The US Department of Justice announced yesterday that it will sue the technology company Apple for abuse of its dominant market position.
Ministry of Justice and to the suit according to the 16 participating states, Apple has maintained a monopoly by limiting other companies’ access to the features and functions of its smartphones. This has led to a lack of competition and an increase in consumer prices.
It’s the president Joe Biden the administration’s first lawsuit against Apple. Apple is the last major US technology company to face a lawsuit to defend its practices.
The Ministry of Justice’s lawsuit has already been declared one of the most significant legal cases in the technology sector. It has been compared to the US administration’s fight against the software giant Microsoft in the 1990s. Microsoft, the undisputed market leader in computer operating systems at the time, was accused of favoring its own web browser. The dispute ended in a settlement, but it forced Microsoft to change its ways of doing things.
Now Apple is being accused of a similar abuse of market position. In the Ministry of Justice’s lawsuit, two different methods of operation are specified, with which Apple maintains its monopoly position. First, the company restricts the creation and distribution of applications with various contracts and fees. Secondly, the company prevents third-party application developers from accessing many important technical features of the phone.
With these actions, according to the Ministry of Justice, Apple prevents others from developing new services that would compete with Apple’s own products.
According to the Ministry of Justice, Apple has imprisoned its users
The US administration’s lawsuit lists five examples of Apple violating antitrust rules.
The first concerns the so-called super apps, which contain small programs. According to the lawsuit, Apple’s rules prevent the development of such applications.
The same idea is in another example, which draws attention to Apple’s cloud gaming restrictions. According to the lawsuit, Apple has prevented the development of applications that offer cloud gaming because they would reduce users’ dependence on the performance of the device itself when the game is run on a cloud server.
The following examples relate to restrictions imposed by Apple that prevent third-party application developers from accessing certain important technical features used by Apple’s own applications.
The lawsuit highlights messaging apps, smart watches and digital wallets. In all of these categories, Apple restricts outsiders’ access to critical functions.
Apple’s iMessage messaging app does not work seamlessly with Android phones. Smart watches from other device manufacturers cannot offer Apple users all the same features as Apple’s own smart watch. It is impossible to transfer the contents of Apple’s digital wallet to another service.
The Ministry of Justice considers that with all the above-mentioned actions, Apple is trying to trap its users in its own ecosystem. If all the digital payment cards are in the Apple wallet, the wrist only has an iwatch that works with the iPhone, and the chat groups only work in the Apple application, switching to Android is challenging.
In which market does Apple have a monopoly?
In lawsuits regarding the abuse of market position, the most important point is the definition of the market.
Apple’s share of the world’s smartphone market is a good fifth, so in terms of the number of phones alone, Apple is not in a monopoly position.
The U.S. Department of Justice defines the market at issue in the lawsuit as the “performance smartphone” market. In practice, this means expensive and powerful phones made of quality materials.
According to the calculations of the Ministry of Justice, Apple’s share of turnover in this market is 70 percent.
It remains to be seen whether the judge will accept the Justice Department’s definition of an appropriate market. Three years ago, a lawsuit against social media giant Meta was dismissed because the US government was unable to establish a substantial market in which the illegal monopoly took place.
Apple sees the lawsuit as a dangerous precedent
Apple managed to knock it out the arguments of the Ministry of Justice immediately after they are presented. In Apple’s view, it offers its users the best possible experience, which is at risk of being undermined if the company is forced to open up its technologies more widely.
Apple considers the actions of the US administration to be a dangerous precedent that will eventually lead to state intervention in the design of new products.
The company announced that it intends to vigorously fight the lawsuit.
In some respects, Apple is in a good position. Technology reporter Casey Newton states In their Platformer newsletterthat Apple has practically given up in three cases out of five.
At the request of the European Union, Apple has already announced that it will ease its rules regarding game streaming. The company has also promised to start supporting a messaging standard that enables smoother communication between different operating systems. Features related to payment are also being opened.
Despite this, the legal process that started yesterday will take a long time.
See the after digi, which discusses the EU’s efforts to intervene in Apple’s operations: