Apple Could Soon Face 'Sweeping' U.S. Antitrust Lawsuit

[d686546s]

I always find it funny when folks talk about new entries not being able to crack the market when the iPhone IS a new entry that DID crack the market. And, they cracked the market with a huger set of obstacles ahead of them than any new competition would have today (in the entire world, only one carrier agreed to carry the iPhone, that wouldn’t exist today). The iPhone today exists because a company, rather than being given special treatment, had to work hard to create the hardware and the features that people desired enough to buy into.

The iPhone was a fantastic and revolutionary device and, for all its flaws, it was a massive leap forward that brought about a whole new category of devices that have changed how people interact with technology.

But to suggest that Apple was the underdog who had to beg to find a single carrier in the whole wide world to let it onto its network is just silly revisionist history. Apple signed an exclusivity agreement with AT&T, and a quite far-reaching one at that, which only reinforced the point that Apple already at that point had quite a bit of weight to throw around. They had early exploratory meetings with Verizon, who turned them down, but that doesn't really support your argument either.

It's also not uncommon for Apple to launch new products in the US first and, indeed, it didn't take long for Apple to launch the phone internationally, almost always exclusive to a single partner, which therefore sounds more like a business strategy than Apple having to beg.

See: https://web.archive.org/web/2015021...less/magazine/16-02/ff_iphone?currentPage=all

 

[Unregistered 4U]

So how do we break those network effects so that a new OS and ecosystem can enter the market? This is the problem no one seems to be addressing.

Well, just looking into recent history, there was a company that entered the cellular phone market and broke the network effects by offering a product that enough folks wanted to buy at a price they were willing to pay. They knew that most folks in the world wouldn’t even have the money to buy their product or even the ability to buy their product (because it was only available on one carrier). As a result, they defined their success as 1% of the market in the first year. It was an ambitious goal, but, if reached, it would mean they’re on the right path.

They didn’t JUST make a compelling product, though. They also gave developers a better deal than they’d ever been given before on mobile development, which meant that developers would have some incentive to at least give this new thing a try. So, I’d say that. More of that.

 

[Unregistered 4U]

It's not even necessarily about illegality.

When has it NOT been used to punish companies illegally using their monopoly to create monopolies in other markets? I like to focus on reality because if we’re talking about fantasy, I’ll concede immediately!

 

[d686546s]

Well, just looking into recent history, there was a company that entered the cellular phone market and broke the network effects by offering a product that enough folks wanted to buy at a price they were willing to pay.

What network effects? The phone market in the 00s was very different.

There were no 'ecosystems,' for the most part no significant services tied to a single manufacturer and most if not all communication happened over standards supported by all devices. People didn't really use apps either.

You could go from a Motorola to a Nokia far easier and with less friction than going from an iPhone to a Samsung now.

 

[mrat93]

Just because you don’t like something doesn’t mean Apple is doing something wrong. There are other apps if you want to message Android users sans SMS.

We’re not debating what we would like to see Apple do. We’re talking about legal issues.

Hm, don’t care. What Apple is doing is anti-consumer and I will highlight that whenever this topic comes up.

 

[Unregistered 4U]

But to suggest that Apple was the underdog who had to beg to find a single carrier in the whole wide world to let it onto its network is just silly revisionist history. Apple signed an exclusivity agreement with AT&T, and a quite far-reaching one at that, which only reinforced the point that Apple already at that point had quite a bit of weight to throw around. They had early exploratory meetings with Verizon, who turned them down, but that doesn't really support your argument either.

Apple signed an exclusivity agreement with Cingular after being rejected by Verizon
"We said no. We have nothing bad to say about the Apple iPhone. We just couldn't reach a deal that was mutually beneficial."
and all other US carriers AND only after a year and a half negotiation process with Cingular. The exclusivity wasn’t something Apple was in a position to demand, it’s what they were willing to give up (and what Cingular REQUIRED) as a part of the deal. If Cingular was taking the risk and it proved to be successful, they wanted to ensure they had 5 years of success (and contract growth) for the trouble. Folks here would likely say that’s anticompetitive. But, again, the iPhone folks are complaining about today wouldn’t exist, without Cingular’s willingness to take the risk knowing they would profit from that risk.

