How the DOJ’s Case Against Apple Echoes Microsoft’s Antitrust Battle in the 1990s

Apple’s Stance on Third-Party App Stores: A Threat to Innovation?

In the world of smartphones, the concept of third-party app stores is virtually nonexistent within the Apple ecosystem, largely due to the company’s strict policies prohibiting their existence on iOS. The Department of Justice (DOJ) contends that this stance is driven by Apple’s perception of these alternative app marketplaces as a potential threat to its platform, arguing that the company’s blocking of such stores poses a significant obstacle to innovation in the mobile app industry.

Drawing Parallels to Microsoft’s Dominance

The DOJ’s complaint against Apple paints a picture reminiscent of Microsoft at the peak of its power. Just as Microsoft recognized the impending rise of the web and the potential threat it posed to its dominance, the DOJ suggests that Apple faced a similar realization as the iPhone gained popularity. Internal documents from Apple, as cited by the DOJ, reveal that shortly after the introduction of the iPhone, despite its success, the company began to fear the potential “disintermediation” of its platform and the commoditization of the iPhone, which could jeopardize Apple’s substantial profits from iPhone sales and related revenue streams.

The Fear of “Disintermediation”

The term “disintermediation” refers to the removal of intermediaries in a supply chain, allowing direct interaction between consumers and suppliers. In the context of personal computers, this is precisely what Microsoft feared – the potential for users to bypass its operating system and access services directly through the web. The DOJ alleges that Apple now faces a similar concern with the iPhone, as the rise of alternative app stores could diminish the company’s control over the app ecosystem and, consequently, its ability to generate substantial profits from iPhone-related revenue streams.

Microsoft’s fears of disintermediation proved to be well-founded, as the web indeed transformed the computing landscape. The DOJ suggests that Apple’s apprehension regarding the potential impact of third-party app stores on its platform is equally justified, highlighting the significance of this issue for the future of mobile app innovation and competition.