Apple is facing one of the toughest tests in its history after the US government filed a lawsuit accusing the tech giant of creating an illegal monopoly that cuts off competition for its iPhone.
The antitrust action, filed in federal court in New Jersey, alleges that the company has used the tight control it maintains over its smartphone ecosystem to “engage in broad, sustained and unlawful conduct.”
That has led to the iPhone getting worse in multiple ways, the Justice Department says. “Consumers should not have to pay higher prices because companies violate antitrust laws,” Attorney General Merrick Garland said in a statement Thursday. “If left unchecked, Apple will only continue to strengthen its smartphone monopoly.”
The criticism and announcement could be momentous for Apple, which could be forced to fundamentally change its operations. But it could also be important for the company's users, since they are the focus of the lawsuit itself.
What is the problem?
The lawsuit concerns Apple's controls over its own products and argues that it has too many. He has used that control to increase his own power at the expense of his clients and others, he argues.
The US government pointed to a number of places where that is the case. Apple's own Messages app, for example, works better with other iPhones; users can only use their own Wallet app when tapping to pay; The Apple Watch works better with the iPhone than any other smartwatch.
All this amounts to unfair competition, the government claims. Developers can't create apps that compete with Apple's, and the same problem faces those who make third-party hardware, such as Bluetooth trackers and smartwatches.
But it also means that customers lose out, the lawsuit argues, because they pay higher prices for fewer features.
What does Apple say?
Apple has said it will defend the case. But his statement made it clear that he feels the future of his products is at stake.
“At Apple, we innovate every day to make people love technology, designing products that work together seamlessly, protect people's privacy and security, and create a magical experience for our users,” he said. “This lawsuit threatens who we are and the principles that distinguish Apple products in fiercely competitive markets.
“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 the government to take a heavy hand in the design of people's technology.
“We believe this lawsuit is factually and legally flawed, and we will vigorously defend against it.”
What could happen now?
The lawsuit asks for “relief,” including anything necessary to “cure any anticompetitive harm.” In short, a victory for the US government would be a legal ruling that would force Apple to stop engaging in the behavior that led to the lawsuit in the first place.
That could mean a lot of things. But as an example, you could require the iMessages app to support the missing features, which would be possible.
In fact, Apple has already been working to curb some of the objections, presumably due to increasing regulatory scrutiny. Earlier this year, for example, it began allowing game streaming apps on the App Store, one of many objections from the US government.
What has already happened?
In Europe some of this has already happened. The Digital Markets Act, which recently went into effect, was born out of some of the same criticisms and attempted to address them in a way that the United States could echo.
The biggest change for Apple under those rules is that it has been forced to allow alternative app marketplaces, so third-party developers can set up their own app stores. Apple has delivered on this, but only to a limited extent: it's only available in Europe, and even there some developers have complained that Apple should have done more.
This is perhaps the most dramatic measure of its kind. But many countries around the world have imposed new rules on Apple in recent years.