There are any number of articles like this one

The Untold Story: How the iPhone Blew Up the Wireless Industry

This 4.8-ounce sliver of glass and aluminum is an explosive device that has forever changed the mobile-phone business, wresting power from carriers and giving it to manufacturers, developers, and consumers.

www.wired.com

that go in depth into how the iPhone came to be. None of them mention Apple negotiating from a position of strength. All of them mention how it was a long process which was primarily helped by Steve Jobs’ personality far more than “Oh my, Apple’s releasing a device, we’re forced to carry it!”.

EDIT: Reading comprehension time.
“Apple was prepared to consider an exclusive arrangement to get that deal done.”
This statement does NOT mean that Apple was requiring an exclusive arrangement. In fact, being able to sell to other carriers from the outset would have been a far more advantageous position for Apple. What that statement means is that getting a deal signed was SO centrally important to Apple, that they were willing to lock themselves into an exclusive arrangement for a number of years, essentially taking a HUGE amount of profits OFF the table, in order to get the deal signed. Even after Apple’s iPhone proved to be successful, Apple could not enter into any other agreements with other US carriers, again turning down potentially huge amounts of sales to other carriers, for 5 years.

 

[Unregistered 4U]

What network effects? The phone market in the 00s was very different.

There were no 'ecosystems,' for the most part no significant services tied to a single manufacturer and most if not all communication happened over standards supported by all devices. People didn't really use apps either.

You could go from a Motorola to a Nokia far easier and with less friction than going from an iPhone to a Samsung now.

Both Windows CE and the SymbianOS existed (and, unsurprisingly, were incompatible). And, it wouldn’t take too much searching to find literature/websites/services related to development for and support of those. I know it’s inconvenient to think that Apple simply produced a better product (competed better) than literally every other hardware/software company producing systems at the time. And, unlike what folks are asking for today, didn’t need any special help from the government to force Microsoft, Nokia, Palm, Motorola (maker of the ROKR) to make it easier for them. And, Blackberry Messaging Service DID exist, was a MAJOR draw for Blackberry sales and was possible only among BlackBerry devices.

And people most certainly used apps. They were likely also complaining that, say, Documents To Go Premium Edition for Palm OS was $49.99! But, these applications brought access and flexibility in a way that nothing before had done. And, they were making a decent profit for the companies that made them.

So, as long as we ignore that there WERE ecosystems and there WERE significant services tied to a single manufacturer and people DID use apps, then you’re right. There were no ecosystems (other than the ones that existed), there were no significant services (other than the ones that existed) and people didn’t use apps (except for those that did).

 

[Unregistered 4U]

I’d guess one big difference of opinions here is because there are a lot of folks that, for their entire life, have only known Apple as being a desirable brand. And, they've built this worldview around the iPhone always having been inevitable. Apple just had to release it and, at the moment of its release, its success was guaranteed. Unfortunately, because they don't want to look at recent history (it's not very TikTokable or clickbaity enough), they don't understand that the way new products come to market is... companies decide to take a risk and create those products. If a product or service that any individual wants to buy doesn't exist, it's because either a) it WILL exist once someone puts money behind it though some degree of waiting is required OR b) it will never exist because what they want (say, a subscription service for ice cream for .25 a month) is not something any company will ever find financially feasible to offer.

 

[Little Endian]

To be honest I like being locked in Apple's Eco system. I however am not held prisoner and no one else is either. I also have android devices and use Windows PCs so I like everyone else is free to use whatever they like.

