Apple lawsuit looks like an ankle-biter
There was something curiously slapdash about the Justice Department’s March 21 complaint against Apple, as if the country’s top antitrust cops aren’t sure of themselves — despite having spent five years working on their theory of the case.
It makes me wonder whether the lawsuit, touted as “landmark” because the feds and 16 states are going after one of the country’s most admired companies, will amount instead to a costly and protracted ankle-biting exercise.
The complaint begins more like a poorly edited magazine article than a legal document. It cites a 2010 email from an unnamed Apple executive to “Apple’s then-CEO” about an Amazon ad for its Kindle e-reader that shows a consumer buying and reading a book on her iPhone and then switching to her Kindle. “Not fun to watch,” the executives inform “Jobs,” who responds that Apple needs to “force” users to remain in the Apple-walled garden via Apple’s payment system.
Two things stand out here, one superficial, the other substantive. It isn’t until three pages later that the complaint refers to “then-CEO Steve Jobs.” It’s a minor point, what journalists call a first-reference omission: The text should have referred to “Steve Jobs” in its first line. It’s just sloppy, beneath the standards of career attorneys at the Justice Department.
More important: That lead anecdote proves, well, nothing. To this day, it is easy to buy a book from Amazon on any device and then seamlessly switch among iPhones, Kindles, PCs or whatever device you prefer, reading the same book. If Apple tried to “force” users onto its platform, as the document lamely suggests, it failed to keep them there.
The complaint is full of such rhetorical oddities and other flimsy legal arguments. It references Apple’s “astronomical valuation,” which, while accurate — Apple’s market value exceeds $2.5 trillion — lacks precision, particularly of the legal sort. If Apple’s market capitalization were merely “planetary,” would Justice deem the company less of a monopolist?
Or take the infamous “green bubble” debate, the exclusion of noniPhone users from coveted blue-bubble message threads. The complaint references the “social stigma” Android users experience, which might be real but is hardly grounds for an antitrust case. Besides, Apple already has capitulated on this, so it isn’t clear what remedy is needed now. Also, services such as WhatsApp, Signal and Discord work just fine on the iPhone. Use those instead.
In some cases, Justice’s arguments are laughable. When it refers to “Apple’s threatened dominance over the automotive industry,” it is addressing Apple’s in-car infotainment system, CarPlay. The government conveniently ignores both the maddeningly poor integration between iPhones and Teslas — how I suffer for Tesla failing to bend to Apple’s will! — as well as recent reports that Apple had squandered $10 billion on a multiyear failed quest to develop its own car. Apple’s automotive dominance is a long way off.
The antitrust cops similarly ignore examples of Apple’s recent weakness. The company trails its competitors in generative artificial intelligence, especially relative to Microsoft, which has a major investment in OpenAI. That’s why the iPhone maker reportedly has been in talks to partner on generative AI with the likes of Google and Chinese search company Baidu. Growth in iPhones themselves — the focal point of the suit — has been slowing. This calls into question the need for action against Apple to hinder the influence of the iPhone. The market is taking care of this on its own.
The complaint also editorializes on Apple’s fledgling entertainment business, nothing that the company “is rapidly expanding its role as a TV and movie producer and has exercised that role to control content.” Yes, Apple has spent money on successful and acclaimed programs such as “Ted Lasso,” “The Morning Show” and “Shrinking.” But it’s nowhere near the biggest Hollywood studio or streaming platform, which, by their very definition, do everything they can to control the content they produce.
Finally, the government let its ideology show. “It is not surprising,” it wrote, that in 2023 “Apple spent more than twice as much on stock buybacks and dividends as it did on research and development.” The complaint helpfully supplies the data: $77 billion on buybacks, $30 billion on research and development. Yet it said nothing about why that’s illegal, because it isn’t, or that Apple is the fourth-largest U.S. spender on investments, after Amazon, Alphabet and Meta.
None of this is to say Apple isn’t a bully that throws its weight around. It is: The company is secretive, vindictive and domineering with its partners and nothing if not opinionated about what personal technology should look and feel like. What’s more, it charges a hefty 30 percent commission when third-party developers sell something on its App Store.
Yet these transgressions ignore two realities. First, developers want to be on the iPhone, and no one is holding a gun to their head to do so. It is well known in Silicon Valley that you develop first for the iPhone — that’s where the money is — and then for Android.
The second reality is that Apple has plenty of competition, much of which it enables to work with its ecosystem. For example: I am a committed Windows and Outlook user, so I use a PC, even though Apple has programs to run Windows and Outlook on Macs. At the same time, I’ve been an iPhone and iPad user for years. I don’t own an Apple Watch, but my beloved, inexpensive Fitbit talks just fine to my phone. And though my daughter and I tease my Android-using wife for ruining our iMessage threads, I spend tons of time in various WhatsApp groups — on my iPhone.