Apple is facing a sweeping antitrust lawsuit from the Justice Department and 16 state and district attorneys focused on its dominance of the smartphone market.
The suit alleged that Apple restricted competition and harmed both consumers and developers through its control over its App Store and the way its devices and services work with third parties.
“Apple has consolidated its monopoly power not by improving its own products, but by making other products worse,” Attorney General Merrick Garland said Thursday.
Apple strongly denied the allegations in the lawsuit and said that if the lawsuit is successful, it would “impede our ability to create the kind of technology people expect from Apple — where hardware, software and services intersect.”
An Apple spokesman said the proposed changes to the way it works would make the iPhone less useful, less private and less secure for users.
Here are five ways prosecutors said Apple created a smartphone monopoly.
‘Degrading and subversive’ cross-platform messaging apps
iPhone 15 phones are shown during a new product announcement at Apple’s campus in Cupertino, Calif., on Sept. 12, 2023. The Justice Department announced a sweeping antitrust lawsuit against Apple, accusing the tech giant of illegally monopolizing smartphones in the U.S. (AP Photo/Jeff Chiu, Tenderloin)
One of the key allegations made in the complaint centers on how Apple allows messaging between users with and without an iPhone.
The government accuses Apple of “degrading and undermining cross-platform messaging apps and competing smartphones,” mainly through the way users of Apple’s messaging platform can send messages to users without an iPhone.
For example, the complaint points out that Apple shows users a “green bubble” in its default messaging app for texts from non-iPhone users, and that it limits messaging functionality to non-iPhone users through unencrypted messages, “pixelated and grainy” videos and the inability to edit messages or display typing indicators.
“This signals to consumers that competing smartphones are of lower quality because the experience of messaging friends and family who do not own iPhones is inferior—even though Apple, not the competing smartphone, is the cause of this degraded user experience,” the complaint states.
The government’s complaint adds that “many non-iPhone users also experience social stigma, exclusion, and guilt for ‘hacking’ into chats where other participants own iPhones.”
The complaint also alleges that Apple makes third-party messaging apps on the iPhone “generally inferior to Apple Messages as well,” through actions such as prohibiting third-party developers from including in their apps certain features that Apple Messages includes.
The lawsuit alleges that Apple prevents other messaging apps from accessing the iPhone’s camera so users can preview their appearance on video before answering a call, and doesn’t allow other messaging apps to continue running in the background when the app is closed.
Restricting Apple Watch to iPhone
A person tries on the Apple Watch during a new product announcement at Apple’s campus in Cupertino, Calif. (AP Photo/Jeff Chiu)
Another key component of the government’s case against Apple centers on the exclusive compatibility of the Apple Watch, Apple’s smartwatch, with the iPhone.
The lawsuit alleges that Apple uses an “expensive add-on” to “prevent iPhone buyers from choosing other phones.” The Apple Watch costs up to $799 on the Apple website.
“Apple recognizes that encouraging users to purchase an Apple Watch, rather than a third-party cross-platform smartwatch, helps boost iPhone sales and strengthen the moat around its smartphone monopoly,” the complaint states.
The complaint cites a 2019 email from Apple Watch’s vice president of product marketing that said the watch “could prevent iPhone users from switching.”
Preventing digital wallets across multiple platforms
The Apple Pay app is shown on an iPhone in New York. (AP Photo/Jenny Kane)
The complaint alleges that Apple used its control over the App Store to “effectively block” third-party developers from creating digital wallets on the iPhone with the touch-to-pay functionality, which Apple’s digital wallet allows users to make payments.
Digital wallets can hold credit cards, movie tickets, car keys, and even personal identification in a single app and can be used to make payments on mobile apps and websites.
Apple Wallet includes Apple’s proprietary payment system Apple Pay, the complaint states, and allows users to pay via iPhone.
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The government claimed that Apple “anticipates that Apple Wallet will ultimately replace the multiple functions of physical wallets to become a single application for shopping, digital keys, transportation, identification, travel, entertainment and more.” And because users “rely” on the feature, switching to another smartphone would require setting up an entirely new digital wallet and potentially losing access to certain credits and stored personal information, according to the complaint.
“Multi-platform digital wallets would offer an easier, more seamless and potentially more secure way for users to switch from an iPhone to another smartphone,” the government said.
Blocking “super apps”
The App Store icon displayed on the phone screen is seen on the iPhone. (Photo Jakub Porzycki/NurPhoto)
The lawsuit alleged that Apple blocked “super apps,” or apps that would provide “lots of mini programs.”
A developer could create a single mini-program that works regardless of whether the user has an iPhone or another smartphone, such as those popular in Asia, the complaint said.
Super apps would make users “rely less on proprietary smartphone software and more on the app itself” and allow users to be “more willing to choose another” smartphone because they could access the same interface and apps, the complaint said.
“Apple has not responded to the risk that super apps could undermine its monopoly on innovation. Instead, Apple exercised its control over app distribution to stifle other people’s innovation,” the government argued.
The lawsuit accused Apple of creating, expanding and enforcing its App Store guidelines for blocking apps from hosting mini-programs.
Cracking down on mobile cloud streaming services
The Apple logo is displayed on a screen during an announcement at Apple’s campus on September 12, 2023 in Cupertino, California (AP Photo/Jeff Chiu, File)
The other key claim raised by the complaint also relates to apps, regarding allegations that Apple blocked cloud gaming apps that would have allowed users to access the content they wanted without having to pay for “expensive Apple hardware.”
In Apple’s own words, it feared a world where “all that matters is who has the cheapest hardware” and consumers could ‘buy [expletive] Android for 25 bux at a garage sale and … have a solid cloud computing device’ that ‘works well,’” the complaint states.
Cloud streaming applications allow users to run programs through a network of services that host and deliver content without having to process or store it on the smartphone itself.
The complaint states that cloud streaming benefits both users by making hardware “unnecessary” and developers by avoiding rewriting the same game for multiple operating systems.
The government argued that for years Apple had “imposed a onerous requirement” that any cloud streaming game or update must be submitted as a standalone app for Apple’s approval, leaving developers to delay software updates or update only on a non-iOS platform .
And “until recently,” Apple required users to download cloud streaming software separately for each game and install app updates for each game individually through “repeated trips to Apple’s App Store,” the complaint said.
In January, Apple opened up its App Store to allow game streaming apps and services, like Xbox Cloud Streaming, The Verge reported.
The government argued that “Apple’s conduct made cloud streaming applications so unattractive to users that no developer designed them for the iPhone.”
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