The Department of Justice sues Apple, saying it illegally sustains an iPhone monopoly
Apple gets served… and it’s not pie. The DOJ dished up a landmark antitrust lawsuit taking on the Apple ecosystem. After a four-year investigation, yesterday the DOJ said that Apple has illegally sustained an iPhone monopoly by giving its own devices (like the Apple Watch) and services (like Apple Pay) an advantage over rivals’. The DOJ said Apple has prevented app developers from creating rival tap-to-pay options for the iPhone, hampered competition in the smartwatch market, and suppressed cloud gaming services.
Bubble burst: The Justice Department even called out Apple’s use of green bubbles for text messages sent by non-iPhone users (“green bubble shaming” is a thing).
Apple said: The lawsuit is “wrong on the facts and the law,” and “threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”
Experts say: The case could take around three years to play out. If Apple loses, it could spell big changes for its iBusiness. Apple shares fell 4% yesterday.
iMessage on four devices… Apple connects its services across its gadgets (which as of late 2022 were used by 2B people). But its tightly controlled ecosystem has led to lawsuits over everything from its “app tax” to limits on how app developers can communicate with their users. Now, Apple’s gated garden is starting to crack:
Record scratch: This month EU regulators ordered Apple to pay a $2B fine, saying the company suppressed music-streaming competition.
Game on: Apple started allowing outside payment systems on the US App Store this year after a lawsuit with Epic Games (but was still charging developers a 27% fee).
Big Tech’s big strategy is under threat… Amazon, Google, and Meta all offer an interconnected web of services, which has led to multibillion-dollar ecosystems. Now that strategy is in jeopardy, and not just for Apple. A DOJ case targeting Google’s ad-tech dominance goes to trial this fall, and the search giant agreed to pay $700M last year to settle allegations that it suppressed Android app store competition. Meantime, the FTC sued Amazon last year in an ecomm antitrust case.