Table of Contents
Last Thursday (21), the United States Department of Justice (DOJ) initiated an antitrust lawsuit in New Jersey Federal Court against a Apple . The lawsuit accuses the technology giant of establishing an illegal monopoly in the smartphone sector, excluding competitors and abusing its market power to extract money from consumers.
Apple joins other major tech companies facing similar lawsuits in the US, including Meta, Google e Amazon. After the news was released, Apple shares fell 3,37% on the Nasdaq in New York.
Allegation of anti-competitive restriction
O US Department of Justice (DOJ), in collaboration with 16 state and district attorneys general, accuses Apple of practices that result in increased prices of iPhones for consumers and developers, thereby strengthening users' dependence on their devices.
According to the statement, the bigtech is accused of selectively imposing contractual restrictions on developers and limiting access to essential phone features, in a strategy to hinder competition in the market.
“Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others,” the DOJ wrote.
The DOJ also released a list of the reasons why the company is being sued, see:
- Monopoly in the smartphone market: The US Department of Justice (DOJ) accuses Apple of creating a monopoly in the smartphone market.
- Limited experience with non-brand smartwatches: Apple is criticized for providing a poor iPhone experience when using non-Apple smartwatches.
- Restrictions on Super Apps: The company limits the operation of super apps like WeChat and KakaoTalk on the iPhone.
- Obstacles when using Cloud Gaming and streaming: The DOJ alleges that Apple makes it difficult or prevents cloud gaming and streaming services from running on the iPhone.
- Limitation of digital wallets: Apple is accused of restricting the use of digital wallets other than Apple Wallet on the iPhone.
- Problems with messages between iPhones and Androids: The issue of “green bubbles” in iMessage, which indicates an inferior messaging experience when communicating with Android devices.
- App Store Fees and Commissions: Apple imposes high fees and commissions on apps downloaded from the App Store, as well as on in-app purchases.
- Restrictions on developers and new technologies: Accusations that Apple discourages developers from offering innovative applications and hinders the adoption of new technologies.
- Limited Apple Watch Compatibility: The Apple Watch only works with iPhones, which is seen as an anti-competitive practice.
- Exclusion of alternative payment methods: The company blocks alternative payment methods within the apps in addition to its own payment system.
- Exclusive and anti-competitive policies: The DOJ accuses Apple of adopting policies that limit competition and restrict consumer choice.
- Security and privacy on the App Store: Questions about whether Apple can continue vetting apps for security and privacy without imposing anti-competitive practices.
Each of these points represents an aspect of the ongoing lawsuit and highlights the DOJ's concerns about Apple's practices and their impact on the technology market. Watch the video made by The Verge to better understand the case:
Impact on the market and consumers
“For years, Apple has responded to competitive threats by imposing a series of 'Whac-A-Mole' rules and contractual restrictions that have allowed Apple to extract higher prices from consumers, impose higher fees on developers and creators, and suppress competitive alternatives. of rival technologies.”
Jonathan Kanter, Chief of the DOJ's Antitrust Division, in a statement.
With reduced competition, market monopolization can directly affect consumers, resulting in an increase in smartphone and app prices beyond normal market expectations. This dynamic has the potential to lead to market stagnation, limiting innovation and options available to users, as well as hindering the growth of small businesses.
For years, app developers for Apple's iOS have expressed discontent with the closed and often opaque nature of the platform.
Developer dissatisfaction with the iOS platform
Renowned companies like Spotify, which offer paid subscription services, face a condition imposed by Apple that requires them to give up 15 to 30 percent of profits for making their apps available on the App Store. Furthermore, Apple offers its own applications that compete directly with others available in its store, the only one allowed by the company for downloads on iOS devices, under the justification of security.
This practice has increased distrust among developers, raising questions about fair market access.
In a 2020 report, the subcommittee identified that Apple has monopoly power over the distribution of apps on iOS. In response, lawmakers have proposed laws like the Open App Markets Act and the American Innovation and Choice Online Act, aiming to prevent platforms like Apple from favoring their own products over competitors.
However, more than two years after the introduction of these legislative proposals, none of them have advanced to a vote in the plenary of either chamber of Congress.
DOJ's Legal Challenges Against Tech Giants
Europe has demonstrated global leadership in efforts to regulate big technology companies, moving beyond the United States in terms of antitrust legislation. Through the implementation of the Digital Markets Act, the European Union established new rules designed to limit the power of dominant platforms, many of which are operated by Apple.
Earlier this month, a significant milestone was reached when the European Commission imposed a €1,84 billion fine on Apple.
At the same time, in the United States, the DOJ is preparing for a near future full of legal challenges involving accusations of monopoly in the technology sector. The DOJ is finalizing arguments in the lawsuit against Google over search distribution, expected in May, and plans to begin a trial in a case involving Google's advertising technology in the fall.
These movements highlight a growing intention to regulate technology giants in both Europe and the United States, highlighting a global effort to ensure fair and competitive market practices in the technology sector.
Legislation to curb the power of large technology platforms
US Attorney General Merrick Garland acknowledged the challenge the government faces in dealing with a company of the size and resources like Apple, valued at trillions of dollars. Garland highlighted the importance of dedicating government resources to protect American citizens, especially in situations where they are unable to protect themselves individually.
Responding to the accusations, Apple's spokesperson said:
“It threatens the essence and principles that differentiate Apple products in a highly competitive market.”
Apple spokesman Fred Sainz defended the company.
He warned that, if successful, the lawsuit could harm Apple's ability to create innovative technology, as well as set a dangerous precedent for government intervention in technological design.
Sainz reiterated Apple's belief that the lawsuit is baseless on both the facts and the law, and assured that the company will vigorously defend its position.
Antitrust legislation addresses infractions that affect the economic order, ranging from production conditions to the distribution of goods or services. These practices may include, but are not limited to, issues such as monopolies, price fixing agreements and other actions that undermine fair competition in the market, as explained in the video below:
Find out more about this and other news at Showmetech TRIO, your weekly tech news trio:
See also other features
Sources: The Verge, Examination, G1
reviewed by Glaucon Vital em 22 / 3 / 24.
Discover more about Showmetech
Sign up to receive our latest news via email.
