Tuesday, September 14, 2010

Apple and Amazon and proprietary software: not a model for free trade.

Both Apple and Amazon like to maintain monopolies and don't like free trade, at least when it comes to selling applications and software for their products.

When you buy an iPod or an iPhone you have buy all the mp3s and Aps through Apple's iTunes. There is no chance for buying competitively priced products when you own one of these devices.

It's the same when you buy Amazon's Kindle, the electronic book reader. You can only buy books through the Amazon website. So if you buy a Kindle you have to buy all your books from Amazon and there is no chance for getting them through another source. There was controversy as well, when Amazon set the maximum price for a book at $9.99 and refused to let publishers charge more, when actually they should charge less because in the electronic format you can reproduce books infinitely at very little cost. The publishers wanted to charge whatever the market will bear. The controversy ended when iPad came out and let publishers charge whatever they wanted.

Now you can buy a competitors product and have more options, but you are then shut out from many of the cool apps or other exclusive content from these companies.

In other words their business model is protectionist, and these companies are thriving on it. Why can't this model work for trade in the United States?

Now if it is OK for these companies to have devices with exclusive content, why isn't are trade regulated that way? Why isn't it OK to regulate who you trade with and what gets traded with tariffs and regulations?

It is OK for these companies to make money with exclusive content, but when you try to protect jobs by saying things like you can only hire American workers for certain jobs that is not OK. Or companies that offshore workers have to pay higher taxes which would give them incentive not to offshore workers, that won't work either.

The Apple and Amazon business model should be the model for how the United States handles trade and protects jobs for its workers.