DOJ GOES FOR APPLE

This time it means business

APPLE IS WORTH $2.5 trillion, and has weathered many challenges, but the latest legal assault looks to have weight behind it. The Department of Justice, working with 16 state and district attorney generals, has filed an anti-trust case that claims it uses its dominance of the smartphone market to control it. The case cites section two of the Sherman anti-trust act, the federal law that limits the power of monopolies.

Among the areas of (alleged) abuse are using the app review process to stifle potential rivals, making it difficult to connect non-Apple smart watches to an iPhone, blocking access to Apple Pay, blocking ‘ super apps’, and using green bubbles to stigmatize messages that aren’t from another iPhone. Essentially, it calls out the ways Apple keeps others out of the lucrative ecosystem of the iPhone, or locks them into it. In the first three months of this year, 72 percent of new smartphones sold in the US were iPhones. Apple will defend itself vigorously, of course. It has enough spare cash to pay for a huge legal team and keep it employed for years, stretching out every aspect of the case. Behind that warm, friendly Apple store is a ferocious defender of territory.

The DOJ isn’t the only legal authority taking a close look at Apple (the European Union isn’t happy, either—see page 9), but it might have the clout to get it to actually change. Fines haven’t worked in the past; Apple took one for $2 billion from the EU over music apps without blinking. It’ll take actual legally enforceable changes in policy and practice to open out the world of Apple to competitors. If you have a long memory, you may recall the DOJ taking on Microsoft in the ’90s, claiming it used the dominance of Windows to stifle competitors’ web browsers. It took a long time to change things, but it did eventually. If it’s not a warning from history for Apple, it should at least be a concern.