The DoJ and 16 states are suing Apple over accusations of anti-competitive behavior in the smartphone market
Apple said the lawsuit will hinder the company's ability to create integrated technology for its customers
Analysts say one of the biggest hurdles for the government is arguing that Apple is a monopoly
It looks like 2024 is going to be a bruising year for big tech versus the U.S. government.
Fresh off a nearly $2 billion fine from the European Union about abusing its position in the market, the U.S. Department of Justice (DoJ) and 16 states on Thursday sued Apple over attempted monopolization of smartphone markets.
The antitrust complaint, filed in New Jersey, alleges Apple "illegally maintains a monopoly over smartphones" by imposing restrictions on developers. The suit alleges that consumers have to pay higher prices because Apple has exercised its monopoly power over a market it helped create.
Apple has called the lawsuit "misguided" and said it will hinder the company's ability to create integrated technology for its customers.
This all follows a DoJ case against Google, as well as Federal Trade Commission (FTC) suits against Meta and Amazon.
Analysts take a bite
"The government’s case is ambitious and far-reaching," Ken Hyers, director of device technologies at TechInsights told Fierce Wireless in an email. "The crux of it is that it accuses the company of imposing onerous contractual limitations on app developers, that it favors its own apps and hardware, and that it makes it difficult for consumers to leave the Apple device ecosystem."
"Apple has built a walled garden in the mobile space based on a playbook they've been running since the 80s," commented Neil Barbour, research analyst with S&P Global. "The difference between this and what they did in desktops and laptops is market share."
"I think the biggest hurdle the DOJ will face is arguing that Apple is a monopoly, given the wide number of other hardware options that are available to consumers, and the fact that in many markets, for smartphones," Hyers said. "Android captures the majority share of the global market and even in the USA Apple captured only slightly more than half of total smartphone sales last year."
"I don't know how you can define a monopoly when you have a 50% market share," Recon Analytics founder Roger Entner told us at a Verizon event on Thursday. "That makes the case for the government really difficult."
"There’s no question that Apple has a lock-in for customers when they purchase a suite of its products (iPhone, iPods, iPad, Mac, etc.) and services," Hyers said. "This is what I call the golden handcuffs for Apple customers."
Hyers, however, argues that Apple customers have little desire to switch. "Switching rates bears this out and explains why Apple users steadily increase over time in most markets, rather than decrease," he said.
"I suspect this case will drag on for several years," Hyers said. "Apple rarely backs down unless forced to, and Apple’s lawyers are ferocious and tenacious and will use every tool in their legal toolboxes to fight the DOJ, point-by-point."
The analyst thinks that CEO Tim Cook and other Apple management will have to give depositions if the case goes to trial. "This will be a fascinating case to watch, and I think we’ll learn quite a bit about the internal thinking of the company from reading the legal filings," Hyers commented.
And he's got some great advice: "Get the popcorn!"