The US Department of Justice accuses Apple of having an illegal monopoly over smartphones

[Dominik W]

Summary

It is happening. According to the AP, the Department of Justice in the US is accusing Apple of having a monopoly over smartphones in the US

 

Quotes

Quote

The Justice Department on Thursday announced a sweeping antitrust lawsuit against Apple, accusing the tech giant of engineering an illegal monopoly in smartphones that boxes out competitors and stifles innovation.

The lawsuit — which was also filed with 16 state attorneys general — is the latest example of the Justice Department’s approach to aggressive enforcement of federal antitrust law that officials say is aimed at ensuring a fair and competitive market, even as it has lost some significant anticompetition cases.

 

Quote

Apple said the lawsuit, if successful, would “hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect” and would “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”

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

 

Quote

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” Attorney General Merrick Garland said in a statement. “We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

 

My thoughts

I never thought the iPhone would be accused of being a monopoly, but thinking about it quickly as I write this, I can see why. The ecosystem (iMessage) has taken over market share among youngsters (me), and Apple essentially has customers for life. I am curious to see how this plays out. 

 

I will add more articles and sources as the news plays out.

 

Sources

AP

The Verge

Lawsuit

Edited March 21 by Dominik W
More quotes / Added sources

[Senzelian]

[venomtail]

Interesting dynamic in other countries when reading how the smartphone ecosystems work in the US, Japan and Korea. Segmented (in Apple's favor), prestige and socially not even accepted amongst younger generation if you don't have an iPhone.

 

Where as in Europe everyone uses 3rd parties. Whatsapp, Signal, Instagram, Messenger and Snapchat for most of people's communication.

[OhYou_]

but it isnt necessarily a monopoly in smartphones, that will never go anywhere in court. they have a monopoly in software. they restrict others from using their software, while restrict other software from running on their devices. I'm not sure the exact legalese on that, but that is the problem.
 

[Dominik W]

Just now, OhYou_ said:

but it isnt necessarily a monopoly in smartphones, that will never go anywhere in court. they have a monopoly in software. they restrict others from using their software, while restrict other software from running on their devices. I'm not sure the exact legalese on that, but that is the problem.
 

I think the idea is that with their monopoly in software (which a Congressional report accused Apple of maintaining), they wall consumers into their garden, essentially monopolizing the smartphone market. 

[venomtail]

3 minutes ago, OhYou_ said:

but it isnt necessarily a monopoly in smartphones, that will never go anywhere in court. they have a monopoly in software. they restrict others from using their software, while restrict other software from running on their devices. I'm not sure the exact legalese on that, but that is the problem.
 

Interested in how courts would differentiate malicious deliberate monopoly to keep competitors down or simply a natural consequence of winning and being the nr 1 choice for most consumers. At what point do companies start suffering from success.

[Senzelian]

4 minutes ago, OhYou_ said:

but it isnt necessarily a monopoly in smartphones, that will never go anywhere in court.

By definition, they don't have a monopoly, neither in hardware nor software. But can we just agree that they're assholes? There should be an anti-asshole law.

[OhYou_]

1 minute ago, Senzelian said:

By definition, they don't have a monopoly, neither in hardware nor software. But can we just agree that they're assholes? There should be an anti-asshole law.

it's just venture capitalism. you cant run a successful business without it in the US. if you try, you will get boxed out, or sued, or infringed, or even shot killed.

[BiotechBen]

15 hours ago, Senzelian said:

By definition, they don't have a monopoly, neither in hardware nor software. But can we just agree that they're assholes? There should be an anti-asshole law.

Laws against malicious compliance? I'm down for that. 

Laws against being deliberately anti-consumer: good luck with apple and Nintendo. I feel like they've got a game of chicken going on where they're trying to see who can treat their customers worse and still have their product be bought regardless.

[manikyath]

this is an interesting one.. they dont *have* a monopoly, but everything they do reeks of monoploly money.

 

- they ban any attempts made at easier migration from iOS to android

- they police their platform with an iron fist.. not against malware, but against companies trying to have off-platform purchases that apple doesnt profit of

- they create this "platform social class separation" where not having a blue bubble or whatever it is means you're less cool.

- there's some arguments to be made about the reliability of these devices decreasing while the cost increases.

