Apple was able to set up an antitrust battle due to its streaming and super apps policy

The New Jersey District Court may not be the perfect place to challenge Apple over its smartphone monopoly, but it may challenge Google and Microsoft over ad tech

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” said Attorney General Merrick B. Garland. Apple will only strengthen its smartphone monopoly if it’s left unchallenged.

The NJ District Court may not have been chosen because of teeth. The Verge also spoke with California Attorney General Rob Bonta, who is one of the 16 attorneys general involved in the DOJ’s lawsuit. While Bonta says he wasn’t heavily involved in choosing the venue since the DOJ was mostly in charge of that decision, he does have some understanding of why the DOJ picked New Jersey — and it’s arguably a little less exciting than fake teeth.

Garland acknowledged the government is facing a company worth trillions of dollars. “When you have an institution with a lot of resources that, in our view, is harming the American economy and the American people, it’s important for us to allocate our resources to protect the American people,” Garland said. Individual Americans don’t have the ability to protect themselves.

Apple will change the App Store framework in the EU in order to make it simpler to use. But to the DOJ, the damage has already been done — and those steps don’t absolve Apple of unfairly suppressing competition, being a thorn in the side of developers, and (supposedly) wielding its monopoly power to “extract more money” from anyone and everyone using an iPhone.

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.

In 1998, the DOJ filed an antitrust suit against Microsoft in the DC district court. Its 2020 suit over Google Search was also filed in DC, and its 2023 suit against Google over ad tech was filed in the nearby eastern district of Virginia.

The DOJ Investigates Apple’s Super Apps for Mitigating Cross-Platform Message Dissemination and Cloud Streaming

Apple’s exclusive software features, like the non-operability aspects of iMessage, makeandroid phones seem inferior in the eyes of consumers even when they don’t have much to do with how Apple conducts business.

Some people are upset that Apple keeps people from outside of its network Messages from people outside its network inside green bubbles. Apple said it would make concessions to add compatibility with the messaging standard. Apple has long argued that security features in iMessage are not compatible with the DOJ.

The complaint has a quote from Tim Cook that was made famous at the time. “I can’t send my mom certain videos,” an audience member told Cook when complaining about the cross-platform messaging quagmire. “Buy your mom an iPhone,” Cook responded.

The suit was filed to try to prevent Apple from using its control over app distribution to undermine cross-platform technologies including super apps, cloud streaming apps, and smart watches.

Phil Spencer, the CEO of Microsoft gaming, said in an interview that Apple’s plans to open the App Store to third-party markets on the iPhones didn’t go far enough.

The DOJ alleges that Apple did not want cloud streaming to exist in the first place. Since cloud streaming services allow users to play games hosted on a remote server, this eliminates the need for powerful hardware to run demanding games. It is possible that users could purchase a cheaper device to play games on mobile instead of shelling out a fortune for a new phone.

However, the DOJ’s lawsuit claims that Apple doesn’t want users or companies in the US to benefit from super apps. It notes that during a board of directors presentation, Apple cited super apps as a “major headwind” to boosting iPhone sales in countries where they’re popular because of “[l]ow stickiness” and “[l]ow switching costs.” If someone benefits from using a super app they don’t necessarily have to be tied to one thing or another.

Users don’t have to download a bunch of separate apps to access certain capabilities in this setup, as the DOJ argues. 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.

The lawsuit states that the super apps are “fundamentally disruptive to existing app distribution and development patterns and ultimately Apple’s monopoly power.” That’s why it’s allegedly blocking developers from putting them on the App Store by requiring super apps to display mini programs in a “flat, text-only list” rather than as individual icons or tiles. The company also doesn’t allow super apps to categorize mini programs in their apps, preventing them from showing recently played games or a list of titles from the same developer.

The lawsuit does not mention that Apple blocks mini apps from using its in-app purchase system, but the company said it would allow them to use its system in January. The change may not address the formatting arguments the DOJ makes in its lawsuits, as the App Store Guidelines only mention privacy rules, among other unrelated requirements.

Apple vs. Microsoft: The 2000 DOJ Trial of the Microsoft Cosmic Insights into Computer IoT, Internet Services, and Software

Apple is worth $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. Apple was able to get its spot at the top due to the work of the Justice Department.

The focus of the Biden administration was on antitrust enforcement. In 2021, the White House issued an executive order meant to encourage stronger enforcement of existing antitrust laws via the Federal Trade Commission and Justice Department, and created the White House Competition Council. “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.

