ImperiOS

The Department of Justice lawsuit is unusually broad. Typically confined to one or a few related specific practices or actions, the complaint argues that Apple uses a variety of tools to discourage customers from using competing companies’ accessories or services.

Some of the practices brought up in the complaint are well-known to phone users, like the iMessage interface that commonly shows iOS texts in blue but messages from non-Apple, SMS-format users (usually on Android phones) in green. The effect is widely thought to be that Android users in cross-platform threads seem to have a somehow lower-quality or nonstandard phone — which is enough to drive iPhone adoption, especially among young people.

Further, users are likely aware of how much easier it is to conduct a simple Bluetooth pairing of their iPhones with Apple’s native speakers, headphones, smartwatches, and laptops, rather than ones made by other manufacturers which may not display in the iOS list of pairable devices or may require more or slower pairing attempts.

Control over the App Store and its fees is an issue Apple has litigated over for some time, but of particular concern to the company are the so-called “super-apps,” like China’s WeChat, which largely take over the phone’s user interface. This would completely end Apple’s long history of curating the platform and only allowing approved accessories, apps, and games to operate optimally on its phones. Such apps threaten to make smartphones more like typical commodities — goods that consumers see as basically interchangeable, like the gasoline from different gas stations on your work commute. That would be an existential threat to Apple, whose phones famously sell at a painful markup relative to Android phones.

Another less-notorious area of Apple’s platform control is related to the relative fledgling industry of mobile digital payments. While Apple has encouraged other “fintech” companies like PayPal to port their services into the Apple Wallet, those other companies are prevented from creating their own digital wallets because only Apple’s can access the near-field communication (NFC) chip on the iPhone that allows users to pay by tapping their phones at the point of service.

Apple argues all these restrictions make the iPhone safer and preserve privacy, arguments that sadly do have some resonance. The volume of spam and fake imitation software is enormous, with Apple products well-known for being less affected; the iPhone also has more privacy measures against app tracking and on-phone data storage. But the DOJ complaint more or less clearly demonstrates how Apple has exploited these reasonable concerns into a range of tools that keeps users in its walled garden (unlike more open platforms, including Google’s Android variants).

On the basis of the broad reach of these practices and their tendency to shape what happens across the smartphone market that Apple originated in 2007, the DOJ complaint claims Apple is a monopolist across the phone sector, rather than only for its own phone and App Store. The government has a point here, but the claim will likely crash against the rocks of US antitrust law. The law will probably see the US phone oligopoly as not fully monopolized, and further, it requires evidence of direct consumer harm before penalties may be sought. And after all, the US Supreme Court ruled in 2004 that companies can’t be sued for favoring their own products or failing to help rivals compete against them.

Apple Encircled

The especially broad scope of the DOJ case owes to a number of factors, including increasing political recognition of the outsize power and ugly records of the platform giants generally. I’ve previously covered the recent revelations that Meta’s popular Instagram app was developed with full internal company understanding that it was actively harming users, especially young girls. Google is facing two major state-federal lawsuits, one over its maintenance of its search monopoly with gigantic payments to phone makers including Apple, and another expected within months over its online advertising monopoly. Amazon is being sued by the Federal Trade Commission for controlling online retail and its third-party marketplace, and even Microsoft has struggled with regulators in its drive to enlarge its gaming empire.

But another factor is an emerging global consensus on putting at least some limited restraints on the platforms. European leadership against Big Tech is one of the surviving areas, like its welfare states, where the economic policy of the Old World is preferable to the American way. The Europeans have passed two major regulations against tech, with real teeth — the General Data Protection Regulation and the Digital Markets Act (DMA). The DMA, most relevant here, requires opening closed software ecosystems of the type that Apple has long cultivated.

The DMA requires that “gatekeeping” platforms allow third-party developer access, for example requiring Apple to allow independent app stores on its platform without its curation or preapproval (a practice referred to as “sideloading”). It also requires the platforms to allow developers to alert consumers about alternative payment methods outside the native app stores.

But with other companies, including Google and Meta, having made only weak attempts to comply with the DMA, all three firms have been targeted in European Commission probes launched just days after the Department of Justice announced the Apple lawsuit. The probes will study if the companies’ stated plans to comply with DMA are adequate, as each company’s proposed system looks to take only small steps in the direction of the act’s rules.

Failure to get in line with DMA requirements comes with significant fines — not the pitiful specified-dollar fines of US regulators. The DMA specifies penalties of up to 10 percent of global revenue for offending platforms — amounting to many billions of dollars for these colossal multinationals, a penalty large enough to create real incentives even for these massive corporations. And Apple is already on the wrong side of the European Commission, for blocking Spotify and other streaming competitors for offering promotions (the company is appealing).

Crap Store

Recent developments in the longer-standing, crucial battle over the App Store are not encouraging. Much was made of the refusal by the US Supreme Court to hear Apple’s appeal of a 2021 district court ruling in the case brought by Epic Games, maker of Fortnite. The ruling forced the company to allow third-party app developers to display links or directions to pay for games and applications outside the App Store, often at a significant discount on their websites. Apple’s high 30 percent fee and tight control over what apps were allowed in the store have been major parts of its surging revenue from fees and its closed computing ecosystem, respectively.

