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The Department of Justice hit Apple with an antitrust lawsuit on Thursday.
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The suit accuses the iPhone maker of anti-competitive tactics in the smartphone market.
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Here are some of the ways critics say Apple is a monopoly.
The Department of Justice hit Apple with a sweeping lawsuit on Thursday, accusing it of “delaying, degrading, or completely blocking” competitors in the smartphone market.
This is the latest punch thrown by the DOJ in its long fight against Big Tech and the tactics those companies use to compete. The new suit against Apple is broad in scope and alleges that the company uses rules, restrictions, and repetitive behaviors to maintain a “smartphone monopoly.”
Apple denied those allegations.
“This lawsuit threatens who we are and the principles that set Apple products apart in highly competitive markets,” the company told Business Insider in a statement Thursday. “If successful, it would hinder our ability to create the kind of technology that people expect from Apple – where hardware, software and services intersect.”
Here are some ways the DOJ and others argue that Apple maintains a tight grip on the iPhone ecosystem — and keeps competitors out.
The App Store and super apps
Apple has long used its digital storefront as a tactic to keep out apps that aren’t specifically designed for the iPhone. The suit argues that Apple sets conditions on the apps it allows on the App Store and imposes anti-competitive rules and regulations.
Apple was forced to allow third-party stores on its operating system in the EU in accordance with the Digital Markets Act, which was signed by the European Parliament in 2022.
“Apple frequently enforces its App Store rules arbitrarily,” the suit argues, “and frequently uses App Store rules and restrictions to punish and restrict developers who take advantage of technologies that interferes with, discourages, competes with, or erodes Apple’s monopoly power. .”
The suit also claims that Apple suppresses super apps that provide multiple services or functions to ensure users stay hidden on the iPhone.
Cloud streaming game apps
Cloud streaming game apps allow users to play video games in the cloud rather than on a gaming console. Think of them as Netflix or Hulu for video games, where users can stream multiple intense games in one app.
The DOJ argues that cloud streaming games can “enhance smartphone competition” by making it easier to perform “advanced computing” tasks on a smartphone. But Apple suppresses these games to keep users more dependent on its expensive hardware systems.
Creating a ‘loyal’ consumer base
It’s no secret that Apple has built a strong — and sticky — consumer base.
Research from Bank of America found that customer loyalty to Apple has remained strong over the years, with 57% of current iPhone users saying they plan to buy an iPhone during their next upgrade.
Meanwhile, according to BofA research, only 55% of Samsung users, 43% of Huawei users, and 33% of Xiaomi users said the same. This is corroborated by 2021 data from research firm Consumer Intelligence Research Partners, which found that Apple had maintained a loyalty rate of more than 90% in the previous three years.
But some argue that this is not just because the company is churning out great products. “Much of it is due to the restrictive ecosystem that Apple has created around its products,” argued Andy Liu, a former student at Simon Fraser University, in a paper published in 2022.
That ecosystem means that the costs of switching to other operating systems are too high for most users, and prevents them from accessing content, such as music or apps, that are exclusive for Apple, Liu wrote.
Messaging apps
Thanks to Apple, no one wants to be the blackberry who answers to all their iPhone-using friends with a green bubble. The suit claims that Apple makes third-party messaging apps on the iPhone “worse” than Apple’s messaging. In doing so, “Apple is knowingly and intentionally degrading quality, privacy and security for its users and others who do not own iPhones.”
smart watches
Apple has left wearable enthusiasts in a bit of a quandary. The company says its popular Apple Watches only work when paired with iPhones, and won’t build a version for Android due to technical limitations. And if you’re an iPhone user looking to wear a Google Pixel Watch or a Samsung Galaxy Watch – you’re in luck. Apple does not plan to make competing watches work with iPhones.
The DOJ argues that Apple limits smartwatch options for consumers by denying them “access to high-performance smartwatches with better styling, better user interfaces and services, or better batteries,” harming other smartwatch companies through “their ability innovate products and reduce sales.”
Digital Wallet
It’s becoming increasingly common for iPhone users to pay for items with Apple Pay, the company’s digital wallet system. But Apple blocked other developers from creating digital wallets on the iPhone with the same “tap-to-pay functionality,” according to the suit. In addition, Apple charges banks a 0.15% fee for any transaction made through Apple Pay.
The suit argues that Apple essentially “maintains complete control over how users make tap-to-pay payments with their iPhone” and “deprives users of the benefits and innovations of third-party wallets.”
Read the original article on Business Insider