The Microsoft antitrust saga and the dot com crash are two of many events that occurred in the same year. The United States is no longer in the same position it once was — in diplomacy, in war, or in technology. The dynamics of the American tech sector are different than when they were a decade ago. While United States v. Microsoft almost certainly had a substantial effect on the technology industry and society at large, let’s just say we’re not exactly in a place where we can A/B test antitrust. DOJ wants to write a narrative about its role in the technological ecosystem and the American economy, but whether that narrative actually rings true remains to be seen.

The DOJ initially tried to break Microsoft up into two companies. That didn’t end up happening, but Microsoft walked away from the trial weakened and with a long list of “prohibited conduct” instructing the company to refrain from anticompetitive shenanigans in its dealings with OEMs and developers. The description of the case from 2000 is worth a read.

Apple has long argued that keeping its mobile operating system, app store, and other services closed offers greater security and safety for customers. The DOJ complaint indicates that Apple does not enforce these policies consistently, which would make sense if there was a goal to protect users.

The US Department of Justice reminded Apple that it was here because we paved the way in their antitrust complaint against the company.

In today’s case, the Department of Justice doesn’t merely imply that Apple benefited from the results of United States v. Microsoft; it comes right out and says it. Take section 26 of the complaint:

After the consent decree, Apple was able to develop a version for Windows and the iPod was able to go gangbusters. The rest is… history? I don’t know if Apple owes the DOJ a thank you card for making the iPhone possible, but not having to deal with Microsoft’s bully behavior along the way wasn’t bad.

Middleware is written by lawyers in United States v. Apple, but you don’t know it. You only have to compare it to the 1998 complaint in United States v. Microsoft to see what I mean. The Apple lawsuit seems like it is trying to be a magazine.

Microsoft worried about disrupting PCs and the DOJ said Apple worried about the iPhone. Apple seems to be the same as Microsoft in that it’s afraid.

In that lawsuit, Epic argued that Apple illegally monopolizes the market for app distribution and payments on its iPhones, allowing it to “unlawfully condition access to the App Store on the developer’s use of a second product—In-App Purchase—for in-app sales of in-app content,” according to the 2020 complaint. The ruling was upheld by an appeals court, butEpic lost on most of its claims. Epic did win one key point, requiring Apple to let developers link to outside payment options. The district court has recently been notified that Apple is not complying with that requirement, rendering it useless.

The DOJ lawsuit against Dentsply: Why is Apple interested in monopolizing services? Is it possible that Apple can exercise market power? An attorney general told the Verge

“DOJ has stepped back from the details and simply asked and answered the question, what are all these about?” says John Kwoka, professor of economics at Northeastern University who recently served as chief economist to FTC Chair Lina Khan. It is a good idea to look at it that way to make sure that you understand the core problem.

The episode demonstrates an early instance of Apple locking users and developers down in order to survive in the marketplace, according to the DOJ. The lawsuit claims that practice has made switching to Apple alternatives more expensive than it’s worth, deterring competition.

If customers are able to freely choose the best option out there, the government will need to show that Apple is able to increase prices or degrade quality without losing customers. “The question is whether users will opt out, can they opt out?” Kwoka said so. Is it possible they will opt out of degradation of service? I think there will be evidence of how apple has compromised service quality without losing anyone at all, like in the Google case. This would go toward showing Apple’s ability to exercise market power.

Apple may have legitimate business reasons to make the decisions the government says were exclusionary.

The Third Circuit has some good law for the victims of monopolization according to William Kovacic, a professor and former chair of the Federal Trade Commission. He points out the antitrust lawsuit that was filed by the DOJ against Dentsply.

A break up is unlikely according to Allensworth. They don’t seem to be looking for one. They’re asking the court to enjoin, which means to stop doing the stuff that they’re complaining about. Europe has asked Apple to do some things and they are asking for something very similar. The European Digital Markets Act requires designated gatekeepers like Apple to make changes to its products that the commission believes will create a more competitive environment.

Enforcers aren’t typically shy about telling the press that all options are on the table. DOJ officials who spoke to reporters on background Thursday didn’t address the specific kinds of remedies they would seek. They emphasized that the case will start with an evaluation of Apple’s liability for harms.

California Attorney General Rob Bonta, one of the state AGs who has joined in the DOJ lawsuit, tells The Verge that the enforcers “are focused on injunctive relief.”

