- The Department of Justice on Thursday attacked Apple with an antitrust lawsuit.
- The lawsuit accuses the iPhone maker of anti-competitive tactics in the smartphone market.
- Here are some ways critics argue that Apple is a monopoly.
The Justice Department filed a sweeping lawsuit Thursday accusing Apple of “delaying, degrading, or completely cutting off” competitors in the smartphone market.
This is the latest punch the Justice Department has thrown in its long fight against Big Tech and the tactics these companies use to compete. The new lawsuit against Apple is broad in scope, alleging that the company uses rules, restrictions and repetitive practices to maintain its “smartphone monopoly.”
Apple denied these accusations.
“This lawsuit threatens our existence and the principles that differentiate Apple products in a fiercely competitive market,” the company told Business Insider in a statement Thursday. “If successful, it would impede our ability to develop technology at the intersection of hardware, software, and services that people have come to expect from Apple.”
Here are some reasons why the Justice Department and others say Apple has a tight grip on the iPhone ecosystem and is crowding out competitors.
App Store and super apps
Apple has long used its digital storefront as a moat to keep out apps not designed specifically for the iPhone. The lawsuit alleges that Apple places conditions on the apps it allows on the App Store, imposing anti-competitive rules and regulations.
Apple was forced to allow third-party stores on its operating systems in the EU under the Digital Markets Act signed by the European Parliament in 2022.
“Apple frequently enforces App Store rules arbitrarily,” the complaint alleges, and “technologies that threaten to interfere with, disintermediate, compete with, or erode Apple's monopoly power.” “Apple frequently uses App Store rules and restrictions to punish and restrict developers who use App Store.” . ”
The lawsuit also alleges that to ensure users become hooked on their iPhones, Apple suppresses super apps that offer multiple services and features.
cloud streaming game app
Cloud streaming gaming apps allow users to play video games in the cloud instead of on a gaming console. Think of it like the Netflix or Hulu of video games. User can stream multiple intensive games in one app.
The Justice Department claims that cloud streaming games can “improve smartphone competition” by making it easier to perform “high computing” tasks on smartphones. But Apple is suppressing these games in order to make users more dependent on its expensive hardware systems.
Building a “loyal” consumer base
It's no secret that Apple has built a strong and persistent consumer base.
Customer loyalty to Apple has remained strong over the years, with 57% of current iPhone users saying they plan to buy an iPhone during their next upgrade, according to a Bank of America study.
However, according to the BofA survey, only 55% of Samsung users, 43% of Huawei users, and 33% of Xiaomi users said the same. This is backed up by 2021 data from research firm Consumer Intelligence Research Partners, which found that Apple maintained a loyalty rate of over 90% over the past three years.
However, some argue that this is not simply because the company produces superior products in volume. “Much of this is due to the restrictive ecosystem that Apple has built around its products,” Andy Liu, a former student at Simon Fraser University, wrote in a paper published in 2022. There is,” he claimed.
That ecosystem means the cost of switching to another operating system is too high for most users, and they lose access to Apple-exclusive content like music and apps, Liu wrote.
messaging app
Thanks to Apple, I don't want to be the black sheep that responds to all my iPhone-using friends with a green bubble. The lawsuit alleges that Apple makes third-party messaging apps on the iPhone “more malicious” than Apple's Messages. By doing so, “Apple is intentionally and knowingly reducing the quality, privacy, and security of its users and those who do not own an iPhone.”
smart watch
Apple has left wearable enthusiasts in a bit of a quandary. The company says its popular Apple Watch only works when paired with an iPhone and will not build a version for Android due to technical limitations. If you're an iPhone user who wants to wear a Google Pixel Watch or a Samsung Galaxy Watch, you're in luck. Apple has no plans to make competing watches work with the iPhone.
The Department of Justice says Apple has compromised consumers' smartwatches by denying them “access to smartwatches with preferred styles, better user interfaces and services, or better batteries.” It claims it limits options and “hurts other smartwatch companies by reducing their ability to innovate and sell their products.” ”
digital wallet
It's becoming increasingly common for iPhone users to pay for goods with Apple Pay, the company's digital wallet system. But the suit says Apple blocked other developers from creating digital wallets with the same “tap-to-pay functionality” on the iPhone. Additionally, Apple charges banks his 0.15% fee for transactions made through Apple Pay.
The complaint alleges that Apple essentially “retains complete control over how users make tap-to-pay payments on their iPhone” and “deprives users of the benefits and innovation of third-party wallets.” ing.
