Psystar wants to force Apple to open up

by Mathew on August 30, 2008 · 10 comments

According to an article in Information Week, the Apple clone-maker known as Psystar Systems is counter-suing Apple, claiming that the computer company uses illegal tactics to protect its market share in personal computers, including anti-competitive measures that are prohibited by the Sherman Act, a key piece of U.S. anti-trust legislation. Among other things, the clone-maker argues that Apple employs technology that effectively “bricks” Apple clones when the software detects non-standard hardware, and also that the company is able to charge more for its computers because of such tactics.

As the Information Week article notes, in order for Psystar’s case to have any chance of succeeding, the company has to prove that Apple computers are a separate and distinct market of their own. If they are part of the much larger market known as personal computers, then Apple’s behaviour arguably doesn’t matter, because the company only has about 10 per cent market share (depending on whose numbers you look at). But Psystar claims that Apple computers are actually a separate market, thanks in part to the company’s marketing campaigns, which are aimed at creating a mystique and a feeling of superiority around its products.

The Sherman Act is likely familiar to many because it was used by the U.S. attorney-general’s office to prosecute Microsoft in 2001 for alleged anti-trust practices, including “tied selling” — i.e., requiring that hardware makers include Microsoft software on their PCs in order to get a deal on the cost of Microsoft Windows. Contrary to popular wisdom, the law doesn’t specifically prohibit companies from having a monopoly (provided it was lawfully acquired), but restricts them from certain kinds of behaviour that would amount to using that monopoly improperly.

I’m not an anti-trust lawyer, obviously, but it seems like a bit of a stretch to me to argue that Apple is a monopoly in any real sense of the word, or that Apple products constitute a separate market. Like Allen Harkleroad, however, I am not-so-secretly rooting for Psystar, because I think that the ability to run Apple software on any piece of hardware would be a great thing — and would probably help Apple more than it is likely to hurt. How come I can get a Macbook Pro and run Windows on it, but I can’t buy a Dell Inspiron and run the Mac OS on it? Doesn’t seem right somehow.

  • http://bizop.ca michael_webster

    You might want to follow the Whole Foods FTC action in which they are maintaining that the relevant market for Whole Foods is the small high end natural market

  • http://www.mathewingram.com/work mathewi

    Thanks, Michael. On the other side of the equation, a propane company
    in Canada successfully argued that acquiring another propane company
    wouldn't impair competition — even though it would give the company a
    huge share of the propane market — because the propane business was
    just a subset of the overall heating market.

  • http://bizop.ca michael_webster

    Matthew, the FTC lost the first round in their battle and then had it reversed.

    I don't believe that we can predict US Anti-Trust decisions from looking at the Competition Tribunal.

    But it will be interesting to follow, certainly Apple has tried to carve out its own market, and in the market ties software and hardware together.

  • http://www.mathewingram.com/work mathewi

    Thanks, Michael — I wasn't suggesting that we could use the Superior ruling to predict U.S. anti-trust decisions, just pointing out that the argument can go both ways.

  • http://bizop.ca michael_webster

    Matthew, your position is the one currently accepted, in both Canada and the US.

    The Whole Foods case strikes most US Anti-Trust lawyers as nutsy.

    But I think that there is something to it: what is a market for a product without considering how the major player advertised for their consumers?

  • ex Bebox hacker

    “How come I can get a Macbook Pro and run Windows on it, but I can’t buy a Dell Inspiron and run the Mac OS on it? Doesn’t seem right somehow.” I'm sure you know the answer: Steve Jobs.

  • http://blog.hackingcough.com Chris Edwards

    “…buy a Dell Inspiron and run the Mac OS on it…”

    That feels so wrong.

    A Thinkpad maybe or one of the less cheesy Vaios (that hopefully doesn't fall apart).

  • http://randalljhoward.com Randall Howard

    Mathew,
    Thanks for posting this. As MAC goes mainstream, I've been wondering this as well. Having recently bought a MacBook, I was struck by how much “price fixing” goes on. The price is always the same no matter where you go. I thought this was illegal independent of market share, but can only imagine that as MAC becomes a dominant player this will somehow get addressed either by competition or the regulators (or both).
    Randall

  • http://psystaropenpro.blogspot.com/2009/05/psystar-open-pro-sucks.html?showComment=1242174660000#c2485354549758552639 Lejla

    All I have to say is I am an owner of a Psystar Open Pro, it is always broken down and there is no support for it. There are some rude young people working there that think since I bought a cheap copy of a Mac, then I should get cheap to no service with it.

  • http://psystaropenpro.blogspot.com/2009/05/psystar-open-pro-sucks.html?showComment=1242174660000#c2485354549758552639 Lejla

    All I have to say is I am an owner of a Psystar Open Pro, it is always broken down and there is no support for it. There are some rude young people working there that think since I bought a cheap copy of a Mac, then I should get cheap to no service with it.

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