclusively allowed AT&T to sell their product. This leaves customers with higher prices, less options, and in some cases poorer quality phones.