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Apple and DOJ Hold Early Settlement Talks in iPhone Antitrust Case
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What "numbers" still come out to Apple not controlling the market? 70%+ share (their number) is strong but in the end it's about the share PLUS the strength of the anticompetitive behavior piece.
Not having done anything? The DOJ anticompetitive claims are about things like Apple making it harder for users to switch away from iPhones by limiting interoperability and degrading certain cross-platform experiences, restricting "super apps" with broad capabilities, limiting cloud gaming, preferencing its own Messages app over third-party apps, and limiting the function of third-party digital wallets and smartwatches, etc.
Apple is negotiating and making some concessions (which could be considered wins for the DOJ), not unlike what Microsoft did leading up to its DOJ case in the late 1990s, but whether or not it's enough to avoid going to trial remains to be seen.
All "super apps" are categorically cancer. We already had the horror of these things on Windows PCs, and people buy Apple SPECIFICALLY to get away from them.
ALL of the numbers come out to Apple not controlling any rational market. And, taking no steps to restrict anyone else from entering the market. And taking no steps to force a non-smartphone owner to only choose an iPhone. And taking no action to force sellers of smartphones to only sell iPhones. Those are historically the criteria for antitrust action. Not “They made a thing people liked enough to buy.”
They haven’t done anything that matches the actions of antitrust actions that came previously. Everything you’ve mentioned are actually reasons for users to switch in large numbers to a competing device if those are features that people actually want. The fact that large numbers of folks don’t care about those things enough to choose a different product isn’t Apple’s problem. It’s not Apple’s fault that their smartphone market share (a rational market designation) is made up of people that don’t care much about those things. And, the folks that DO want those things, well, they can simply buy those things completely unimpeded by Apple.
Yes it was a joke.
Although i have had someone argue that the US and other countries are only following what the EU is doing and not independently investigating Apple.
mansplains
macrumors 68000
A company with 70%+ share of a particular market can absolutely be "controlling" that market and you can’t definitively say Apple has done nothing wrong. The DOJ is alleging that Apple has monopoly power in the performance smartphone market and has unlawfully maintained or increased its dominance through anticompetitive behavior that impede current or potential future competitors, increase related costs and difficulty of competing and raise switching costs for consumers. All of which does/can stifle competition and innovation.
The DOJ's goal is to show that Apple's control over its ecosystem is being used in ways that unfairly disadvantage current and potential competitors and/or raise consumer switching costs. Negotiations between DOJ and Apple are ongoing. Time will tell whether this will end up going to trial. It will largely come down to DOJ's confidence in their case and how meaningful Apple's concessions are/will be.
Not even for a fraction of a second did I have doubts that MrSnirf wasn’t joking. But I still have doubts it is the United States Department of Justice. Me thinks it is the Trump Department of Justice.
Just a reminder of the 24k plaque by Tim C will do. A phone call to the FIFA —eh DOJ boss will follow and they will suspend any red card Apple was shown.
surferfb
macrumors 68030
The question is whether or not the market definition being used is appropriate for antitrust purposes. You can artificially define a market in ways that pretty much anyone “controls” a market. But that doesn’t mean they actually do.
For a completely non-tech example, Butterball sells ~16% of turkeys in the US. A lot, but nowhere near a monopoly. But if you define the market as “frozen whole turkeys over 15 pounds sold in chain grocery stores during November” then all of a sudden we’re probably way over 50% and Butterball starts to look like they are controlling the turkey market. Using that definition to declare it’s anticompetitive for Butterball to also sell stuffing so they have to sell off that part of their company and they’re not allowed to pay grocery stores for slotting fees would be absurd.
Lots of independent legal analysts seem to think the DOJ might have crossed the line of appropriateness with the “performance smartphone” market definition. I, unsurprisingly, agree with them. But at the end of the day those are just opinions and it’s for the courts to decide (if the case makes it that far).
The DOJ has had some success narrowly defining markets in antitrust cases. Ultimately, it's up to the courts to decide if the narrow(er) market definition is reasonable under the particular circumstances.
And if you do it in the way the EU does it, Butterball has a problem because they sell 100% of all turkeys with the label “Butterball” on them, giving them an uncontested monopoly!
I CAN definitively and objectively say that Apple has done nothing wrong as the only lawsuits successfully brought against them were AFTER the rules were changed to say the legal way Apple was running their business is not allowed. Apple doesn’t have monopoly power in the performance smartphone market as a user that has no performance smartphone at all is free to buy any phone on the market. Look at the list of reasons antitrust actions have been previously taken and describe which one matches something Apple was doing? You won’t find one.
What the DOJ can’t do (and what no one can do), is define in real terms how Apple impedes future competitors in a way that is illegal… in a way that is drastically different from the way any other business in the US is doing. It’s expensive to switch from a Nintendo Switch to a PlayStation 5 AND vice versa. Should the government bring a case against BOTH of those companies and every other company in the US that provides incentives for users to remain users? These early settlement talks are being held because the government realizes that and they want to negotiate a way where they can say they “made” Apple do something.
You CAN'T definitively or objectively say Apple has done nothing wrong. Whether a lawsuit is brought against a company or not doesn’t determine if the company had done something wrong. There's plenty of illegal activity that goes on but never sees a courtroom, gets prosecuted, etc
Sometimes parties negotiate deals, make concessions, agree to settlements, etc. to avoid a trial even though illegal activity or wrongdoing had taken place.