 

[JCCL]

This makes no sense. It’s quite common that Spotify is far better than Apple Music. You compete by having a better product. Maybe Spotify needs to get better instead of going to mom and dad government.

Hard to be competitive when you have to pay a 30% cut to your competitor, don’t you think?

 

[d686546s]

EDIT: Reading comprehension time.

Well, thank you for sharing the same article that I linked to earlier. Apologies for being a bit flippant, but did you actually read beyond what you thought was the 'gotcha?'

Cingular clearly thought the iPhone may be a strategic asset that could give them a competitive advantage and were concerned that if they turned Apple down, someone else might pick them up. The fact that Verizon turned them down does not necessarily alter that.

Besides, while carriers were the main distribution method, you could buy unlocked devices even in 2007 and Apple could have sold the iPhone freely, particularly outside of the US where GSM networks were the norm.

Yes, exclusivity was a concession strategy for Apple, but ask yourself why would anyone want exclusive rights to a product that is such a big risk as you make it out to be.

The truth is that Apple wasn't the scrappy underdog anymore then. This was the company that had produced the most successful mp3 player, had stared down the music industry and created a highly successful digital music platform in the process and its Macs were definitely hip and desirable.

This does not take away from Apple's tremendous success and achievement, but also let's not let folk tales get in the way.

So, as long as we ignore that there WERE ecosystems and there WERE significant services tied to a single manufacturer and people DID use apps, then you’re right. There were no ecosystems (other than the ones that existed), there were no significant services (other than the ones that existed) and people didn’t use apps (except for those that did)

There were around 21 million BlackBerry users in the US and roughly 36 million globally around 2010, when it was the most popular. In comparison, the iPhone had over 120 million users in February 2022 in the US alone.

The smartphone market in the late 00s was minuscule in comparison and even those that technically had smartphones (eg Nokia Symbian phones) often did not install any apps or services.

This was the time of feature phones and for the most part there were absolutely no network effects of the kind we experience today. The primary use case was carrier-based calling and texting and it didn't really matter for either which phone you had.

Let's not rewrite history.

I’d guess one big difference of opinions here is because there are a lot of folks that, for their entire life, have only known Apple as being a desirable brand. And, they've built this worldview around the iPhone always having been inevitable. Apple just had to release it and, at the moment of its release, its success was guaranteed. Unfortunately, because they don't want to look at recent history (it's not very TikTokable or clickbaity enough), they don't understand that the way new products come to market is... companies decide to take a risk and create those products. If a product or service that any individual wants to buy doesn't exist, it's because either a) it WILL exist once someone puts money behind it though some degree of waiting is required OR b) it will never exist because what they want (say, a subscription service for ice cream for .25 a month) is not something any company will ever find financially feasible to offer.

I don't know mate, when I was young Apple was almost bankrupt and Steve Jobs didn't work for Apple.

Apple did an amazing job reinventing itself with new Macs, the iPod, iTunes Music Store and then the iPhone.

Having been there before Apple achieved those things shouldn't however mean that, right now, we shouldn't Apple assess for what it is.

 

[shpankey]

DOJ doesn't "make money" either way, but Apple sure does. You can't be this naive, or is it reflexive projection?

Honest question here. where does the monies for a suit like this go exactly? Just curious.

 

[Michael Scrip]

Hard to be competitive when you have to pay a 30% cut to your competitor, don’t you think?

Spotify doesn't pay 30% to Apple anymore.

Eight years ago Spotify started telling their subscribers to stop paying through the App Store and subscribe through the Spotify website instead.

Just 6 months ago Spotify stopped allowing App Store subscriptions altogether. So they're not paying the "Apple Tax" anymore. Hooray!

And since Spotify is the largest music streaming service in the world... with more paying subscribers than any other service... it's kinda hard to feel sorry for Spotify.

 

[avkills]

Hard to be competitive when you have to pay a 30% cut to your competitor, don’t you think?

