Less than three weeks after the European Commission hit Apple with a €1.8 billion ($1.95 billion) antitrust fine for “abusive App store rules for music streaming services”, the U.S. Department of Justice has sued Apple for allegedly “monopolizing smartphone markets”. The DOJ, along with 16 state and district attorneys general, accuses Apple of using and maintaining its dominant position in the U.S. smartphone market by engaging in behavior that stifles competition and, as a consequence, hurts U.S. consumers.
“Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers,” the DOJ said in a statement. “Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.”
The sweeping lawsuit that encompasses 88 pages focuses on five different examples of Apple engaging in what the DOJ thinks is illegal, anticompetitive behavior. Those examples include Apple’s treatment of so-called super apps (e.g. WeChat), cloud streaming apps (mostly for gaming), cross-platform messaging, smartwatches and digital wallets. In all of these examples, the DOJ alleges, Apple used it position to put in place rules and policies that make it harder for non-Apple devices and services to compete with Apple’s own offerings, thus keeping users in the company’s (in)famous walled garden.
“Rather than respond to competitive threats by offering lower smartphone prices to consumers or better monetization for developers, Apple would meet competitive threats by imposing a series of shapeshifting rules and restrictions in its App Store guidelines and developer agreements that would allow Apple to extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives,” the DOJ describes Apple’s “playbook”, which it has allegedly deployed across many technologies, products and services.
Apple responded by calling the lawsuit “wrong on the facts and the law” and saying that it would “vigorously defend against it”. In fact, the DOJ attacks the very core of Apple’s business model, which is creating products and services that seamlessly work together, and thus by definition make it less attractive for users to opt for non-Apple products. Whether or not, or to what extent, Apple’s behavior is against antitrust laws is now for the courts to decide. Experts think that the lawsuit, which has been years in the making, could drag on for years before we see a verdict.
