How the Fight Against Apple Could Redefine Antitrust Law
“The Justice Department’s lawsuit against the iPhone maker pushes the boundaries of competition rules. Some experts say that may make winning more difficult.
A shot at Apple’s moneymaker
With its antitrust lawsuit against Apple, the Biden administration has joined a growing list of regulators taking on the iPhone giant. But the Justice Department is taking a more ambitious approach than the others by aiming at the company’s tight control of the iPhone ecosystem, which officials say hurts consumers and developers while producing giant profits.
If successful, the case could upend a business model that has made Apple one of the most profitable companies in history — but victory would require courts to accept a redefinition of decades-old antitrust law.
Prosecutors zeroed in on Apple’s efforts to lock-in consumers. The Justice Department argues that the company unlawfully restricted competition by blocking key iPhone features to prevent consumers from switching devices.
Apple is profiting “not by making its own products better, but by making other products worse,” Attorney General Merrick Garland said on Thursday.
The lawsuit identified five areas: smart watches, digital wallets, cloud-based gaming, messaging apps — yes, the green-bubble debate is key here — and so-called “super apps” that bundle different programs. (It also suggests that Apple’s behavior affects an even wider array of products, including cars.)
Apple said the approach amounted to excessive interference in business.“If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect,” a spokeswoman said, adding that it would let the government have a heavy hand in designing people’s technology.
Regulators globally are already changing how Apple operates. The European Union’s sweeping Digital Markets Act aims to open up iOS and the App Store, and the bloc has also fined the company $2 billion for hampering music-streaming competitors.
South Korea and the Netherlands have adopted legislation to require app store owners to allow alternative payment systems. (Skeptics say Apple is seeking to undermine those efforts.)
The new case pushes the boundaries of traditional antitrust policy. That’s in keeping with the stated aim of regulators like Jonathan Kanter, the Justice Department’s antitrust chief, and Lina Khan, the head of the F.T.C.
“We want to help real people by making sure that our antitrust laws work for workers, work for consumers, work for entrepreneurs and work to protect our democratic values,” Kanter told The Times in January, declining to comment on specific cases.
But some experts think this lawsuit is a stretch. Gus Hurwitz, a senior fellow at the University of Pennsylvania Carey Law School, told DealBook that antitrust policy traditionally hasn’t focused on issues like porting consumer data to different platforms.
He added that while prosecutors were seeking to help some consumers — those who favor switching devices — the lawsuit could end up hurting others. Users of iOS “derive a lot of value from their closed ecosystem,” he said. “Apple users like the closed ecosystem and the benefits that confers on them.”
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