Just because alternatives exist and customers are free to buy/use those alternatives doesn't mean a company can't have monopoly power. A monopoly or monopoly power does not have to mean a company has 100% of a market. A couple of examples from the tech world are Microsoft which was declared a monopoly with Windows even though there were/are OS alternatives people were/are "free to use." Google was declared a monopoly in search even though there were/are search alternatives people were/are "free to use."
The DOJ is attempting to make its case that Apple's control over its ecosystem is being used in ways that unfairly disadvantage current and potential competitors and/or raise consumer switching costs. Negotiations between DOJ and Apple are ongoing. Time will tell whether this will end up going to trial. It will largely come down to DOJ's confidence in their case and how meaningful Apple's concessions are/will be.
I7guy
macrumors Westmere
At the same time Apple may be negotiating with the doj to avoid a trial which may or
May not go its way. You can’t definitely say Apple has done something wrong, their lawyers may opt to settle, make changes to their ecosystem and/or fight it out.
The doj doesn’t win ‘em all. I tried researching this and one case seems popular was against ibm that they lost.
And Apple could be willing to negotiate and make concessions because they know they’ve been engaging in illegal anticompetitive behavior and don't want to be officially found guilty in court and potentially face harsher penalties. All of this is a reason why I previously stated that it can't be definitively said that Apple has done nothing wrong.
True, although "wins" don't only occur in a courtroom. A win for the DOJ could be getting a company to make concessions and adjustments to their behavior before (if ever) going to trial.
I7guy
macrumors Westmere
Correct we can all play out our hypotheticals on what is going on behind closed doors. The only thing known for sure is we don’t know.
That could be a win depending on what Apple agreed to. Apple may have quietly been deciding a strategy anyway here in the US even prior to all of this. We may never know.
The biggest impediment to competition in the smartphone market is apps. If app developers refuse to make their apps for your platform you are screwed. We should be focusing our attention on the amount of control they have on the success (and viability) of competing platforms.
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🙂 Ok. Have a good day!
Microsoft’s case, though people like to claim it was about a monopoly, if you look at the governments write up, there’s not much mention of monopoly. This is copious mention of OEM’s and it was Microsoft’s mistreatment of OEM’s that got them in trouble. As Apple HAS no OEM’s there’s nothing in common between the two.
These DOJ is attempting to make the case that McDonald’s control over the Big Mac and, by extension the Big Mac Meal is being used in ways that unfairly disadvantage current and future competitors. They have not found anything that will hold up in court and they won’t because when one objectively reviews EVERY case where antitrust actions have been taken, Apple has not committed any of those actions. Apple hasn’t committed any actions that come even remotely close to warranting antitrust remedies. If the government makes up a new law, as they did in the EU, that says running a business legally is illegal, then of course they could have a case. Since there’s nothing Apple’s legally doing that’s not being done by other legal entities, there’d be resistance from every company doing business in the US (and those companies fund those legislators) so not likely.
The biggest impediment to competition in the smartphone market is governments removing the profit incentives. Designing hardware/software/app distribution is not easy and there’s a lot that can go wrong at every step of the way. The environment that created the iPhone and Android was such that taking a gamble that you’ve got a good idea could yield significant returns, so they made the effort. Now, governments worldwide are warning any competitors that if they release anything in their region that challenges the current leaders to the point where they become the leader, they will face stiff fines and additional regulation. The iPhone wouldn’t be what it is today if the DMA had been enacted in 2007. For all their TALK of competition, all they’re really doing is solidifying the market positions of Google and Apple. No one should be surprised in 10 years if the smartphone competition is still just Google and Apple.
Yes I totally agree that government regulation can and does stifle innovation. The DMA pretty much guarantees that there will never be a competitor to iOS or android. No one would dare try in case they became too successful.
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The problem is when a company has a significant and desirable part of a market, it can be very difficult for a developer to avoid developing for that segment even though they may realize the company in question is unfairly controlling the market through illegal anticompetitive practices.
The Microsoft case was absolutely about Microsoft being a monopoly (with Windows) and how that monopoly power and engaging in anticompetitive behavior unfairly impacted markets Microsoft did business in. Them being a "monopoly" was the first key element of the case.
It's about Apple’s dominance in the broader "performance smartphone market" and them allegedly using that dominance in ways that unfairly disadvantage current and potential competitors and/or raise consumer switching costs. A potential hypothetical McDonald’s analogy would be more about McDonald’s dominance in the "premium fast-food burger market" and how they unfairly use that dominance/control in markets they do business in.
Apple's activities/actions, if proven, can absolutely be violating antitrust laws. We're still in the relatively early "allegations" and "negotiations" stages at this point. The DOJ investigated and negotiated with Microsoft for many years before the case ended up going to trial.
BaldiMac
macrumors G3
The problem with that logic when applied to Apple is that Apple's terms were competitive enough to build one of the largest market of apps in the world. Developers saw the terms and chose to develop under those terms when Apple had minimal market share. Over time those terms have become less restrictive. Now people want to call those same terms illegal and anticompetitive.