Apple is about to face its biggest antitrust challenge yet as the Department of Justice (DOJ) takes aim at the tech giant’s alleged control of the smartphone market.
Apple faced a high-profile antitrust challenge a few years ago from video game company Epic Games over the company’s app store rules, and the tech giant mostly prevailed on the challenge. However, the differing claims made in the government’s latest complaint will once again test Apple’s rules regarding its control of the app market.
The complaint alleges that Apple’s creation of the iPhone ecosystem has given the company a dominant position in the smartphone market, which is now ubiquitous in American households. Apple has been accused of creating services and products that only work best when used with Apple-managed systems, using a “playbook” to maintain dominance over technologies ranging from the app store and messaging platform to smartwatches and digital wallets.
“It’s the biggest challenge they’ve faced yet,” said William Kovacic, former chairman of the Federal Trade Commission (FTC).
Kovacic said the Epic Games case involved “critical issues” involving the Apple system – and provided a glimpse into possible Apple defenses and uncovered materials through the discovery process – but the case brought against Apple by the DOJ and 16 state attorneys general was addressed last. week is more important.
“The scope is broader; the range of behavior being addressed is greater. And in some ways it is more important that the strength of the United States government is behind the cause,” he said.
“There is an intangible advantage in arguing that you represent the interests of the United States as a whole and not just the interests of a single interested party,” he added.
The DOJ complaint contains five key allegations about Apple’s conduct. Prosecutors allege the company has blocked “super apps” that could override its own applications, suppressed mobile cloud streaming services, banned cross-platform messaging apps, limited the functionality of third-party smartwatches with Apple devices, and restricted the use of third-party digital wallets.
In addition to existing implementations of the alleged anti-competitive “playbook,” the complaint alleges that Apple has “every incentive” to follow the same pattern in the future as it continues to expand.
“Apple has countless products and services: AirPods, iPads, music, Apple TV, photos, maps, iTunes, CarPlay, AirDrop, Apple Card and Cash. These provide Apple with future opportunities to engage in anticompetitive behavior and the ability to avoid legal remedies. Appropriate forward-looking remedies are necessary to ensure that Apple cannot use these products and services to further strengthen its monopoly position,” the complaint said.
The sweeping complaint could impact several industries depending on how the lawsuit plays out, said Henry Hauser, an attorney at Perkins Coie. Hauser previously worked as a trial attorney in the DOJ’s Antitrust Division and as an attorney in the FTC’s Technology Enforcement Division.
“This would impact so many different markets – financial services, media, entertainment, gaming, telecommunications,” Hauser said.
Apple has strongly pushed back on the allegations in the DOJ complaint, arguing that doing so would actually lead to less competition.
“If it works, [this lawsuit] would hinder our ability to create the kind of technology people expect from Apple – at the intersection of hardware, software and services. It would also set a dangerous precedent, giving the government the power to take a heavy hand in designing people’s technology. We believe this lawsuit is flawed on the facts and the law, and we will vigorously defend against it,” Apple said in a statement.
An Apple spokesperson also claimed that the antitrust lawsuit appears to argue on behalf of its major rivals, rather than what plaintiffs say small developers have been harmed by Apple’s dominance. The spokesperson said Apple is not responsible for the inability of other major tech companies with similar resources to offer quality smartphones to consumers.
Kovacic said smaller developers may be more willing to come forward and serve as witnesses in the case now that the DOJ has filed the complaint.
“If you are a smaller company and are afraid of crossing swords with a powerful entity whose cooperation you need to succeed, you might be very reluctant to take a hostile position unless you are certain you believe that the government is the only power. way in,” he said.
Bringing the case is a way for the government to show that “we are committed,” he added.
Apple says it has helped create more competition by allowing users to use its system, which is becoming increasingly secure, the company says. The company’s argument that restrictions on other devices and apps are essential to maintaining secure products will likely be a key point of defense; the company used similar arguments to defend itself in its case against Epic Games, and under pressure from US and global policymakers.
Sam Weinstein, a Cardozo law professor and former attorney in the DOJ’s antitrust division, said the security and privacy argument could be “very persuasive.”
He said the fact that the DOJ has already addressed this argument in its complaint highlights how important that will be as the case progresses.
In the complaint, the DOJ alleged that Apple “cloaks itself in a cloak of privacy, security, and consumer preference to justify its anticompetitive conduct,” when in fact the company “selectively advances privacy and security interests” by degrading the security of text messages or close deals. to make Google the default search engine ‘when more private options are available’.
“Ultimately, Apple uses privacy and security concerns as an elastic shield that can expand or contract to serve Apple’s financial and business interests,” the complaint said.
Hauser said the strength of the argument will depend on testimony from technical and industry experts about how essential Apple’s policies are.
“Is there a way – without really burdening the company, without undermining the really legitimate pro-competitive objectives – to achieve less exclusionary behavior?” he said.
Apple isn’t the only tech company under pressure for its market power. The DOJ has two cases against Google, one based on search queries and one over its power in the advertising market, and the FTC has sued Meta and Amazon over monopoly charges.
All the tech giants have opposed the accusations leveled against them. In addition to the cases in the US, they have had to adapt to new regulations aimed at their market power introduced by the European Union.
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