[OddOod]

Good.
They are a monopoly

[manikyath]

4 minutes ago, OddOod said:

Good.
They are a monopoly

by these figures nvidia has a monopoly on GPU's, intel has a monopoly on CPU's, and lays has a monopoly on potato chips.

[OddOod]

1 minute ago, manikyath said:

by these figures nvidia has a monopoly on GPU's, intel has a monopoly on CPU's, and lays has a monopoly on potato chips.

GPUs and CPUs are *components*, not full systems, nor ecosystems. As for Pepsico, yes, it does have a monopoly, but it's not an unfair one as it doesn't prevent consumers from consuming other brands of chips

[manikyath]

Just now, OddOod said:

GPUs and CPUs are *components*, not full systems, nor ecosystems. As for Pepsico, yes, it does have a monopoly, but it's not an unfair one as it doesn't prevent consumers from consuming other brands of chips

pepsico at most has a duopoly (because coca cola company exists), and neither of those are doing it fairly because they are both actively pressing supermarkets to only sell their brand.

[OddOod]

1 minute ago, manikyath said:

pepsico

Pepsico owns Lays

[manikyath]

Just now, OddOod said:

Pepsico owns Lays

your point being? lays isnt the only brand is it?

[Donut417]

2 minutes ago, OddOod said:

Pepsico owns Lays

Most people don’t realize that 4 or 5 companies own all the food brands. 

[OhYou_]

7 minutes ago, Donut417 said:

Most people don’t realize that 4 or 5 companies own all the food brands. 

most people dont realise that the food those 4 or 5 companies sell is really bad for humans

[coasterghost]

34 minutes ago, OddOod said:

Good.
They are a monopoly

Wow... so having a high market share means you are a monopoly apparently. Want to know something funny, that 39.66% of other, shows that Apple indeed does not have a monopoly by definition. By that logic, Boeing has a monopoly too on the 700 series, or that Youtube is the monopoly on video streaming.

 

If you want to see a real monopoly, check out Luxotica. 

 

Also, dear DoJ, We are we going after google next?

[Kisai]

1 hour ago, venomtail said:

Interesting dynamic in other countries when reading how the smartphone ecosystems work in the US, Japan and Korea. Segmented (in Apple's favor), prestige and socially not even accepted amongst younger generation if you don't have an iPhone.

Because it's a good device, most of the time. Show me a $99 dollar Android device that is as good as a $2000 iPhone. You won't find one, no matter how hard people try to convince you Android isn't a crappy OS.

 

Android's entire failure to get this kind of status is because Google's name is attached to it. Google is not associated with prestige, it's associated with throw-away disposable software and devices, and lack of support. Apple? 7 years, any device, with all your other Apple kit without a fuss. 

1 hour ago, venomtail said:

Where as in Europe everyone uses 3rd parties. Whatsapp, Signal, Instagram, Messenger and Snapchat for most of people's communication.

This is largely due to Apple being a US company and rolling out things exclusively to the US first, often to it's own detriment.

 

For example Apple Pay, rolled out to US first, because US's existing payment infrastructure was utterly garbage, people were still swiping cards, and made "chip and pin" functionally useless. The REST OF THE WORLD had moved on to Chip+Pin, and only NFC payments after the fact rolled out, did Apple have an enormous lead. Remember what everyone else wanted to do? QR codes? Yeah no way to shoulder surf that with a camera. "Magnetic stripe replay attack" . Both of these are equally stupid.

 

Yet if you want to use a loyalty card at a store, you are using a QR code or a conventional 2D barcode on the phone. Not a NFC code which would speed things up.  I swear every time I go to the grocery store, I have to try and scan the 2D barcode of the loyalty card 15 times before it works, wasting 2 minutes at the self-checkout that would have gone faster if I just forgone the loyalty card.

 

But you know what happened? China and India basically used QR code payments exclusively. Something that is only available on WhatsApp (India) on the iPhone or WeChat (China). If you want the stand alone app, there are stand alone apps, but why would you want a stand alone app?