Who tries to get a Spotify account via the app on the phone? I guess it is possible someone would try that, but isn't it first better to get said account via a computer via a web browser; make said account, then use said account to log in all the devices that have Spotify apps?

I really don't follow how Apple is a monopoly. The only thing they make where they have over 50% market share is the iPhone, but they are barely over 50%. When they have 90% then maybe we can talk about it. The iPhone market is really the only dominant market Apple has. And to be honest, most of the other companies at the time of release laughed them off (Blackberry, Nokia, etc.)

The only reason Microsoft got hammered over Explorer is the fact that Windows was damn close to 100% market share and Microsoft was using that dominance to influence web standards that would only work on Explorer. So since Explorer was the browser that shipped with Windows, web developers were forced to do stupid **** so that things would work on Explorer and the other browsers at the time like Mozilla. Guess what, Microsoft does the same thing today with Edge; but they don't have the same leverage on inventing f'd up web standards that are proprietary any more.

 

[DEMinSoCAL]

Hard to be competitive when you have to pay a 30% cut to your competitor, don’t you think?

Spotify doesn't pay Apple anything since their app doesn't do in-app purchases--you have to subscribe to Spotify via web.

 

[Analog Kid]

Not sure that's true. Precedents change, as any legal historian will tell you. Especially in the area of anti-trust.

You sound like a sports fan explaining the narrow sequence of events that could allow your team to still get a wildcard spot in the playoffs. All furthering my point: saying that we'll need to go against long established tradition of building on precedent in rulings to reinterpret existing law and find differently than a well litigated case only a few months old is a far cry from "for sure a monopolistic practice".

 

[Analog Kid]

That's not how it works. Anti-trust isn't consumer protection law. It's not even necessarily about illegality. It's about using large-scale practices to distort the market in unfair and anti-competitive ways. There's a degree of subjectivity to it. And if the people have voted a government into power that wants to prosecute that, and they can do so convincingly to a board of economic experts, then changes will come.

What do you mean anti-trust laws aren't about legality? You're making it sound like a vote for prom king, if prom king meant you got a wedgie in front of the school.

If you're going to say it isn't about consumer protection, you might want to explain that to the DOJ:

This law aims to promote fair competition and prevent unfair business practices that could harm consumers.

And the FTC:

or over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers

You're describing this exactly the way I think many people here believe it works: someone gets mad at a company and then they get even by filing anti-trust. Like most people don't know what communism is, but they know calling someone a Communist is bad so use it completely out of context.

And if the people have voted a government into power that wants to prosecute that, and they can do so convincingly to a board of economic experts, then changes will come.

I really have no idea where you're getting this... It's being pursued by the Department of Justice, not the Department of Economy Buffs. Anti-trust violations are a matter for the courts, not some extra-judicial board of subjective experts. I think you're confusing it with how we declare recessions?

You're going to have to link to something concrete, because what you're saying sounds completely fanciful.

 

[Motorola68000]

GOVERNMENT BLURB TRANSLATOR: We must find a way to get backdoor into Apple equipment and pretend its for consumers.

Basically their wish is 'All computer computer should be the same, on the same operating system, leaving the same backdoor for government'

Same same same old, those that can't build anything want to destroy those that have.

 

[Philip_S]

Now that Apple has finally gotten around to adding some basic features (like tag sharing), there's no reason to look at anything else.

The anti-stalking features make AirTags almost useless for recovering stolen goods.

 

[Philip_S]

You sure missed the point. Of course retailers mark up. The point is Apple makes themselves the ONLY retailer and forces app companies to accept payment from THEIR APP through Apple's Payment system and it'll only cost them 30% to accept the payment! VISA and MC charge 3%. So, focus more on the fact that Apple is a monopoly on payment for in-app purchases (which Apple has nothing to do with nor the App that is running on an iPhone or iPad) than using generalizations because that's not what Apple would be charged in court for.

In other words, Apple shouldn't even be involved with in-app purchases. App developers should be able to use their own gateway and payment systems.

