Apple, Hermes and Antitrust Laws
- By Shargeel Sheikh -
- Mar 26, 2024
Turns out, being exclusive in the business world is a crime. The more a brand takes into account the measures to maintain its exclusivity, the more likely that brand is to come under the radar of governments and local authorities.
Currently, as I write this piece, two major organizations in the business world are facing major allegations about antitrust law breaches from the US Department of Justice (DOJ).
Hermes and Apple came under direct hit from the authorities as they were questioning their business operations.
This time it’s not about using endangered species skins for their products, nor is it the laxness’ in the customer’s privacy. The antitrust lawsuits filed against these two organizations are simply because they do one thing exceptionally well: preserving their exclusivity and monopoly.
What are Antitrust Laws Anyways?
Antitrust laws are a set of rules for the market to function properly. Antitrust laws help maintain healthy competition, prevent artificial monopolies from emerging, and tackle any mergers or acquisitions that can potentially stifle the competition in the market.
These were officially introduced and taken seriously in the US by the Sherman Law Act of 1890.
After that, many countries in the world have adopted these laws to keep an eye on the market.
Throughout the years, The US Department of Justice has acted against giant firms such as Microsoft, Amazon, and others who made attempts to gain high market share.
These laws have helped the startup culture to thrive and have stopped the big players from colluding and establishing corporate mafias.
Apple’s Case: The Exclusivity Conundrum
On one side we have Apple which has come under fire for restricting access to software and applications that are a mainstay in its competitor’s devices.
It allows only a set of its exclusive apps such as Clubhouse and Facetime to run on its smartphones and allows limited to zero access to common applications that are prevalent in the Android world.
As a result, the DOJ accuses Apple of creating a monopoly through these illegal means just to remain different. As a result, Apple enjoys a staggering 64% Smartphone market share in the US.
Law representatives have censured Apple of violating antitrust laws by using manipulative means to maintain its monopoly and positioning itself as the Smartphone of choice for people.
It is these practices that Apple has turned into a market monopoly for the rich and elite. And the allegations claim that these practices are illegal.
While there’s no crime in being a monopoly, using tactics to perpetuate that monopolistic existence is.
In response to the ongoing ruckus, Apple representatives have justified that under the law it is their right to choose who to do business with and which application to feature or limit on the app store or how to design their smartphones.
They have further highlighted the reason lies behind their unwavering commitment to preserving user privacy and security, something which the tech firm is reluctant to hand over to third parties.
Hermes: The Birkin’s Bag Dilemma
What happens when a 200-hundred-year-old French company owned by the Dumas family with 7000 craftsmen and is a symbol of pure luxury gets highlighted for being too expensive?
The lawsuit against Hermes has been filed because of the company’s strategy of selling its priced Birkin’s bags.
For those who are not aware, Birkin’s bags are one of the trademark products of Hermes. These are the most expensive items and can range from $10,000 to up to a whopping $2 million.
The Birkin bags have been seen in the hands of celebrities and millionaires and therefore have become a highly sought-after bag. These are sold every year for hundreds of thousands of dollars in auctions across the world.
Birkin bags can’t be bought online. One has to visit the physical store to get one and will still face rejection. Why? Because one simply can’t just walk in and ask to get their hands on a Birkin.
Hermes has a special policy for this. If one genuinely wants to acquire a Birkin‘s bag. Then that individual has to establish a certain type of buying history with Hermes.
Once the person has already purchased a number of products, then they become eligible to purchase a Birkin Bag.
There’s no exact amount mentioned up to which an individual has to buy stuff to qualify for the Birkin Bag.
Now the DOJ has filed a lawsuit stating that Hermes is allegedly leveraging Birkin’s policy to sell this category only to its loyal and rich customers and uses tactics like long waiting policy, unreasonable price hikes, and ridiculously creating scarcity.
The allegations have been further fueled by the fact that Hermes is arguably the only luxury brand in the market with zero ancillary products and has witnessed a surge in revenue and profits relative to its competitors like Saint Laurent, Gucci, and Louis Vuitton.
These allegations come as Hermes plans to raise prices after a 21% growth in sales last year, majorly by its Birkin and Kelly bags.
Media outlets have failed to take out any comment on the statement from Hermes so far.