While the firm faces a lawsuit over its position in the device market in the US, it’s weathering increasing pressure from European regulators over its app store practices
US DOJ files antitrust suit against Apple, alleging an illegal monopoly in the smartphone market
On 21 March 2024, the US Department of Justice (DOJ) joined 16 other state attorneys general in filing an antitrust lawsuit against Apple. The suit alleges that Apple has maintained an illegal monopoly over the smartphone market by limiting access to developers and undermining third party apps, services and products. Summarily, the case claims that Apple has sought to systematically undermine competition which could have made users less reliant on the iPhone and Apple’s suite of products and services, including by limiting interoperability. In turn, the tech firm has allegedly leveraged its dominant position to extract more money from consumers as well as developers and other businesses such as content creators which contract with Apple. The US DOJ, alongside the US Federal Trade Commission (FTC), have now sued all five of the so-called “GAFAM” American tech giants in federal courts in recent years, marking a revival of ex-post competition policy. The DOJ currently has cases pending against Google, Amazon and Meta while the FTC lost its bid to block Microsoft’s acquisition of video game publisher Activision Blizzard in 2023.
DOJ claims that Apple’s walled garden degrades consumer experience and limits innovation while raising prices
Among its allegations against Apple, the US DOJ cites the firm’s repeated attempts to stifle interoperable or cross-functional platforms by limiting their compatibility with the iPhone and selectively enforcing restrictive contract terms with developers. Apple’s alleged goal has been to prevent consumers from switching away from the iPhone by sheltering its user base within a walled garden of proprietary products and services. The suit claims that Apple has sought to suppress the growth of ‘super apps’ – or multifunctional apps which can include messaging, payment, e-commerce and social media services among others – out of fear it would make it easier for consumers to switch smartphones. Apple is also alleged to have blocked the development of cloud-base gaming platforms which would allow consumers access to similarly high-quality video and streaming experiences without having to purchase more expensive and capable hardware, such as the systems employed in iPhones. Perhaps most relatably, the DOJ points to Apple’s supposed degradation of the quality of messaging with non-iPhones, noting the ‘green bubble’ as well as worsened video quality and lack of encryption unfairly mark the messaging services of other devices as inferior to the iPhone’s iMessage platform. Notably, Apple recently reversed its long-held position and announced that iMessage would support the RCS protocol while the firm’s iMessage service faced a potential designation under the EU’s Digital Markets Act (DMA).
Apple faces global scrutiny for alleged competitive practices, drawing the attention and ire of European regulators
In addition to the lawsuit in the US, Apple has faced increasing pressure from European regulators regarding its conduct across multiple other markets. The firm is currently the subject of pending investigations in Italy, France and Germany (as well as India) relating to its dominance in the app store market and its use of non-public consumer data for advertising advantages. Apple was also heavily criticised for its proposed compliance plan with the DMA, which was referred to as “hot garbage” and a “complete and total farce” by competitors. Through its authority under the DMA, the EC recently launched an investigation into Apple’s compliance measures, focusing on potential violations of anti-steering provisions by the Apple App Store and Apple’s Safari browser. The Commission is also requesting further information on the firm’s renewed fee structure for third-party app developers which was the most hotly contested component of its plan. International scrutiny of Apple’s role in the device or smartphone market is limited, however, likely due to the far smaller market share Apple holds in this market outside of the US. Though the tech firm has expressed its view that this limited global market share undermines the DOJ’s case, both the DOJ and the FTC have proven their willingness to lead globally in investing in antitrust litigation in the absence of ex-ante regulation of digital competition in the US.
