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The federal government’s aggressive crackdown on Big Tech expanded Thursday to include the Justice Department’s antitrust lawsuit against Apple, one of the world’s best-known and most valuable companies.
The department joins 16 states and the District of Columbia in filing serious challenges to Apple’s influence and influence, alleging the company aims to keep customers dependent on the iPhone in an 88-page lawsuit. The company claimed that its actions violated antitrust laws. You are less likely to switch to a competing device. The government has blocked the tech giant from offering applications that compete with Apple products, such as digital wallets, which could reduce the value of the iPhone and harm consumers and small businesses that compete with the iPhone. He said that there is.
The Justice Department’s lawsuit seeks to end this practice. The government even has the right to demand the dismantling of Silicon Valley’s icons.
The lawsuit ends years of regulatory scrutiny of Apple’s wildly popular suite of devices and services, which over the years has fueled its growth into the planet’s most valuable publicly traded company, valued at about $2.75 trillion. . The attack directly targets the iPhone, Apple’s most popular device and most powerful business, putting the billions of smartphones it has sold since 2007 at the core of its empire. Attack the way you came.
By tightly controlling the user experience on the iPhone and other devices, Apple creates what critics call an “unequal playing field,” giving its companies access to core features that are denied to its competitors. Allow for products and services. For years, financial companies have had limited access to mobile phone payment chips and the ability of Bluetooth trackers to use location services. Also, it is easier for a user to connect his Apple products, such as smart watches and laptops, to his iPhone compared to products from other manufacturers.
“Each step of Apple’s course of action has created and strengthened a moat around its smartphone monopoly,” the government said in a lawsuit filed in the U.S. District Court for the District of New Jersey. It added that the company’s practices had led to “higher prices and lower innovation.”
Apple says these efforts make its iPhones more secure than other smartphones. But app developers and rival device makers say Apple is using its power to crush the competition.
An Apple spokesperson said: “This lawsuit threatens who we are and the principles that make Apple products stand out in a fiercely competitive marketplace.” “If successful, it would hamper our ability to develop the kind of technology that people have come to expect from Apple at the intersection of hardware, software, and services. It would also set a dangerous precedent, allowing governments to This will have a major impact on the design of technology.”
Apple is the latest company the federal government has sought to rein in following a wave of antitrust pressure from both the Justice Department and the Federal Trade Commission in recent years, with the Biden administration appointing those commissioners and passing legislation. The focus is on reforming the law accordingly. Modern times. Google, Meta and Amazon all face similar lawsuits, and companies from Kroger to JetBlue Airways face increased scrutiny over potential acquisitions and expansions.
The lawsuit asks the court to prevent Apple from engaging in current practices such as blocking cloud streaming apps, weakening messaging across smartphone operating systems, and blocking the creation of digital wallet replacements. There is.
Under the law, the Justice Department has the right to seek changes to Apple’s business structure, including a breakup, a Justice Department official said on condition of anonymity. The official did not say what further action the authorities could request in this case, but any request would not address the question of whether and how Apple violated the law. It will depend on what kind of judgment the court makes.
It’s unclear how the lawsuit, which is likely to take years for any kind of resolution, will affect consumers. Apple plans to file a motion to dismiss the lawsuit within the next 60 days. In its filing, the company plans to emphasize that competition law allows it to adopt policies and designs that competitors object to, especially when the design improves the iPhone experience.
Apple has effectively fought off other antitrust claims. Apple allows customers to easily switch between its iPhone operating system and Google’s Android system, a judge rules in a 2020 lawsuit brought by Fortnite maker Epic Games over App Store policies. persuaded. The company released data showing that the reason fewer customers switch mobile phones is loyalty to the iPhone.
The company has also defended its past business practices by highlighting how the App Store, which opened in 2008, generated millions of new business. Over the past decade, the number of paid app makers has increased 374 percent to 5.2 million, a sign that the market is thriving, Apple said.
