WASHINGTON (AP) — The Justice Department’s antitrust lawsuit against Apple is shaping up to be a major battle reminiscent of the government’s 1990s case against Microsoft. However, the complaint filed by the Justice Department last week appears to lack the impact and force of that earlier blockbuster case.
Last week, the Justice Department and attorneys general from 16 states accused Apple of illegally monopolizing the smartphone market and using its power to lock consumers into its products for higher profits. But the key question isn’t just about Apple’s financial success, it’s about whether the company achieves it through exclusionary or predatory tactics. According to the Justice Department, Apple responds to competitive threats by making it difficult and costlier for users to switch from iPhones rather than making their products more attractive. However, in many cases, Apple employs both strategies simultaneously.
Before moving forward, the Justice Department must first prove that Apple holds a monopoly. While Apple’s share of the domestic smartphone market is around 70%, it is significantly lower than Microsoft’s more than 90% share of the personal computer operating system market in the 1990s. Nonetheless, the government argues that Apple exercises excessive control in several critical areas, including “super” apps, cloud-streaming apps, smartwatches, digital wallets, and messaging services.
The crux of the antitrust case against Apple is that the company has stifled competition by maintaining a closed ecosystem that prevents outsiders from accessing its platform. For example, the Justice Department claims that Apple has imposed onerous rules regarding super apps, hampering their growth in the United States. Additionally, strict regulations around cloud-streaming apps have made it challenging for users to play certain games on lower-end hardware, pushing them to buy higher-end Apple products. Apple’s exclusive integration of its devices and services has also limited compatibility with third-party products and services.
While Apple has recently made some changes in response to pressure from European Union regulators, the Justice Department aims to demonstrate that Apple’s decisions were intended to suppress competition to the detriment of consumers. However, Apple argues that its tight control and integration are what have defined its brand from the beginning, emphasizing simplicity, reliability, and security.
The lawsuit highlights specific concerns around Apple’s restrictions on the design choices of others, such as forcing super apps to display their mini-programs in a limited format and prohibiting developers from informing users about lower subscription prices available elsewhere. Moreover, Apple’s thorough review process for every game on cloud-streaming services seems excessive, given that cloud-streaming eliminates the need to install games on an iPhone. Apple’s messaging system, iMessage, is also at the center of scrutiny, as it only allows communication with other iPhone users and lacks the encryption provided by green-bubble texts sent to Android users.
Nevertheless, courts have traditionally been reluctant to require companies to develop products that benefit competitors or mandate open product design. To truly transform the competitive landscape, significant legal reforms would be necessary.
As the antitrust lawsuit against Apple unfolds, it is poised to have far-reaching implications for the tech giant’s business practices and the broader smartphone market. The outcome of this legal battle will determine the future of competition and innovation in the industry.