Apple faces its biggest antitrust challenge yet

Apple is set to face its biggest antitrust challenge yet as the Department of Justice (DOJ) targets the tech giant’s alleged control of the smartphone market.

Apple faced a high-profile antitrust challenge a few years ago by video game company Epic Games over the company’s app store rules, and the tech giant was the biggest winner against the challenge. However, the broad claims made in the government’s latest complaint will once again test Apple’s rules for controlling the app market.

The complaint argues that Apple’s creation of the iPhone ecosystem gave the company dominance in the market for smartphones, which are now ubiquitous in US households. Apple has been accused of creating services and products that only work best when used with Apple-run systems, using a “playbook” to maintain dominance across technologies from its app store and messaging platform to smart watches and digital wallets.

“It’s the most significant challenge they’ve faced so far,” said William Kovacic, former chairman of the Federal Trade Commission (FTC).

Kovacic said the Epic Games case dealt with “critical issues” related to Apple’s system – and provided a glimpse into Apple’s potential defenses and that material was brought to light through the discovery process – but the case filed by the DOJ and 16 attorneys general against Apple finally. more important week.

“The scope is wider; the range of behavior addressed is extensive. And in some ways, it’s more important to have the force of the United States government behind the situation,” he said.

“It’s the intangible advantage of being able to claim that you represent the interests of the United States as a whole and not just the interests of one vested interest,” he said.

The DOJ complaint makes five major allegations about Apple’s conduct. Prosecutors argue that the company blocked “super apps” that could override its own applications, suppressed mobile cloud streaming services, excluded cross-platform messaging apps, limited third-party smartwatch functionality with Apple devices and blocked use a third party digital wallet.

Beyond current implementations of the alleged anticompetitive “playbook,” the complaint alleges that Apple has “every incentive” to follow that same pattern in the future as it expands.

“Apple has many products and services – AirPods, iPads, Music, Apple TV, photos, maps, iTunes, CarPlay, AirDrop, Apple Card, and Cash. These provide future avenues for Apple to engage in anti-competitive behavior and the ability to circumvent remedies. Appropriate anticipatory remedies are necessary to ensure that Apple can no longer use these products and services to strengthen its monopoly power,” the complaint said.

This broad complaint could have an impact across industries based on how the law plays out, said Henry Hauser, a lawyer at Perkins Coie. Hauser previously worked as a trial attorney in the DOJ’s antitrust division and as an attorney in the FTC’s technology enforcement division.

“This would affect so many different markets — financial services, media, entertainment, gaming, telecommunications,” Hauser said.

Apple pushed back strongly on the allegations laid out in the DOJ complaint and argued that it would actually create less competition.

“If successful, [this lawsuit] 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, allowing the government to take a strong hand in people’s technological design. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,” Apple said in a statement.

Apple’s spokesman also claimed that the antitrust suit appears to be an advocate for its larger rivals, rather than what prosecutors say are small developers who have been harmed by Apple’s dominance. The spokesperson said that Apple is not responsible for the inability of other major technology companies with similar resources to offer consumers high-quality smartphones.

Kovacic said smaller developers may be more willing to come forward and serve as witnesses in the case now that the complaint has been filed by the DOJ.

“If you’re a smaller business and you’re afraid of crossing swords with a powerful entity whose cooperation you need to succeed, you might be reluctant to take an adversarial stance unless you’re sure the whole government way in,” he said.

Bringing the situation to the attention of the government is one way “we are committed,” he said.

Apple argues that it has helped create more competition by creating options for users to use their system, which it says is safer and more secure. A key point of defense is likely to be the company’s argument that its limits on other devices and apps are necessary to keep products safe and secure; the company used similar arguments to defend itself in its case against Epic Games, and under pressure from US and global policy makers.

Sam Weinstein, a Cardozo Law professor and former attorney in the DOJ’s antitrust division, said the argument about security and privacy can be “very persuasive.”

He said the fact that the DOJ had already addressed that argument in its complaint showed how important it will be as the case moves forward.

In the complaint, the DOJ alleged that Apple “wraps itself in a blanket of privacy, security and consumer choices to protect its anti-competitive behavior,” and in reality the company is “selectively subverting privacy and security interests” through text message security to degrade or by distorting markets. to allow Google to become the default search engine “when more private options are available.”

“Ultimately, Apple deploys privacy and security justifications as an elastic shield that can stretch or contract to suit Apple’s financial and business interests,” the complaint says.

Hauser said the strength of the argument will come down to testimony from technical and industry experts about how necessary Apple’s policies are.

“Is there a way — without really burdening the business, without undermining those very legitimate goals for competitiveness — to get less exclusionary behavior?” he said.

Apple isn’t the only tech firm pushing its market power. The DOJ has two cases against Google, one based on search and another regarding its power in the advertising market, and the FTC sued Meta and Amazon over monopoly allegations.

All the tech giants have pushed back against the allegations leveled against them. In addition to the cases in the United States, they had to adjust to new regulations aimed at their market power imposed by the European Union.

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