US Government Sues Apple for Antitrust Violations
Photo Credit: Spencer Platt/Getty Images via The Seattle Times
In a lawsuit brought forth by the United States Department of Justice (DOJ), Apple is being accused of allegedly monopolizing the smartphone market by imposing restrictions on developers and making it difficult to switch out of the Apple ecosystem. The civil antitrust lawsuit was launched in the US District Court for the District of New Jersey, with the backing of both the DOJ and 16 state and district attorney generals. The DOJ claimed in their official press release that the purpose of the lawsuit is to “restore competition” to the smartphone market “on behalf of the American public.”
In the US, unlawful monopolies are defined as when a company has and maintains market power for a product or service not through fair competition and merit but instead through suppression of competition and anti-competitive behaviour.
The alleged monopoly in this lawsuit exists because, while Apple has only 28 per cent of the smartphone market globally, it maintains a 60 per cent market share domestically, according to Backlinko. This number jumps to almost 90 per cent of US teens from a recent Piper Sandler study. The lawsuit cites several key factors that illustrate the DOJ’s case, which all centre around the allegation that Apple is undermining developers that make competing products and services. By undermining developers, they are allegedly discouraging interoperability, making it more difficult for consumers to leave the Apple ecosystem.
The DOJ mentions in their lawsuit how Apple uses its control of the iPhone to prevent many systems from existing on the platform. In the official 88-page complaint, the DOJ outlines five major restrictions Apple is imposing on developers that promote this anticompetitive conduct. These restrictions include “blocking innovative super apps,” “suppressing mobile cloud streaming services,” “excluding cross-platform messaging apps,” “diminishing the functionality of non-Apple smartwatches,” and “limiting third party digital wallets,” as listed in the lawsuit.
This is not the first lawsuit directed against Apple for its restrictive policies. In the case Apple Inc. v Pepper, Apple was sued for its restrictive store measures such as its prevention of third-party app stores.
Although Apple’s ecosystem is one of the primary focuses of the lawsuit, it is often also one of Apple’s major selling points, with Apple often mentioning the exclusivity and security of its ecosystem as positives. However, the DOJ claims that Apple “wraps itself in a cloak of privacy, security and consumer preferences to justify its anticompetitive conduct.”
If Apple loses the lawsuit, which might not be resolved for months or even years, it could lead to sizable changes to how users interact with the iPhone, though it is possible that very little actually changes in the end. Some analysts believe that a settlement is a likely outcome, with Apple being forced to make smaller compromises, according to The Los Angeles Times. The compromises that Apple would be forced to make would most likely center around the current tight control of the app store and the opening of tap-to-pay accessibility for third-party developers.
Apple released a statement denouncing the allegations, in which they wrote that “this lawsuit threatens who we are.” They argued that, if successful, this lawsuit would be “empowering government to take a heavy hand in designing people’s technology,” and they believe this lawsuit is “wrong on the facts and the law, and [they] will vigorously defend against it.”
Meanwhile, the DOJ referenced the precedent set by the case United States of America v. Microsoft Corporation from 2001, which dealt with Microsoft’s monopoly of internet browsers on Windows computers. The case successfully argued that Microsoft was using legal and technical restrictions in an illegal manner to prevent users and manufacturers from using search engines other than Internet Explorer.