Apple Faces Sweeping DOJ Lawsuit: Experts Praise Stronger-Than-Expected Case

DOJ’s Antitrust Lawsuit Against Apple: A Comprehensive Analysis

The Department of Justice’s Growing Expertise in Tech Monopoly Cases

The Department of Justice’s antitrust division has demonstrated its increasing proficiency in tackling tech monopolies, having filed its third lawsuit in just four years. According to antitrust experts who spoke with The Zero Byte, the accumulated experience is evident in the complaint filed against Apple on Thursday. Eleanor Allensworth, a professor at the University of Texas School of Law, notes that the Apple complaint presents a more plausible narrative about consumer harm compared to the FTC’s suit against Amazon, making it a stronger lawsuit from a legal perspective.

The Challenges Ahead for the DOJ

Despite the DOJ’s careful strategic choices, such as the broad scope of the case and a favorable venue, proving that Apple’s 65-70 percent share of the smartphone market constitutes dominance will likely be a challenging task. William Kovacic, a former FTC chair and antitrust professor at George Washington University Law School, acknowledges that the DOJ has learned from the Epic v. Apple lawsuit and has crafted the complaint to address potential weaknesses identified by the judge in that case.

Apple’s Alleged Anticompetitive Practices

The DOJ’s complaint against Apple focuses on the company’s alleged anticompetitive practices, which the government argues have a cumulative effect on the market. The complaint highlights five examples, including the lack of interoperability between iPhones and Android phones in messaging (known as the “green bubble” issue), Apple’s exclusion of superapps from the App Store, and restrictions on cloud streaming and web apps. In response, Apple has stated:

The complaint threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.

Proving Market Dominance: The Dentsply Case

The DOJ’s case against Apple may find support in the precedent set by the United States v. Dentsply International, Inc. case. In that case, the appeals court found that the denture manufacturing company violated anti-monopoly law by using exclusive dealing arrangements to prevent rivals from accessing necessary inputs. Dentsply had a 75-80 percent market share based on revenue and 67 percent based on units, which could prove useful for the government’s argument regarding Apple’s market dominance.

Potential Remedies: Breakups vs. Behavioral Changes

While DOJ Antitrust Division Chief Jonathan Kanter has expressed a preference for structural remedies (i.e., breakups) over behavioral ones, experts believe that a breakup is unlikely in the Apple case. Instead, injunctions to stop the allegedly harmful behavior might be more appropriate and plausible. California Attorney General Rob Bonta, who has joined the DOJ lawsuit, emphasizes that the enforcers are focused on injunctive relief.

Eleanor Allensworth explains that splitting Apple into separate entities for handsets, operating systems, the App Store, and iMessage would be challenging. However, behavioral remedies come with their own set of problems, as evidenced by the ongoing conflict in the Epic v. Apple case.

The Road Ahead: Lessons from Europe and Potential Outcomes

As the DOJ’s antitrust case against Apple is expected to span several years, enforcers will have the opportunity to observe how Europe handles the Digital Markets Act (DMA) and which rules and enforcement mechanisms effectively promote competition in digital markets. While a court order in US v. Apple may be years away, it is possible that Apple, facing ongoing troubles with European regulators, may proactively change its behavior. However, Attorney General Bonta remains committed to the litigation, stating, “We’re not holding our breath for that. We’re bringing the litigation.”