Apple vs. Samsung in the DOJ lawsuit: What do artificial teeth have to do with their lawsuit? The case of Kovacic and Bonta

Break-ups are decisive and final, while behavioral remedies can be hard to track. But in this case, says Allensworth, “it’s really hard to think about splitting that baby and saying Apple can make handsets, but can’t make an operating system, can’t have the app store, can’t have iMessage.”

One example is the long-winded battle over the terms of the behavioral remedies in the case of Apple’s App Store. Kwoka says Apple can figure out how to throw sand in the gears.

So, what do artificial teeth have to do with the Department of Justice’s massive lawsuit against Apple? Well, they may be one of the reasons why the DOJ decided to file its lawsuit in the state of New Jersey — instead of, say, Virginia or Washington, DC, like it did for Google and Microsoft.

“It was a case — low tech — that involved dentures,” Kovacic says. “But they [the DOJ] won and with an opinion that lays out a view of the law that’s going to be good for them here.”

The DOJ was accusing Dentsply of maintaining a monopoly in the business of artificial teeth. Dentsply sold artificial teeth to dental laboratories for the purpose of making dentures. The policy was adopted by Dentsply to prevent authorized dealers from adding further tooth lines to their product offering. This prevented dealers from selling other brands of artificial teeth to laboratories, allowing Dentsply to “exclude competitors from the dealers’ network.”

Bonta says that Apple has been affected by anticompetitive conduct and exclusionary conduct of competitors in the state of New Jersey. The lawsuit lists both Samsung and Google as the two “meaningful competitors” to Apple in the premium smartphone market and specifically points out that Samsung’s US headquarters are “located in this district.”

The only thing that you can forget about this is that it’s a lawsuit, not just the observations of a single poster in the comments section. There, the document suddenly changes voice, finally pivoting into a formal communication to a judge. “Mobile phones,” the complaint reads primly, “are portable devices that enable communications over radio frequencies instead of telephone landlines.”

From cloud streaming games to CarPlay, the DOJ complaint tries to rope in the burning grievances of every kind of nerd and then some. The only thing that’s missing is a tirade on how ever-increasing screen sizes are victimizing me, a person with small hands. (At the Thursday press conference, Attorney General Merrick Garland made no mention of how Sarah Jeong would like to see the SE return to its 2016 size.)

There is a description in the DOJ about Apple’s conduct making cloud streaming apps so unattractive to users, that no developer designed one for theiPhone, and how the need to regularly updateAAA video game titles compares to the App Store review. At no point does the DOJ say that Apple is why I can’t play games on my phone. It is also not saying that. Is Apple standing between me and my video games??? I wonder, as I unconsciously rummage around for my pitchfork.

A lawsuit is a communication between lawyers and a judge. It can become highly technical and jargonistic when it is sent to a specialized audience, like antitrust or technology, because it is a specialized message. Tech lawsuits are often obscure even to techies, interspersed with bizarre software terminology that is pretty much meaningless outside of a court of law. Copyright law loves “technological protection measure” and antitrust law loves “middleware.”

There is a scene! Characters! The invocation of Steve Jobs himself! I think this paragraph can use a hard edit prior to publication, but it should be a lawsuit rather than a work of narrative nonfiction.

In fact, this opening paragraph isn’t even numbered: legal filings like this generally have every paragraph numbered. A weird curtain-raiser that has been near the table of contents is what it is. It’s not against rules, but US v. Apple powers up for two pages before getting into allegations.

Compare that to the opening paragraph of the complaint in the DOJ’s 1998 blockbuster antitrust lawsuit against Microsoft (which is, of course, properly labeled as paragraph 1):

This action is being brought to restrain Microsoft from engaging in conduct that harms competition in the computer software industry, and remedy the effects of its past conduct.

It’s almost like the lawyers in US v. Microsoft wrote a document asking a judge to apply the Sherman Antitrust Act to the market for personal computers! What a sleepy day!

The DOJ believes surveys have shown that the link between devices associated with the Apple Inc. phone and the switch to Android deters people from moving to it.

One 2013 message quoted, from Apple’s senior vice president of software engineering, is claimed to have warned that allowing Apple Messages to work across platforms “would simply serve to remove [an] obstacle to iPhone families giving their kids Android phones.”

The suit portrays this ad as triggering concern inside Apple. It says that an executive wrote a letter to Jobs and said it was easy to switch from the phone to the operating system. Not fun to watch.” The suit doesn’t quote Jobs’ response at length, but says he wrote that Apple would “force” developers to use its payment system to lock in both developers and users on its platform.