At some point, Apple’s idea of innovation went from making exceptional products to making pretty good ones exceptionally hard to compete with. At least that’s the takeaway from the Department of Justice’s monopoly lawsuit against the iPhone maker. As Attorney General Merrick Garland put it, “Apple has maintained its power, not because of its superiority, but because of its unlawful exclusionary behavior.”

It is much easier and more pleasurable to use Apple products with other Apple products. And the company is notoriously hard-assed with its App Store marketplace, the only place its customers can go to obtain services outside of the ones Apple provides. 

Building walls for a “magical experience”

Apple has long dressed up these barriers as necessary to making its ecosystem of products easy to use and for keeping its users safe. “At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users,” Apple told reporters. 

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.” 

While that’s true to some extent, that stance is also incredibly profitable to Apple, which can take a 30% cut of sales on its App Store. Indeed, it gets the second-biggest chunk of its revenue after iPhones — 22% last year and growing — from services, which includes the App Store, iCloud, and Apple Pay. And services have much bigger margins than its products. Both its products and services work together to simultaneously aid the user experience, but also make it harder to leave Apple.

Bursting Apple’s blue bubble

The Justice Department has accused Apple of degrading or preventing competitive services: blocking super apps and cloud gaming that would make users less reliant on expensive hardware, prohibiting others from developing competing digital wallets, and limiting the functionality of third party-accessories like smartwatches and Bluetooth headphones. 

Apple doesn’t go out of its way to accommodate the competition.

Take the case of the green bubbles. When an Android owner enters a group chat with Apple users, their experience is not the same, and it degrades everyone else’s. Their videos are pixelated, their notifications incomplete, and, most visibly, their chat bubbles are green rather than blue. It is a signpost: the other is here and is not as good. 

Apple could release iMessage for Android or extend to Android users similar perks, if only to make everyone’s experience better, but it hasn’t yet. While this might not be anticompetitive with a capital A, it’s perhaps something more powerful: Apple is flexing soft power. 

iPhone users themselves police Android users, accusing them of “breaking” the chats, taking cracks at the inferiority of the green bubbles, and by extension, Android users themselves. It's a powerful social stigma that the Justice Department says is especially effective among teenagers, where iPhone adoption is at 85%.

One bite, you’re hooked

There’s lock-in happening with Apple products. What’s unclear is whether that’s because Apple’s products are so good or because it’s purposefully hurting competition, or simply because it’s relying on its leading position and the inertia of human nature, to keep people coming back for more. It’s probably a bit of all the above.

To wit: 79% of iPhone owners upgraded from a prior iPhone, according to a report last month by UBS. It found that 60% of respondents “noted it would be inconvenient to leave the Apple ecosystem even though they would like to try another smartphone.”

Last year, about 13% of iPhone buyers had switched from Android, according to Consumer Intelligence Research Partners (CIRP), a market-research firm that’s been doing a long-running survey on the topic. That share is pretty typical of the past five years, and notably is higher than the share of Android buyers switching from iPhone (about 5%).

But generally it’s rare these days for people to switch operating systems at all, Michael Levin, CIRP partner and cofounder, said. Apple exclusively uses its iOS operating system, while a number of manufacturers use Google’s Android. 

“Now the two dominant operating systems are so comparable and so locked in, there's almost no switching,” Levin told Sherwood.

The small portion of those who do switch, he said, aren’t doing it for smartphone features, but rather for outside reasons like changing phone plans.

iPhone buyers are also much more likely to buy other Apple accessories. CIRP found that two-thirds of iPhone buyers who have a Bluetooth headset own AirPods. For Android smartphone buyers, their choice in Bluetooth headsets is much more fragmented, with Samsung, the leading Android brand accounting for less than 20% of Android users headsets. Very, very few Android users bought AirPods.

The same trend goes for smartwatches, with more than 80% of iPhone owners with a smartwatch or fitness tracker choosing Apple Watch, according to CIRP. 

iCloud, iPhoto, iWallet, and other native applications, which are increasingly important to people’s public and private lives, make things easier for iPhone users and also harder to leave. 

“iCloud storage is as accessible on any device as you can get. It’s just well integrated,” Levin said. “Is that legal making life easier for consumers or illegal making life harder for DropBox? I don’t know.” 

Apple is the incumbent, and as the incumbent with the largest market share out of any other manufacturer in the US, it comes with certain advantages. People do not like to change what they do. The settings and apps the phone comes with usually remain. If your phone already has an operable weather app, most people will keep that app.

People do switch, but there has to be an exceptional reason.

“Most people use the default apps,” Ed Orozco, a product designer who’s written about default settings, said. “In situations where there's a better choice, only some people will switch,” he said. “The alternative has to be so much better than the incumbent so that they can compete.”

While Orozco doesn’t think Apple is being purposefully anticompetitive, and says he believes the company is trying to do its best by its users, he concedes that not all of Apple’s default apps have to be great for people to use them. “Some really suck,” he said. “Apple Maps is appalling to this day.”

Can money fix innovation stagnation?

David Myhrer, an independent tech analyst who’s covered Apple, doesn’t think any phone makers — Apple, Google, Samsung — are being particularly innovative with their devices. 

“If you look at phones, it’s basically been the camera for forever — that’s the only thing that evolves,” Myhrer said.

Rather, he said, Apple’s innovation is in making its broad offering of products work so seamlessly together: a feat that many other companies try but don’t usually succeed at. “They do offer a better customer experience in terms of how it all works together.”

But for a company of Apple’s stature and market cap, that feels like a low bar. We know that Apple had the money to try harder, but they didn’t.

Last year Apple spent nearly $30B on R&D, or about 8% of its total sales. For context, Microsoft spent about 13% of revenue on R&D last year, while Google spent 15%. The last time Apple’s percentage was this high was more than 20 years ago, around when Apple released the iPod and was developing the iPhone. But in the meantime, Apple’s R&D as a share of sales had sunk. In other words, it’s raking in cash without commensurately redeploying it toward its next big thing. 

Of course, just because you throw money at something doesn’t mean you’ll have the next big thing. Take the Vision Pro, which has accounted for some of the uptick in recent R&D spending but so far seems to have limited interest among everyday consumers. 

After canning its self-driving car earlier this year, Apple is reportedly working on home robotics. But a “mobile robot that can follow users around their homes” and an “advanced table-top home device that uses robotics to move a display around” doesn’t exactly inspire awe just yet.

In the end, ecosystem lock-in just isn’t the same thing as innovation. And rather than powerful, it can come off as desperate. With all those fees coming in from the App Store, Apple’s got plenty of cash to burn to try and think different.