Since then, Apple has rolled out its plan for compliance with the ruling, which allows developers a single option for an external link, and the format for displaying such links is tightly restricted. Apple is not letting developers include advisory notes, like those that might inform a user of a discount on the developer’s site. More comical, the current policy allows Apple to still charge a 27 percent commission on App Store sales. These outcomes have led the case to be seen as a favorable outcome for the company.

Overseas, Apple’s plans allow European developers to continue paying the status quo commission, or have their commission reduced but adding a fifty euro cent download fee for every transaction above €1 million per year. Developers have complained that these fees total amounts similar to the payments under the existing system. South Korea has already created rules close to Europe’s, and Japan, Australia, and the UK are considering similar ones to allow independent payment systems on Apple’s store, which did an enormous $24 billion in business last year.

This possibly continuing effort may in time rein in Big Tech, at least to a neoliberal standard of not allowing one gigantic capitalist oligopoly to too seriously damage the business environment for the other gigantic capitalist oligopolies. But no breakup threat is on the table, and despite its stock sinking somewhat, the company remains the second-biggest private firm in the world.

The Long Shadow of US v. Microsoft

In any discussion of anti-monopoly lawsuits against the tech platforms, the 1990s-era antitrust suit against Microsoft is always cited as a precedent, and this case is no different. The Microsoft suit was filed at a time when the internet was a new consumer phenomenon, Apple was a nearly bankrupt PC maker, and Microsoft’s operating system (OS) monopoly ran over 90 percent of the world’s computers (compare to the 54 percent US market share enjoyed by Apple smartphones today). Microsoft, like other tech platforms from Google to Facebook, frequently used its gigantic cash reserves and strong relationships with other essential firms to block threats to its OS, such as the cross-platform Java universal programming language.

The first commercial web browser, Netscape, also seemed a threat to Microsoft’s OS, and it was the monopolist’s decision to package its own knockoff browser Internet Explorer in its ubiquitous Windows 95 update that precipitated antitrust actions by the Federal Trade Commission and then the DOJ.

Microsoft’s prior operating system monopoly was considered fair and square since it came about through natural market processes like network effects and standardization. But to then use that monopoly to take over the adjacent market of web browsing does count as “monopolization” in the strange eyes of US antitrust law, bringing on proceedings that ran for years. Microsoft in the end narrowly avoided being broken up in 2001 and instead had modest limits put on its behavior.

The relevance of this past action today is that Apple’s successful policies intended to keep out certain apps, especially the super-apps, is similar to Microsoft’s war against possible OS threats. That’s because super-apps often function so as to become the main interface on a user’s phone, meaning they are essentially potential operating systems themselves that could blow a giant hole in the fortifications of Apple’s “walled garden” of hardware and software. And indeed, both the DOJ filing itself and the press coverage today reliably compare Apple to the Microsoft of the 1990s.

But Apple’s definitive anticompetition case is very different. From 2005 to 2010, Apple ran a tech-collusion ring later ruled in federal court to have been a wage-fixing conspiracy. At a time when Google and Facebook were hiring software coders at a furious pace to build out their fast-growing platforms, the going salary for engineers rose steeply. To counteract these higher salaries, Apple’s then CEO and celebrated tech asshole Steve Jobs led a secret agreement by several large tech firms not to cold-call and poach one another’s engineers, thus cooling demand and decreasing the rate of pay growth for the workforce. Among the firms revealed in court to have placed one another on “Restricted Hiring” lists or “Do Not Cold Call” lists were Apple, Google, Microsoft, Intel, IBM, and Comcast.

The effort was cartoonishly corrupt. Relevant emails from Google’s then CEO Eric Schmidt, for instance, began with “DO NOT FORWARD”; one said he only wanted to discuss the subject “verbally since I don’t want to create a paper trail over which we can be sued later?” His head of human resources replied, “Makes sense to do orally. i agree.” Recruiters who failed to get the message and tried to poach engineers despite the agreement were fired. Eventually, the ring was exposed, and the DOJ sued, leading to a relatively modest total settlement of $435 million.

While US antitrust enforcement has been pitifully weak for some decades now, the turning of, increasingly, both Democrats and Republicans against the tech sector has greased the political wheels somewhat for more aggressive actions. Certainly the new Justice suit is broader and more ambitious than more narrowly focused cases in the past.

But antitrust remedies are inherently limited in their helpfulness — keeping oligopolies from becoming full monopolies and trying to block corporate collusion are all well and good, but three giant blood-sucking corporations are only somewhat better than one. We’re still left with enormous empires of money and production capable of making huge demands on society and keeping unorganized workers at a disadvantage. Giant, system-critical companies like Apple should be publicly taken over and managed democratically by their workers with public oversight — an appealing socialist solution.

Still, the rising tide of actions in important overseas markets, with the US bringing up the rear but still bringing bigger suits, is the kind of roughly synchronized public action that is the only foreseeable near-term way to corner and put some kind of leash on the giant worldwide tech platforms. For all these reasons, a recent Wall Street Journal headline declared, “Apple’s Business Model Getting Hit From All Sides Now.”

And yet, according to the company’s public filings, that model still made $97 billion in profit last year. This potential renaissance in platform antitrust may be too little, too late. With its monumental resources and incredible legal budget — enough to put literally hundreds of attorneys on a single case — even a global regulatory assault may find Apple too big to swallow.