 

And this is the story that plays out every time someone says "Apple is a Monopoly", it's not, it has never been, but because of how it has vertically integrated things, there is the appearance of a monopoly when you talk about Z Hardware product and Y Service operated by Apple (eg iMessage.) Only in the eyes of Americans does the iPhone ever look like it's a monopoly. The rest of the world that can't afford to replace phones every year, has to make do with crappy Android devices and thus the cry about not having iMessage on them, because their "blue" bubble says they have an iphone or a "green " bubble tells their friends they are poor.

 

 

[porina]

IANAL Being a monopoly in itself is not illegal. It's abusing the position that is. I had anti-trust training at a past company, who didn't want to become hit by such. They were the dominant player in a particular niche and it was a very nice earner. Think professional products where you get higher margin. Not consumer tier flashy stuff. So they advised on behaviours that could be negatively interpreted and should be avoided.

 

At the end of the day it will be up to DOJ to collect sufficient evidence that laws are broken.

[wanderingfool2]

1 hour ago, venomtail said:

Interested in how courts would differentiate malicious deliberate monopoly to keep competitors down or simply a natural consequence of winning and being the nr 1 choice for most consumers. At what point do companies start suffering from success.

Well if they are the only ones in the market it will usually just be labeled a monopoly if they are in the position of power for a long period of time.

 

Generally though you decide based on the actions and communications that the company makes and whether a company would be making those decisions if there was competition.

 

As an example, a reporter asking Tim Cook on implementing RCS because it created a degraded experience when they were talking with another person the response was effectively like "buy an iPhone" to counter that.  That would be in my opinion a tipping point that Apple views itself as having so much power that their response to things is essentially to buy their product instead of a competitors because they refused to support a feature.

 

Another example of this is when Tim Cook??? or maybe Steve Jobs attempted to bring the non-compliant giants like Amazon into their payment system [essentially threatening cutting them off if they didn't agree to something].  Or looking at cases like Apple vs Tile (where Apple essentially utilized it's analytics and software to push out Tile).

 

Courts look into things like that to try determining whether a company is being deliberate.

 

1 hour ago, manikyath said:

this is an interesting one.. they dont *have* a monopoly, but everything they do reeks of monoploly money.

 

- they ban any attempts made at easier migration from iOS to android

- they police their platform with an iron fist.. not against malware, but against companies trying to have off-platform purchases that apple doesnt profit of

- they create this "platform social class separation" where not having a blue bubble or whatever it is means you're less cool.

- there's some arguments to be made about the reliability of these devices decreasing while the cost increases.

I would say it depends...as I think the definition is that they have control over the market.  While Android is a viable and competitive alternative, as a whole one might label Apple as having a monopoly since their policies becomes the defacto standard that everyone else has to play by effectively [and they use that control to force customers into their ecosystem]...they are I think barely straddling the fence on this one.

 

Honestly though, the monopoly/antitrust laws need to change to include any business that has sufficient control on a market who attempts to negatively effect a marketplace.

[starsmine]

2 hours ago, venomtail said:

Interested in how courts would differentiate malicious deliberate monopoly to keep competitors down or simply a natural consequence of winning and being the nr 1 choice for most consumers. At what point do companies start suffering from success.

you know I think this is not a great way to look at it. What do you mean a company suffers from success. Who exactly gets harmed if a company gets split here? the company is not a person. The fact that Tim Apple could be harmed by a split I have zero sympathy for, as the consequences of a monopoly, if it is found to be one, have significantly greater societal harms then a multibillionaire being cut down to... a multi-billionaire. Share holders are not harmed by a split inherently as the market does not shrink if a company is split, if anything it divests your interests if you let it. 

A natural monopoly is an entirely different concept, and does not really apply to this market like a utility would and you see dozens of other people enter the smartphone hardware market. Software is a bit of a different story. 

[BachChain]

2 hours ago, Dominik W said:

Apple said the lawsuit, if successful, would “hinder our ability to create the kind of technology people expect from Apple

They're absolutely right. Artificial locks and limitations are a Hallmark of apple technology

[jagdtigger]

1 hour ago, Kisai said:

Because it's a good device, most of the time. Show me a $99 dollar Android device that is as good as a $2000 iPhone. You won't find one, no matter how hard people try to convince you Android isn't a crappy OS.

No sh!t sherlock, get a 1k$ android phone and watch your argument fall apart. (Id wager even a 500$ android phone would suffice for ~90% of ppl.)