Five ways prosecutors say Apple created a smartphone monopoly

Apple is facing an extensive antitrust lawsuit from the Justice Department and 16 state attorneys general and district attorneys general, targeting Apple’s dominance of the smartphone market.

The lawsuit alleged that Apple limited competition and harmed both consumers and developers through its control of the App Store and the way devices and services interact with third parties.

“Apple has consolidated its monopolistic power not by making its own products better, but by making other products worse,” Attorney General Merrick Garland said Thursday.

Apple strongly pushed back on the allegations in the lawsuit, saying that if the lawsuit were successful, it would “hinder our ability to create the kind of technology people expect from Apple – at the intersection of hardware, software and services.”

An Apple spokesperson said the proposed changes to performance would make iPhone less useful, less private and less secure for users.

Here are the five ways prosecutors say Apple created a smartphone monopoly.

‘Demeaning and debilitating’ cross-platform messaging apps

iPhone 15 phones are shown during a new product announcement at the Apple campus in Cupertino, California, September 12, 2023. The Department of Justice announced a sweeping antitrust lawsuit against Apple, accusing the tech giant of having an illegal monopoly on smartphones in the US (AP Photo/Jeff Chiu, file)

One of the main allegations in the complaints concerns the way Apple enables messaging between users with and without iPhones.

The government accuses Apple of “degrading and undermining cross-platform messaging apps and competing smartphones,” primarily because of the way it allows users of Apple’s messaging platform to send messages to users without iPhones.

For example, the complaint addresses how Apple shows users a “green bubble” for text messages from non-iPhone users in its default messaging app, and how it limits messaging functionality to non-iPhone users via unencrypted messages, ‘pixelated and grainy’. ‘ videos and the inability to edit messages or see typing indicators.

“This signals to users that competing smartphones are of lower quality because the experience of messaging friends and family who don’t own an iPhone is worse – even though Apple, and not the rival smartphone, is the cause of that degraded user experience.” , the complaint states.

The government’s complaint adds that “many non-iPhone users also experience social stigma, exclusion, and blame for ‘breaking’ chats where other participants own iPhones.”

The complaint also alleges that Apple makes third-party messaging apps on iPhone “worse overall and compared to Apple Messages,” through actions such as banning third-party developers from including certain features in their apps that include Apple Messages .

The complaint alleges that Apple prohibits other messaging apps from accessing the iPhone camera to let users preview their appearance on video before answering a call, and does not allow other messaging apps to continue running in the background when the app is closed.

Limit Apple Watch to iPhones

A person tries out an Apple Watch during a new product announcement at the Apple campus in Cupertino, California. (AP Photo/Jeff Chiu)

Another key part of the government’s case against Apple centers on the exclusive compatibility of the Apple Watch, Apple’s smartwatch, with the iPhone.

The complaint alleges that Apple uses the “expensive accessory” to “discourage iPhone customers from choosing other phones.” An Apple Watch costs up to $799 on Apple’s website.

“Apple recognizes that encouraging users to purchase an Apple Watch, rather than a cross-platform smartwatch from a third party, helps drive iPhone sales and strengthens the moat around its smartphone monopoly,” the complaint says .

The complaint cites a 2019 email with Apple Watch’s vice president of product marketing, which said the watch “can help prevent iPhone customers from switching.”

Preventing cross-platform digital wallets

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 tap-to-pay functionality, which users can do with Apple’s digital wallet. to make payments.

Digital wallets can hold credit cards, movie tickets, car keys and even personal identification in one app and can be used to make payments in mobile apps and websites.

The Apple Wallet includes Apple’s proprietary payment system, Apple Pay, the complaint states, and allows users to make payments with their iPhone.

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The government claimed that Apple “envisions that Apple Wallet will eventually replace several functions of physical wallets and become a single app for shopping, digital keys, public transit, 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 stored funds and personal data, the complaint said.

“Cross-platform digital wallets would provide users with an easier, more seamless and potentially more secure way to move from iPhone to another smartphone,” the government said.

Block ‘super apps’

The App Store icon that appears on a phone screen can also be seen on an iPhone. (Photo by Jakub Porzycki/NurPhoto)

The complaint alleged that Apple blocked “super apps,” or apps that allegedly offer a “multitude of mini-programs.”

A developer could create a mini-program that works regardless of whether a user has an iPhone or another smartphone, such as those popular in Asia, the complaint said.

The super apps would make users “reliant less on the smartphone’s native software and more on the app itself” and allow users to be more “willing to choose another” smartphone, as they can access would have the same interface and apps, according to the complaint. declared.

“Apple failed to respond to the risk that super apps would disrupt its monopoly by innovating. Instead, Apple exercised its control over app distribution to stifle the innovation of others,” the government alleged.

The complaint accuses Apple of creating, expanding and enforcing its App Store guidelines to prevent apps from hosting mini-applications.

Suppression of mobile cloud streaming services

The Apple logo is shown on a screen during an announcement at the Apple campus on September 12, 2023 in Cupertino, California. (AP Photo/Jeff Chiu, File)

Another major allegation raised in the complaint also concerns apps, due to allegations that Apple blocked cloud gaming apps that would have given users access to desired content 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 a device.’ [expletive] Android for 25 bux at a garage sale and… got a solid cloud computing device that ‘works fine,’” the complaint read.

Cloud streaming apps allow users to run programs over a network of services that host and deliver the 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 alleged that for years Apple had “imposed an onerous requirement” that any game or cloud streaming update must be submitted as a standalone app for Apple approval, causing developers to delay their software updates or only update on non-iOS platforms.

And “until recently,” Apple required users to download cloud streaming software for each game individually and install app updates for each game separately through “repeated visits to Apple’s App Store,” according to the complaint.

In January, Apple opened its App Store to allow game streaming apps and services like Xbox Cloud Streaming, The Verge reported.

The government claimed that “Apple’s behavior made cloud streaming apps so unattractive to users that no developers designed one for the iPhone.”

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