A week after being hit with a business crunch by a landmark lawsuit from the U.S. Department of Justice, Apple is firmly denying any similarities between itself and Microsoft in the 1990s. It's a comparison that U.S. Attorney General Merrick Garland weighed heavily in his filing last week.
Although some parts of the US v. Microsoft case were partially overturned, the Windows maker was ultimately required to correct certain business practices deemed proprietary by the government. Garland and the 16 state attorneys general who joined the Apple lawsuit are no doubt seeking similar results to rein in practices they believe are unfairly advantageous to the $2.65 trillion company.
“In 1998, Apple co-founder Steve Jobs criticized Microsoft's monopoly and 'dirty tactics' in operating systems targeting Apple. So the company asked Microsoft to 'act fairly.' “We decided to 'consult with the Department of Justice,'” the complaint says, strongly suggesting hypocrisy on Apple's part. “But even back then, Apple didn't face the same restrictions it imposes on third parties today. Apple users could use iPods on Windows computers, but Microsoft told Apple that Apple's iTunes It didn't charge a 30% fee for each song downloaded from the store.Similarly, when Apple brought the iPhone to market in 2007, it benefited from competition between component manufacturers and wireless carriers. .”
Apple has cited global iPhone sales as nowhere near the more than 90% market share held by Windows before the turn of the millennium. Lawsuits like this are a rare opportunity to see big companies bragging about how few devices they've sold compared to the overall market. In fact, worldwide, that number hovers around 20%, making it difficult to argue that Microsoft dominates the competition in the same way that Apple did a quarter century ago.
It's certainly true that the iPhone has performed particularly well in the domestic market, with direct ties to the many lower-end handsets that dominate India and China (the No. 1 and No. 2 markets, respectively). We're not facing any competition. However, Apple suggested that the Justice Department's suggestion that its share of the total U.S. smartphone market exceeds 65% is misleading because it refers to revenue rather than unit sales. are doing. Of the latter, the company believes it controls less than half of the domestic market.
The difference between these numbers is determined by the price per unit. Here the Department of Justice suggests that Apple controls his 70% of the “high performance” smartphone market. It's true that the majority of Apple's devices fall into the premium category, and the company largely controls them here in the United States. The Department of Justice will likely have difficulty proving that it constitutes a monopoly.
That's why much of the 88-page complaint focuses on aspects like Apple's tight controls on the App Store, the Watch's inability to connect with Android devices, and, of course, the scary green bubbles. Overall, the attorney general, who co-authored the lawsuit, said this evidence shows that the company is using its market position to pressure third parties and generally making life difficult for his Android developers. This suggests that it proves that there is.
One of the more interesting aspects of this lawsuit is the allegation that such conduct led to the end of Amazon, HTC, LG, and Microsoft's own attempts to compete in this space.
“Many well-known and well-funded companies have been unable to successfully enter the relevant markets due to these barriers to entry,” the complaint states. “Past failures include Amazon (which launched its Fire phone in 2014 but was unable to sustain the business profitably and exited the following year); Microsoft (which discontinued its mobile business in 2017); HTC (Sold its smartphone business to Google in September 2017 and withdrew from the market.) LG (Withdrawn from the smartphone market in 2021.) Currently, Samsung remains a significant competitor in the U.S. high-performance smartphone market. And only Google. Even though Google controls the development of the Android operating system, the barriers are so high that Google ranks a distant third behind Apple and Samsung.”
Apple is effectively laughing off any suggestion that these market failures are the fault of anyone other than the companies behind it. Competitors consulted by the Justice Department in putting together the case likely have different opinions about how much of a direct role they played in the iPhone maker's failure to capture meaningful market share ( (And each of the above cases is very different from the other), but in the case of the Fire Phone, at least Amazon should blame itself squarely.
The US government should take a long hard look in the mirror as to why companies like Huawei aren't challenging Apple on its home turf.
The smartwatch example is an interesting one. Even Cupertino's well-paid legal team would have a hard time arguing that Apple Watch owners aren't hampered by iOS exclusivity. However, the company suggests that technical limitations are the reason. Apple said it spent three years trying to make WatchOS compatible with Android, but gave up, citing security and privacy concerns.
Similarly, Apple points to its recent announcement that it will support RCS Messages on the iPhone, but to distinguish between encryption and compatibility with specific Messages features, the stigmatized green bubble It insists on the need for continued existence.
The complaint cites internal emails from Apple executives suggesting that eliminating the green bubble would hurt business.
After all, Apple believes the lawsuit is aimed at effectively turning iOS into Android. The company points to a 2008 Supreme Court case, Pacific Bell Co. v. LinkLine Communications. The court ruled unanimously in Pac Bell's favor, saying the carrier did not violate antitrust laws and could decide which companies to partner with.
When the time comes for the company to counter, it will argue that it's not Apple's job to support its competitors.
“If we succeed, [the lawsuit] “Our ability to develop the kind of technology people have come to expect from Apple at the intersection of hardware, software, and services will be hampered,” the company said in a statement shortly after last week's filing. It would also set a dangerous precedent that would give governments more power over how people design technology. We believe this lawsuit is wrong on the facts and the law and intend to vigorously defend against it.
Learn more about Apple's antitrust lawsuit here.
