Case against Apple is not a blockbuster

The Justice Department wants the public to know that its case against Apple is a big deal — otherwise, why compare it with the government’s 1990s lawsuit against Microsoft, which is the closest thing to a blockbuster in modern-day antitrust enforcement? The complaint filed this month, however, looks to be less of a hit.

The Justice Department and attorneys general from 16 states alleged March 21 that Apple is illegally monopolizing the smartphone market, leveraging its power to lock consumers into its products and increase its margins. The question isn’t merely whether Apple makes a lot of money by selling its phones. (It does.) The question is whether it does so through exclusionary or predatory tactics. The Justice Department says yes: Apple responds to competitive threats by “making it harder or more expensive” for users to ditch their iPhones, not by “making it more attractive” for them to hold on to them. The flaw in this logic is that Apple doesn’t always choose between those options. Often it does both things at the same time.

The department’s first step will be to prove that Apple has a monopoly at all. By revenue, the company’s share of the domestic smartphone market is roughly 70%. This looks puny in comparison with the more than 90% share of the market for personal computer operating systems that Windows held around the turn of the century. Still, it’s substantial, so it’s possible to imagine a judge moving to the next part of the case — what Apple is doing with that monopoly. Here, the Justice Department highlights areas over which it alleges Apple has exerted too much control: “super” apps that combine many functions in one package, cloud-streaming apps that allow users to play games the same way they’d watch shows on Netflix, smartwatches, digital wallets and messaging.

The idea is that in each of these areas, Apple has shut down competition by keeping its ecosystem closed to outsiders. Apple has imposed onerous rules related to super apps, all-in-one programs such as Tencent’s WeChat that mix, say, messaging with shopping and other functions. The rules, the DOJ says, have stunted super apps’ growth in the United States, so Americans have had to settle for individual apps for each function on their good, old iPhones. Rules for cloud-streaming apps were unworkable, preventing people from playing fancy games on lower-end hardware and thereby encouraging people to buy Apple products with high-end chips capable of running games on the phones. Apple watches don’t work with Android devices, and third-party watches don’t work well with iPhones. Apple Pay is the only way to tap to pay with an iPhone, and Apple takes a hefty cut when you do. Users of iMessage can only iMessage with iPhone users while Android users’ texts come through as despised green bubbles, no read receipts or typing indicators in sight.

All of these things either are true now or were true until recently, when Apple made some changes partly in response to pressure from European Union regulators. But the Justice Department must prove that Apple made these choices to squelch competition, to consumers’ detriment. Prosecutors might have a chance if they show that the company’s rules were arbitrary, or arbitrarily enforced, to counter a clear competitive threat. Yet rules enacting strict control over what is and isn’t welcome on an iPhone usually won’t look arbitrary or targeted in the long story of Apple’s empire. Control is what has always made Apple, well, Apple — even before the company became the behemoth it is today. The tight integration of products and services makes every Apple device simpler to use. It also, the company contends, makes those devices reliable and reliably safe.

The DOJ’s suit has some more promising elements, for example those concerning not how Apple designs its own phones but how it restricts the design choices of others: forcing super apps to display their mini-programs in a “flat, text-only” list or prohibiting App Store developers from informing users that they can pay less elsewhere for a subscription. When it comes to cloud-streaming, Apple’s requirement to review every single game on a streaming service rather than merely reviewing the service seems excessive given that the very point of cloud-streaming is that the games are never installed on an iPhone. Apple might also struggle to convince a judge that it clunkified the process of messaging with Android users to promote its proclaimed goals of privacy and security. Those green-bubble texts aren’t encrypted, while iMessages are.

Even so, courts haven’t tended to find that companies have a duty to build products that will help their competitors — and they haven’t generally concluded that products must be open by design. For the transformation many competition advocates seek, the country would need different laws.