tools, and its control over the developers’ license agreement, [gave] Apple the unique ability to define how competition among ad networks on the iPhone will occur and evolve.”[1] Put differently, once Apple entered the mobile advertising market, it was in a position (depending on how it decided to leverage its closed platform and its proprietary information) to go very quickly from zero to a very substantial share of the mobile advertising market.
This begs the question, however, whether in these instances where incipient monopoly power can very quickly become entrenched monopoly power we should act, let the market tip, or whether there is a compromise position. The problem here is both legal and one of prosecutorial discretion. Section 2 of the Sherman Act may apply in these instances because it prohibits “attempts to monopolize” as well as monopolization. However, in both cases, the plaintiff must show either monopoly power or near monopoly power. Near monopoly power may include incipient monopoly power in some cases, but in others it may not. (This stands in stark contrast to Section 102 of the Competition Law administered by the European Commission which requires that the EC establish that the firm is “dominant” before any further inquiry can occur.)
If Section 2, however, is an impediment, it is only an impediment to DOJ, which must challenge conduct under Sherman or Clayton Acts or not at all. In contrast, the FTC can challenge a transaction or conduct of an incipient firm under Section 5, if needed, which is not only broader than the Sherman Act,[2] but which Congress specifically envisioned could be used to go after incipient conduct. As I noted at the Spring Meeting, while it may not make sense that the FTC, but not the DOJ has Section 5 authority, the
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