Also, their most significant competitors in what they define as their markets are also charging very similar fees, and all of them are making substantial and consistent profits on those it does rather strongly suggest a lack of meaningful competition, so an investigation is justified just in case someone spoke in front of a live mike or wrote something stupid. Otherwise some of those competitors would be reducing their margins by spending more adding value or by cutting prices. (Unless some of those companies want to confess to securities fraud or tax fraud, of course.)

 

[Philip_S]

Or, as an adult, you should make more informed buying decisions and not buy Apple products.

Maybe he wants both a device he fully controls and which isn’t loaded with spyware by the OS developer and their OEM

For most of us who use the Apple ecosystem, the controls put in place are a feature, not a bug. I am so far to the extreme of this that I thought Apple should never release the "Files" app.

Why? Without the files app or some functional equivalent it would be much more inconvenient to access local file servers, or files owned by other people on other systems who aren’t apple users. You’d be limited to web interfaces or whatever per-app solution might be provide, or a lot of rigmarole that removes most of the benefits using a smartphone to work on those files at all

 

[wanha]

“The PC guys are not going to just, you know, knock this out“.

I always find it funny when folks talk about new entries not being able to crack the market when the iPhone IS a new entry that DID crack the market. And, they cracked the market with a huger set of obstacles ahead of them than any new competition would have today (in the entire world, only one carrier agreed to carry the iPhone, that wouldn’t exist today). The iPhone today exists because a company, rather than being given special treatment, had to work hard to create the hardware and the features that people desired enough to buy into.

That’s the ONLY way any new competitor is going to come along… if they look at what exists, finds a profitable niche, then grows into that. Making the iPhone MORE desirable (by forcing changes to its business model) would, in effect, reduce the likelihood of competition entering the market. For example, some people say they don’t like the privacy model of Android, but don’t like the locked down nature of the iPhone. With the current size of the cellular phone market, even if only 1% of folks would be interested in such a thing, that’s still a huge windfall to the company that focuses on the hardware and their own OS to put together a compelling enough product.

Instead, what we have are folks that look at the challenge and decide not to even try. If that was Apple’s stance, a company that financially, should not have even TRIED to enter the market, we wouldn’t have the iPhone (or Android either, for that matter… or the Android we’d have would have been copied off of Blackberry instead of Apple).

You're oversimplifying it by ignoring the very real network effects of the iPhone (and Android to a lesser degree).

Unlike iPhone and Android, mobile phones weren't software platforms back in 2007. There were very few barriers for consumers to switch brands, because there was no app ecosystem you had invested in, no cloud storage you were paying for, no photo libraries to port over, no missing app for your new phone by your favorite app developer.

Phones were more or less standalone devices.

This is all different today, and it's all to do with the network effects that come with software platforms.

It's 100x harder for a new phone or OS to break into the market place now, because we've all spent year and years spending money and buying apps and building out our ecosystem.

Most people simply won't abandon that for a slightly better experience.

 

[wanha]

So how do we break those network effects so that a new OS and ecosystem can enter the market? This is the problem no one seems to be addressing.

Great question! I wish I had the answer

 

[Ethosik]

Yeah. But there isn’t really an alternative to Siri on Apple devices. And future versions of Siri will hopefully get better once they start incorporating a real AI backend.

That’s…..the point. Android is far far FAR superior in so many ways, including digital assistants. The ONLY advantage iOS has is its closed ecosystem. But that will be taken away.

 

[Ethosik]

The b@st@rdz in Washington can't fix healthcare, can't fix immigration issues, can't even come close to balancing a budget, can't fight other world powers from fighting with each other, can't stop fighting with the other party across the isle... but oh boy, they sure do come together to "fix" the problem of a stupid watch and how it works (or doesn't work) with a phone.

Frustrating.

Agreed. This is absolutely absurd. There are more real issues to deal with.