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Epic was unable to bring down Apple’s walled garden model with its Fortnite lawsuit, but now the Department of Justice is taking a swing. In cooperation with 16 state and district attorneys general, the department has filed a civil antitrust lawsuit against the company. The suit alleges that Apple has abused its dominant market position in smartphones to suppress competition and inflate consumer prices. If the case succeeds, the walls around Apple’s garden could tumble.
The DOJ claims in the filing that Apple has worked consistently to undermine apps, services, and products that would increase user choice and lessen the company’s monopoly power. The status quo has allegedly filled Apple’s coffers and driven the company to a staggering $2 trillion valuation at the expense of numerous groups, including app developers, phone buyers, and online merchants. “We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law,” said US Attorney General Merrick Garland.
This case could result in fundamental changes to how Apple does business. The iPhone alone hit $200 billion in sales for 2023, and the services it sells, along with mobile devices, pulled in another $85 billion. The government has come with receipts demonstrating how Apple’s decisions have limited consumer choice, and some of them use CEO Tim Cook’s own words against him.
The filing spends a lot of time on Apple’s opposition to “super apps,” which refers to a single app with numerous features or services. Apps that use HTML5 or JavaScript can run in a mobile browser on any phone, but Apple restricts the ability of apps to run “mini” programs because it fears that would “let the barbarians in at the gate.” The DOJ also takes issue with Apple’s use of iMessage as a lock-in mechanism. By degrading messaging between iOS and Android, the company has allegedly forced many consumers to keep buying its phones when they might otherwise have purchased something else. By way of evidence here, the DOJ cites Tim Cook’s “buy your mom an iPhone” moment. Apple recently said it would add RCS support to the iPhone, but iMessage remains locked down.
Credit: Apple
Several years ago, Apple almost allowed Microsoft to put Xbox Cloud games in the App Store. But its insistence on listing each game individually with a full streaming stack made the deal untenable for Microsoft. It eventually had to launch Xbox Cloud Gaming as a web app instead of listing it in the App Store, and the DOJ claims this deprived consumers of easy access to cloud gaming content.
The case will also focus on Apple’s decision to lock down mobile payments and the Apple Watch. Apple sold $40 billion in wearables last year, and all those devices are paired to iPhones. The government alleges that Apple’s refusal to allow the Apple Watch to work on other platforms forces consumers to keep buying iPhones. Apple has also blocked third-party payment providers from the phone’s NFC hardware, and the DOJ says that cross-platform payments are good for consumers.
This move comes as Apple is still tussling with European regulators over the Digital Markets Act. For the first time, Apple is being forced to allow third-party app stores, but it has devised some aggressive policies to keep developers in check, including banning Epic Games from the iOS platform. Apple’s lawyers are about to be very busy.