Five lessons from the enormous US antitrust case against Apple

The US Department of Justice is suing Apple for “monopolizing the smartphone markets” to help ensure the continued success of the iPhone – to the detriment of consumers and third-party developers. The lawsuit was filed on March 21 and will be a long time to play out. It touches on everything from iMessage lock-in and App Store developer fees to “super apps” and cloud gaming. If the administration is successful, we could witness a sea change for the iPhone and Apple’s ecosystem at large.

Apple, as expected, is highly critical of the DOJ’s antitrust filing. “This lawsuit threatens who we are and the principles that differentiate Apple products in fiercely competitive markets,” said Apple spokesman Fred Sainz. The company also said the legal battle “sets a dangerous precedent, giving the government the power to take a heavy hand in designing people’s technology.”

With more than 1 billion units sold, the iPhone is Apple’s biggest money maker. And the DOJ’s argument boils down to one central idea: Apple is doing everything it can to keep it that way and maintain the iPhone’s popularity. But the company has tread into unfair territory and used underhanded tactics that give its own devices (like the Apple Watch) and services (Apple Pay) a clear advantage over those of the competition, which can’t deliver the same experience.

And the company’s exclusive software features – like the non-interoperable aspects of iMessage – make Android phones corpses inferior in the eyes of many consumers, even though those disadvantages have everything to do with the way Apple does business and very little to do with the way companies like Samsung, Google and others design and produce their own devices.

“Over many years, Apple has repeatedly responded to competitive threats by making it more difficult or expensive for its users and developers to leave rather than making it more attractive for them to stay,” the government wrote in the first paragraph of its complaint. Apple’s conduct, the Justice Department alleges, has “restrained users and developers while protecting profits.”

During Thursday’s press conference, US Attorney General Merrick Garland addressed Apple’s messaging strategy. “iPhone users find rival smartphones to be of lower quality,” he said, noting that calls to Android users (green bubbles) lack encryption, result in substandard media sharing and lack features such as typing indicators.

Apple has said it plans to support RCS, a more modern messaging protocol, later this year for improved cross-platform communications. But even then, you shouldn’t expect those bubbles to change color. The green bubble stigma is real – at least in the United States, where iMessage is so widespread. And the DOJ says this is a huge contributing factor to iPhone lock-in.

The complaint includes a quote from Tim Cook at the 2022 Code Conference, which made headlines at the time. “I can’t send my mom certain videos,” an audience member told Cook when complaining about the cross-platform messaging morass. “Buy your mom an iPhone,” Cook replied.

Another consumer-driven aspect of the DOJ lawsuit is the messy smartwatch situation on iOS. The Apple Watch offers easy setup, seamless compatibility, and deep integration with the iPhone and Apple’s ecosystem, while third-party watches are much more limited in the scope of features they can offer. It’s quick and easy to respond to a text or email from Apple’s watch. Others? Fewer.

The Justice Department claims that Apple is using its wearable as yet another tool in its package to ensure that people choose another iPhone when the upgrade comes around — and not an Android device, where the Apple Watch would be useless.

(It should be noted that Wear OS devices from Samsung and Google also no longer support the iPhone.)

The EU may have led the way in forcing Apple to loosen its grip on the App Store, but the DOJ also sees a glaring problem with the fees developers must pay – and the strict guidelines they must adhere to – to get their apps allow it to continue to exist. available to millions of iPhone owners.

According to the antitrust filing, Apple has put up roadblocks to keep so-called “super apps” off the platform. And the company’s rules have made it impractical for Microsoft and other cloud gaming companies to launch their services in a way that would allow them to monetize those offerings. The EU’s DMA legislation has led Apple to change some of those policies, but the key players are still not satisfied.

“They’re definitely not going far enough to create competition on the largest gaming platform in the world,” Microsoft Gaming CEO Phil Spencer said recently. The edge in addressing Apple’s plans to allow third-party app marketplaces on the iPhone and make the App Store more “open” in the EU.

Apple’s fiery response makes it clear that the company intends to defend itself. We are on the first day of a lawsuit that will surely drag on well into the future. It took more than three years for the government and Microsoft to reach a settlement in that high-profile antitrust case (and another four years for disgruntled attorneys general to wade through the appeals courts). The stakes here are just as crucial.

In the meantime, Apple will make major changes to the App Store framework in the EU and reduce messaging friction by supporting RCS. But for the DOJ, the damage has already been done — and these moves don’t absolve Apple of unfairly stifling competition, being a thorn in the side of developers, and (supposedly) exercising its monopolistic power to “take more money ” from anyone. and anyone who uses an iPhone.

Leave a Reply

Your email address will not be published. Required fields are marked *