The Apple Case: First Day of a High-Frequency First-Principles U.S. Competition and the Federal Trade Commission

Apple’s fiery response makes it clear that the company has every intention of defending itself. We are on the first day of a lawsuit that is sure to go on for a long time. It took over three years for the government and Microsoft to reach a settlement in that high-profile antitrust case (and another four years for dissatisfied state attorneys general to run through the appeals courts). The stakes here are just as critical.

The case is being filed in the US District Court for the District of New Jersey. Attorneys general from California, New Jersey, Arizona, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New York, and North Dakota joined the DOJ in the complaint.

The US Attorney General acknowledged that the government was facing a resource deficit and was facing a company worth trillions of dollars. Garland said that it’s important for the institution to allocate its resources to protect the American people. Individual Americans don’t have the ability to protect themselves.

The EU might’ve led the way in forcing Apple to loosen its grip over the App Store, but the DOJ also sees a glaring problem with the fees that developers must pay — and the strict guidelines they must abide by — for their apps to remain available to millions of iPhone owners.

The government also says that Apple has thrown around its power to suppress innovation in streaming services for video games, non-Apple smartwatches, and third-party party digital wallets that let users tap-to-pay.

The Department of Justice went to trial against the parent company of the world’s most popular search engine. The FTC is working on a suit against Amazon.

Apple Shouldn’t Stream Cloud Games on the iPhone: A Super App Critique of the U.S. Apple Co-Operator and the DoJ

The company’s exclusive software features, including non- interoperable aspects of iMessage, make the company’s products seem inferior in the eyes of consumers, even when those drawbacks have nothing to do with how Apple conducts business.

The Justice Department said that Apple had been able to block innovation in super apps with broad function and that it had also ensured it wouldn’t allow people to use cross- platform messaging apps.

The quote from Tim Cook at the Code Conference that made a big deal out of was in the complaint. “I can’t send my mom certain videos,” an audience member told Cook when complaining about the cross-platform messaging quagmire. Cook said to buy your mother an Apple product.

The Justice Department alleges that Apple is using its watch to ensure that people upgrade to the new model of phone whenever upgrade time rolls around, instead of the other way around, and that the Apple Watch isn’t an effective replacement for an existing phone.

Apple had a monopoly power because it blocked cloud gaming apps that would have given users access to desirable apps and content without the need to pay for Apple hardware, according to the lawsuit. “In Apple’s own words, it feared a world where ‘all that matters is who has the cheapest hardware’ and consumers could ‘buy[] a [expletive] Android for 25 bux at a garage sale and… have a solid cloud computing device’ that ‘works fine.’”

Apple didn’t want cloud streaming to exist on the iPhone in the first place, the DOJ alleges. Cloud services allow users to play games hosted on a remote server, eliminating the need for powerful hardware to run demanding games. In other words, users could purchase a cheaper Android device or even an older, used iPhone to play stream games on mobile instead of shelling out $799 for a brand-new iPhone 15.

The DOJ is claiming that Apple does not want users in the US to benefit from super apps. Apple said during the board of directors presentation that it was a big problem for the iPhone to be popular in countries where it was popular because of its stickiness and cost. If someone benefits from using a super app, they don’t necessarily need to be tied to any one ecosystem — like Apple’s.

This setup is convenient for users and developers, the DOJ argues, as users don’t have to download a bunch of separate apps to gain access to different capabilities. Meanwhile, developers also don’t have to push separate app updates for Android and iOS, since these programs run within an app instead of on a phone itself.

“Apple recognizes that super apps with mini programs would threaten its monopoly,” the lawsuit states. One Apple manager said that allowing super apps would let the barbarians in at the gate.

Although the lawsuit mentions that Apple blocks mini apps from using the API they need to use Apple’s in-app purchase system, the company said it would start letting mini apps and games use its system in January. It is not certain if the change addresses the arguments that the DOJ makes in its lawsuits, or if it only states that mini apps should adhere to privacy rules.

Apple’s iPhone, Microsoft’s Internet Browser, and the DOJ’s Case against Microsoft: Implications for Internet Privacy and User Protection

Apple is worth nearly $3 trillion, making it one of the highest valued companies in the world. And its iPhone is one of the most popular phones on earth, dominating the global market, according to market analyst firm IDC. The Justice Department is of the opinion that Apple was able to maintain its position at the top.

The Biden administration is very focused on antitrust enforcement. The White House created the White House Competition Council in order to encourage stronger enforcement of antitrust laws. “Polls show that the public is truly concerned that the federal government should do more about the power of monopolies in order to make the economy more fair and competitive,” Timothy Wu, former special assistant to the president for technology and competition, said in a speech in November 2021.

An official from the DOJ commented that there are examples where companies that violate antitrust laws end up being more valuable than they are because of it. Microsoft, thanks to its success in cloud services and more recently AI, is now the most valuable company in the world.

The case against Microsoft accused the company of forcing PC builders and others to use its internet browser, in order to make them favor it. The company was slow to embrace the web due to its inability to make web services useful and lucrative, but that’s because it was caused by something.

Apple has long argued that keeping its mobile operating system, app store, and other services closed offers greater security and safety for customers. But Newman says that the DOJ complaint indicates that Apple doesn’t enforce these policies consistently as would make sense if the goal was to protect users.