All modern technology giants face significant federal antitrust challenges. The Justice Department is also pursuing a lawsuit against Google’s search business and one focused on Google’s control over advertising technology. The Federal Trade Commission has filed a lawsuit accusing Facebook owner Meta of obstructing competition when it acquired Instagram and WhatsApp, and a separate lawsuit accusing Amazon of abusing its power over online retail. I woke you up. The FTC also tried unsuccessfully to block Microsoft’s acquisition of video game publisher Activision Blizzard.
These lawsuits reflect pressure from regulators to bring closer scrutiny of companies’ role as gatekeepers of commerce and communications. In 2019, under President Donald J. Trump, government agencies launched antitrust investigations into Google, Meta, Amazon, and Apple. The Biden administration has doubled down on this effort, appointing critics of big tech to head both the FTC and the Justice Department’s antitrust divisions.
In Europe, regulators recently punished Apple with a €1.8 billion fine for preventing music streaming competitors from communicating with users about promotions and options to upgrade their subscriptions. The app makers also appealed to the European Union’s enforcement agency, the European Commission, to investigate claims that Apple is violating a new law that requires iPhones to be published on third-party app stores.
In South Korea and the Netherlands, the company could face fines over fees it charges app developers to use alternative payment processors. Other countries, including Britain, Australia and Japan, are considering rules that would weaken Apple’s grip on the app economy.
The Justice Department, which launched an investigation into Apple in 2019, has chosen to pursue a broader and more ambitious lawsuit than any other regulator has previously brought against the company. Rather than focusing narrowly on the App Store like European regulators, it focused on Apple’s entire ecosystem of products and services.
The lawsuit filed Thursday focuses on a series of practices Apple claims the government used to shore up its dominance.
The company will “impair” the ability of iPhone users to send messages with owners of other types of smartphones, including those with the Android operating system, the government said. According to the complaint, this disparity sends a signal that other smartphones are of lower quality than the iPhone, as symbolized by the green bubble that indicates a message for Android owners.
Apple has similarly made it difficult for iPhones to work with smartwatches other than its own Apple Watch, the government claimed. Once an iPhone user owns his Apple Watch, it becomes much more expensive to throw away the phone.
The government also said Apple was trying to maintain its monopoly by not letting other companies build their own digital wallets. Apple Wallet is the only app on the iPhone that uses a chip known as NFC, which allows you to pay by tapping your phone at checkout. Apple encourages banks and credit card companies to allow their products to work within Apple Wallet, but banks and credit card companies do not have access to the chip or create proprietary software on behalf of their customers. Creating wallets is prohibited.
The government is refusing to allow game streaming apps that could potentially devalue the iPhone’s hardware or provide “super apps” that allow users to perform a variety of activities from one app. He said that
Colin Kass, an antitrust attorney at Proskauer Rose, said the government’s complaint alleges that the company filed an influential decades-old lawsuit against Microsoft for tying its web browser to the Windows operating system. It is said that similar arguments are being used to make the claim. He said the most persuasive argument, and the one closest to the Microsoft case, is that Apple contracts with rival companies to develop apps that work in conjunction with other app providers, like “super apps.” He added that there is a possibility that they are blocking the situation.
Other legal experts said it was legal for companies to give preferential treatment to their products and services, and the government needed to explain why it was a problem for Apple.
“This lawsuit is about technology,” Kass said. “Can antitrust laws force a company to redesign its products to make them more compatible with competitors’ products?”
Apple has defended itself against other antitrust claims by arguing that its policies are important to keeping its devices private and secure. Epic Games’ defense argued that curbing the distribution of apps protects iPhones from malware and fraud. This practice benefited customers and made the iPhone more attractive than competing devices running the Android operating system.
The government will likely try to show that the effects of Apple’s policies hurt rather than helped consumers.
“Competition makes devices more private and more secure,” said Jonathan Canter, assistant attorney general in the Justice Department’s antitrust division. “In many cases, Apple’s actions have made its ecosystem less private and less secure.”
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