The United States continues its crusade against big tech. Whether through the Department of Justice (DOJ) or the Federal Communications Commission (FCC), Joe Biden’s administration has launched an offensive against what it sees as illegal monopolistic practices by companies such as Alphabet (Google), Amazon and Microsoft. The latest chapter in this battle is a major lawsuit against Apple over the digital fortress it has built around its flagship product, the iPhone.
The 88-page lawsuit — announced Thursday by Attorney General Merrick Garland — was filed in federal court in New Jersey by the Justice Department and attorneys general of 16 states. The lawsuit accuses the tech giant of violating antitrust laws by blocking rivals from accessing its smartphone hardware and software functions, hindering their ability to offer alternative products and services to those of the Tim Cook-led company.
“Consumers should not have to pay higher prices because companies are violating antitrust laws,” Attorney General Merrick Garland said in a statement. “If not challenged, Apple will only continue to strengthen its smartphone monopoly.”
“Apple has employed a strategy that relies on exclusive, anti-competitive behavior that harms both consumers and developers,” he continued. “For consumers, this meant fewer choices; higher prices and fees; lower quality smartphones, apps and accessories; and less innovation than Apple and its competitors. For developers, this meant being forced to play by the rules that isolated Apple from the competition. And as stated in our complaint, we argue that Apple has consolidated its monopoly power not by making its own products better — but by making other products worse.”
According to the DOJ, Apple’s anti-market behavior takes several forms. First, Apple imposes contractual restrictions and fees that limit the features and functionality that developers can offer iPhone users. Second, Apple selectively restricts access to connection points between third-party apps and the iPhone operating system, degrading the functionality of non-Apple apps and accessories. As a result, for much of the past 15 years, Apple has collected what Garland called “a 30% commission tax on the price of any app downloaded from the App Store.” Apple has also cracked down on programs such as cloud streaming apps — including gaming apps — as well as cool apps that could reduce users’ dependence on Apple’s own operating system and expensive phones, which Garland noted cost as much as $1,600. .
“And, as any iPhone user who has ever seen a green text message or received a tiny, grainy video can attest, Apple’s anticompetitive behavior also includes making it difficult for iPhone users to communicate with users of non-Apple products,” he said. Wreath. “It does this by reducing the functionality of its own messaging app and by reducing the functionality of third-party messaging apps. In doing so, Apple knowingly and intentionally degrades quality, privacy and security for its users.”
If an iPhone user sends a message to a non-iPhone user through their messaging app, that text doesn’t just appear as a green bubble, but includes limited functionality. The conversation is not encrypted. Videos look pixelated and grainy, and users can’t edit messages.
“As a result, iPhone users perceive competing smartphones as inferior because the experience of messaging friends and family who don’t have iPhones is poorer — even though Apple is responsible for cross-platform messaging. And it does it on purpose,” said Garland, who also noted that a smartwatch or digital wallet also has difficulty communicating with Apple’s operating system.
“Every step of Apple’s conduct built and strengthened the moat around its smartphone monopoly,” the government said in the lawsuit, which accuses the company of using its monopoly to overcharge consumers, developers, content creators, artists, publishers, small businesses and retailers.
The lawsuit begins by revealing an internal email in which a senior Apple executive warns Steve Jobs about an ad for the new Kindle e-reader, which shows it can be used even if a person switches from an iPhone to an Android smartphone. “Not fun to watch,” the message read. “Over many years, Apple has repeatedly responded to competitive threats like this by making it harder or more expensive for its users and developers to leave than by making it more attractive for them to stay,” the complaint states.
It continues: “For many years, Apple built a dominant iPhone platform and ecosystem that drove the company’s astronomical valuation. At the same time, it has long been recognized that disruptive technologies and innovative apps, products and services have threatened that dominance by making users less dependent on the iPhone or making it easier to switch to a non-Apple smartphone.”
“Instead of responding to competitive threats by offering lower smartphone prices to consumers or better monetization for developers, Apple would counter the competitive threats by imposing a series of rules and restrictions in its App Store guidelines and developer contracts that would allow Apple to extract higher fees, stifle innovation , offer a less secure or degraded user experience and stifle competitive alternatives,” it added.
This is the third time in the past 14 years that the Justice Department has sued Apple for antitrust violations. This lawsuit is still the biggest. In 2010, the company agreed to settle a lawsuit over its illegal dealings not to hire staff from Google, Adobe or Disney subsidiary Pixar. Two years later, the Justice Department sued Apple and book publishers for illegally fixing the prices of e-books sold on the iPad. After the DOJ won the suit, Apple was forced to change certain practices to improve its antitrust compliance.
In addition, Apple also faces the demands of its competitors. The pressure intensified on Wednesday when Meta Platforms, Microsoft, social network X and Match Group joined forces to file a complaint against Epic Games — the maker of the video game Fortnite — that Apple violated a court order governing payments in its app store.
Epic sued Apple in 2020, claiming it violated antitrust laws by forcing consumers to purchase apps through the App Store and charging developers up to a 30% commission on purchases. The ban required Apple to allow developers to provide links and buttons to direct consumers to alternative payment options. Last week, Epic requested that Apple be fined for contempt of court, arguing that the new rules and a new 27% fee imposed on developers had rendered the links useless.
The Department of Justice filed two lawsuits against Google, one for alleged abuse of its dominant position in the search engine market — which went to trial and awaits a verdict — and the other for monopolistic behavior in the digital advertising market, which is still pending. Now the same Department, headed by Attorney General Merrick Garland, has found itself targeting Apple, a company it has already attacked in two other smaller cases.
The FCC unsuccessfully tried to block Microsoft’s purchase of video game company Activision in a second lawsuit. In addition, he sued Amazon last September, claiming the company has monopoly power to “inflate prices, degrade quality and stifle innovation for consumers and businesses.”
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