Department Of Justice Sets Sights On Apple In Suit Over Unlawful Business Practices

NEWS – The ball has finally dropped on the big Apple.

The ball (metaphorically speaking) — an antitrust lawsuit filed in the U.S. on March 21 by the Department of Justice (DOJ) — came down following the DOJ’s allegations that Apple engaged in anticompetitive behavior with the iPhone. The Cupertino, California-based company also is accused of wielding its monopoly power in the smartphone market to stifle competition, a violation of federal law.

Apple immediately reacted to the legal filing and wasted no time in issuing an official response (see below).

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Does Not… Compete?

Wired characterized the DOJ’s landmark case against Apple as an assault on the company’s most prized asset: the iPhone.

In a speech given at a press conference on the day that the antitrust lawsuit was announced, U.S. Attorney General, Merrick Garland, alleged that Apple employs a strategy relying on anticompetitive behavior which has resulted in less innovation from the company as well as its competitors. Additionally, Garland claimed that this also has led to higher prices and fewer choices for consumers.

“As outlined in our complaint, we allege that Apple has consolidated its monopoly power not by making its own products better but by making other products worse,” said Garland.

Macworld reported that the antitrust lawsuit also claims that Apple’s anticompetitive behavior encompasses not only its apps and services but extends even further to include its advertising, automotive services, entertainment, location services, news subscriptions, video communication, web browser, and more. Additionally, the suit argues that — unless these unlawful business practices are stopped — the company’s monopoly in the smartphone market will likely entrench other markets.

The argument in the litigation, per Macworld, is not about whether consumers have the freedom to choose which brand of smartphone they buy but, rather, is about the iPhone having an unfair advantage over smartphones from other companies.

Notably, the DOJ’s landmark case against Apple is much broader in scope than most other cases that have been brought forth by U.S. regulatory agencies in recent years. With that said, however, as noted by Macworld, the decisions that were handed down in past antitrust lawsuits have generally swung in the company’s favor.

According to Rebecca Allensworth, a law professor at Vanderbilt University in Nashville, Tennessee, the antitrust lawsuit appears to be relatively solid but added –— in an interview with Wired — that the government potentially faces an uphill battle ahead.

An individual who sees potential flaws in the suit is Paul Swanson, a partner at the Holland & Hart law firm in Denver, Colorado. Speaking to Wired, Swanson pointed out that federal law prohibiting anticompetitive behavior does not technically require companies to work with its competitors.

“A business doesn’t violate antitrust laws by terminating or refusing to work with another business,” said Swanson.

Does Not Compute

At a briefing with members of the media shortly after the antitrust lawsuit was announced, Apple, per TechCrunch, took swings at the DOJ and slammed the suit for being: “misguided.”

In itss rebuttal to the antitrust lawsuit, Apple argued that the suit threatens to undermine everything that sets apart it’s product from other smartphones on the market which, should the government prevail, would only serve to make the iPhone look and feel just like an Android smartphone. Additionally, in the company’s view, the DOJ risks denying consumers the feature(s) they value most about their iPhones — its mobile operating system (iOS) — as well as its integrated ecosystem of apps and services (e.g., iMessage and iCloud) which are exclusively found on the device.

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” said Apple (in a prepared statement released to the media).

“If successful, it would hinder our ability to create the kind of technology people expect from Apple – where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”

Macworld reported that the DOJ initially began its inquiry into Apple back in 2019.

Interestingly enough, the DOJ’s landmark case against Apple had been, per Wired, widely expected for quite sometime. When the antitrust lawsuit finally dropped, however, it came down with such a ferocity that it surprised everyone.

As noted by Business Insider, U.S. regulatory agencies are not the only ones going after Apple for breaking the law. In early March, regulators in the European Union (E.U.) issued a fine of nearly $2 billion to the Cupertino California-base Company for not allowing developrs of apps to provide consumers with alternate payment options outside of the App Store. Apple’s potential violation of the Digital Markets Act, which aims to allow fair competition in Europe’s digital markets, is the next major investigation that will be pursued by the E.U..

The Computer & Communications Industry Association (CCIA) — which, for more than 50 years, has advocated for sound competition and consumer protection principles that support innovation in technology — was one of many organizations that did not approve of the antitrust lawsuit. Speaking to CNN, Matt Schruers, President and CEO of the CCIA, pointed out that there are many options out there and consumers can easily switch to their preferred hardware and/or software of choice.

“U.S. antitrust laws protect consumers from harmful practices but this complaint takes aim at design choices that have produced a product beloved by consumers,” said Schruers.

A Note from the Author: to read the arguments made in the DOJ’s landmark case against Apple, visit: www.justice.gov