The lock-in issue at the heart of the DOJ’s case against Apple

It’s no secret that Apple products work best if you stick to an iPhone. As it turns out, this is a big reason why Apple has found itself in hot water today with the US Department of Justice, which claims the company has gone too far in shutting down messaging, smartwatches and digital wallets to deliberately hinder its rivals.

This will come as no surprise to most consumers. We’ve all known about green bubbles for years and that you can’t bring your Apple Watch to an Android phone. What the DOJ is saying is that this set of protective policies makes it extremely difficult for an iPhone user to leave its walled garden, limiting competition so much that it breaks the law.

Green bubbles play a key role in the lawsuit. Texting between iOS and Android users is known to be a bad experience: you can’t send large files or photos, edit messages, or send nice comments like a heart or thumbs up. That friction leads to social pressure to stay on the iPhone, with the DOJ noting that these exclusions become an “obstacle”[s] to iPhone families giving their children Android phones.” This is especially true for American teenagers, 85 percent of whom use an iPhone. The lawsuit points out that Apple is well aware of the problem, quoting Apple executives as saying that moving iMessage to Android will hurt us more than it will help us. (The DOJ didn’t take kindly when Tim Cook told a customer to “buy your mom an iPhone” to improve his text messaging.)

According to the DOJ, this misleads consumers into believing that Android phones are worse, even though Apple is the one imposing all the restrictions.

The DOJ also notes that Apple restricts third-party messaging apps such as WhatsApp, Signal and Facebook Messenger compared to iMessage. For example, you’ll need to dig into the permissions to allow these apps to run in the background or access the iPhone’s camera for video calls. They also can’t include SMS, which means you’ll have to convince friends to download the same apps if you want to use them. However, iMessage does all this natively.

And while Apple recently agreed to support RCS to improve cross-platform messaging, the DOJ doesn’t believe it. It notes that not only has Apple not yet adopted it, but third-party apps would still be “prohibited from integrating RCS, just as they are prohibited from integrating SMS.” The DOJ also takes issue with the fact that Apple only agreed to adopt a 2019 version of RCS. Unless Apple agrees to support future versions, the company states that “RCS could soon be broken on iPhones anyway.”

The DOJ isn’t happy with the way Apple is using the Apple Watch as a bludgeon for iPhones. As it stands now, you must have an iPhone to use an Apple Watch, And Apple restricts third-party smartwatches from doing everything an Apple Watch can do.

The Apple Watch isn’t cheap, and the DOJ notes that Apple is well aware that people are less likely to switch phones when they buy one. But on top of that, it cites the fact that a third-party smartwatch lacks features like quick replies to text messages, accepting calendar invites, and interacting with app alerts in the same way as an Apple Watch.

Another issue is Bluetooth connectivity. While the Apple Watch can maintain a connection if a user accidentally turns off Bluetooth on the iPhone, third-party watches cannot. As with third-party messaging apps, users will have to dig into separate permissions to enable background app refreshing and disable power saving mode if they want the most stable and consistent Bluetooth connection. This affects passive updates, such as tracking the weather or tracking workouts.

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Cellular connectivity is another way Apple limits third-party watches. There is no barrier to using the same song on your Apple Watch and iPhone. However, if you want to do that with a third-party mobile watch, you will need to disable iMessage on iPhone. Since most iPhone users don’t want to do this, it essentially means that if you opt for a third-party watch, you’ll have to use two separate numbers for your watch and iPhone.

When it comes to digital wallets, the DOJ’s issue with Apple is that the company is blocking financial institutions from accessing NFC hardware on the iPhone. (Although Apple will start allowing access in much of Europe due to new regulations in the EU.) That in turn stops them from offering tap-to-pay capabilities and again directs iPhone users to Apple Pay and Apple Wallet.

This means that banks also have to pay 0.15 percent for every credit card transaction via Apple Pay. Conversely, it is free for banks that use Samsung or Google payment apps. As a result, Apple will have received nearly $200 billion in U.S. transactions in 2022, according to a report from the U.S. Consumer Financial Protection Bureau. The same agency estimates that tap-to-pay transactions in digital wallets will increase by more than 150 percent by 2028.

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Once again, the DOJ claims that it is feasible for Apple to enable tap-to-pay access, but that it will not do so because it would be “a way to [A]pple [P]ay trivial” and encourage other types of payment apps. It also notes that Apple already allows merchants to use NFC to accept Apple Pay payments.

Apple says it disagrees with the DOJ’s lawsuit and views all of these decisions as choices it has made to protect consumers – especially around privacy and security. In a statement, Apple spokesman Fred Sainz said the lawsuit “threatens who we are and the principles that distinguish Apple products in fiercely competitive markets.”

The DOJ does not view these principles as improving the iPhone, but rather limiting competitors in an effort to make the iPhone stickier. And while it will likely be a while before a concrete solution emerges, there’s a chance that Apple’s walled garden approach won’t be as effective as it was before the end.

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