aApple’s issues span beyond the Atlantic. The company is facing challenges with the EU regarding the Digital Markets Act and is closely monitoring the UK’s progress with the Digital Markets, Competition, and Consumers Bill. However, the looming antitrust lawsuit from the US government poses a significant risk for the company. The primary battleground now shifts back to its home turf.

From our narrative:

The lawsuit, filed in federal court in New Jersey, accuses Apple of having a monopoly in the smartphone market and engaging in “pervasive, persistent, and unlawful conduct” by leveraging its control over the iPhone. The lawsuit seeks to break Apple’s stronghold on the smartphone market and alleges that the company has stifled innovation to maintain its dominance.

At a press conference, US Attorney General Merrick Garland stated, “Apple has maintained power not through dominance, but through illegal anti-competitive behavior.” He emphasized that monopolistic practices like Apple’s pose a threat to the economy’s free and fair markets.

The lawsuit amalgamates a plethora of allegations from the expansive market Apple controls, focusing primarily on substantiating the key claim in US antitrust law: harm to consumers. While competing against Apple can be exasperating, the lawsuit’s success hinges on demonstrating consumer harm.

The lawsuit argues that Apple’s policies restricting the integration of third-party smartwatches with iPhones, while facilitating easy Apple Watch compatibility, and the differentiation between SMS messages from Android users and iMessages from other iPhones have contributed to the decline in market competition. It also touches on Apple’s CarPlay system’s driver-centric approach being all-encompassing.

This preemptively addresses Apple’s stance that restrictions are imperative for safeguarding user privacy and security. The filing contends that Apple justifies its anti-competitive behavior under the guise of privacy, security, and consumer preferences to further its financial and business interests. Deals like offering a “more private and secure app store” for certain entities and the multi-billion-dollar deal with Google to make it the default search engine underscore Apple’s willingness to compromise. The government insists this reveals Apple’s true intentions.

What Kind of Monopoly?

One fundamental question remains ambiguous: what exactly does Apple monopolize? Government filings assert that the company dominates the “high-performance smartphone market” at the expense of cheaper, entry-level devices. Eliminating these affordable phones would secure Apple’s 70% revenue market share, a substantial figure. Apple’s own documentation suggests they don’t view their entry-level smartphones as competitors to the iPhone and high-performance smartphones, further complicating the matter.

While the scenario might seem implausible, denying Apple’s market-shaping influence, which the Justice Department aims to dismantle, is challenging. However, does Apple truly wield market influence by dominating “high-performance” smartphones? International comparisons reveal that high-end Android smartphones excel outside the US, but Apple’s dominance remains largely unaffected. The minimal adoption of iMessage in a market dominated by WhatsApp, Line, and WeChat showcases a noticeable difference, but it hasn’t significantly impacted Apple’s overall position.

Another Game

For those in Europe, the prospect of government action against Apple for abusing its monopoly might seem unsurprising. However, US antitrust enforcement varies from the European model, necessitating litigating the case in court and prevailing based on merit.

One advantage of this system is its fairness in proving Apple’s monopoly abuse within a judicial framework, curbing regulator overreach. However, enforcement poses challenges, with cases potentially enduring for years and incurring hefty legal expenses for Apple, if either won or lost.

In contrast, the EU exemplifies a contrasting approach, swiftly enforcing regulations that are binding. The investigation into Meta, Google, and Apple underscores the regulatory landscape’s swift and decisive nature in the EU.