Thomas Hazlett on Apple vs. Google

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🗓️ 25 October 2010

⏱️ 69 minutes

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Summary

Thomas Hazlett of George Mason University talks with EconTalk host Russ Roberts about the growing rivalry between Apple and Google. It is commonly argued that Apple with its closed platform and tight control from the top via Steve Jobs is making the same mistake it made in its earlier competition with Microsoft. Google on the other hand is lauded for its open platform and leveraging of a large number of suppliers for its Android phone, for example. Hazlett, drawing on his recent article in the Financial Times, argues that these arguments fail to recognize the different competitive advantages of Apple and Google and the implications of those advantages for the companies' respective strategies. The conversation concludes with a discussion of the move to application-based web browsing such as Facebook, Twitter, and the implications for Google.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mail at econtalk.org. We'd
0:33.6	love to hear from you.
0:36.8	Today is October 20, 2010, and my guest is Thomas Haslet of George Mason University. Tom, welcome
0:45.6	back to econtalk. Hello. This past summer, you wrote a piece in the Financial Times arguing
0:51.0	that the standard view of Google and Apple's business strategies misses the point. The standard
0:56.8	view is critical of Apple for being a closed system and praises Google for its openness.
1:02.0	Well, let's start with that standard view, and then we'll get to your critique. So, what
1:05.8	is this critique that you hear the standard view that critiques Apple and Google, Apple
1:11.1	and praises Google?
1:13.6	Well, the interesting schism, you see a lot in the tech press, where there is widespread
1:22.1	criticism of Apple for being so-called proprietary or closed platform, and it's actually on
1:31.4	multiple levels that the accusation is made in the United States. Apple only markets its
1:38.0	iPhone for use on one of the four competing networks, national networks, and has an exclusive
1:48.0	contract with AT&T. That's seen to be an exclusive approach that denies the customers of
1:56.8	the Apple products, the benefits, the competition. Then from there, of course, when you buy an
2:02.5	Apple product, in this case, the iPhone, you're stuck in an Apple-organized world. So,
2:11.8	it's easy to go to iTunes, but it's hard to go to anywhere else if you want to buy music.
2:17.7	Or applications for the phone.
2:20.3	That's right. You go to the Apple App Store for your applications. So, Apple takes care
	...

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