Apple CEO Tim Cook speaking at the Fortune CEO Initiative 2018 Annual Meeting in June 2018. Image: Stuart Isett/Fortune Photo/Flickr (CC BY-NC-ND 2.0)
US attorney general Merrick Garland said that Apple’s monopolistic practices have resulted in fewer choices, higher prices, lower quality products and less innovation.
After years of regulatory scrutiny over its monopolistic habits, Apple finally finds itself flung into a legal battle launched by the US Department of Justice over the country’s antitrust laws.
In a lawsuit filed today (21 March), the US Department of Justice seeks to hold Apple accountable for allegedly maintaining monopoly power in the smartphone market not “simply by staying ahead of the competition” on merit but by “violating federal antitrust law”.
“Consumers should not have to pay higher prices because companies break the law,” said attorney general Merrick Garland in a press briefing today.
Garland said the US Justice Department alleges that Apple has employed a strategy that relies on “exclusionary anti-competitive conduct” that hurts both consumers and developers.
“For consumers, that has meant fewer choices, higher prices and fees, lower quality smartphones, apps and accessories, and less innovation from Apple and its competitors. For developers, that has meant being forced to play by rules that insulate Apple from competition,” he said.
The crux of the complaint seems to be that Apple has consolidated its monopoly power not by making its own products better but by limiting the features of third-party products.
Apple does this, the department argues, by imposing contractual restrictions and fees that limit the features and functionality that developers can offer iPhone users. It also alleges that Apple “selectively restricts” access to the points of connection between third-party apps and iOS, degrading the functionality of non-Apple apps and accessories.
“As a result, for most of the past 15 years, Apple has collected a tax in the form of a 30pc commission on the price of any app downloaded from the App Store, as well as on in-app purchases. Apple is able to command these fees from companies of all sizes.,” Garland continued.
“Apple has also suppressed the emergence of programmes like cloud streaming apps, including gaming apps, as well as super apps that could reduce user dependence on Apple’s own operating system and expensive hardware. As any iPhone user who has ever seen a green text message or received a tiny grainy video can attest.
“Apple’s anti-competitive conduct also includes making it more difficult for iPhone users to message with users of non-Apple products … By doing so, Apple knowingly and deliberately degrades quality, privacy and security for its users.”
Apple pushed into a corner
In a statement shared with MacRumors, Apple said the lawsuit is “wrong on the facts and the law,” and the company vowed to “vigorously defend” itself.
“At Apple, we innovate every day to make technology people love – designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users. This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” Apple told the publication.
“If successful, it would hinder our ability to create the kind of technology people expect from Apple – where hardware, software and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”
Earlier this week, several Big Tech companies called out Apple for its app payment rules as the company’s row with Epic Games intensified.
Meta, Microsoft, Match Group and X all weighed in with an amicus brief, supporting a claim from Epic Games that Apple failed to honour a court-ordered injunction in 2021. This injunction was meant to stop Apple from preventing app developers from using “buttons, external links or other calls to action” informing users of payment options outside of their apps.
Epic Games has been in legal battles with Apple for years, criticising the tech giant for how it handles its App Store. Now, the latest lawsuit has opened up a Pandora’s box for the iPhone maker.
Earlier this month, the European Commission fined Apple more than €1.8bn for what it called anti-steering provisions that restricted developers from informing iOS users of alternative music subscription options available outside the App Store, breaking EU antitrust laws.
Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.
Apple CEO Tim Cook speaking in June 2018. Image: Stuart Isett/Fortune Photo/Flickr (CC BY-NC-ND 2.0)
