Apple antitrust suit mirrors strategy that beat Microsoft, but tech
industry has changed
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[March 22, 2024] By
Mike Scarcella
(Reuters) - The U.S. government's antitrust lawsuit against Apple draws
on the watershed 1998 case that broke Microsoft's stranglehold on
desktop software, but that may prove to be an imperfect blueprint for
addressing smartphone competition.
The market for the iPhone today looks very different from the
near-monopoly enjoyed by Microsoft's Windows operating system two
decades ago, and the government as a result may face a tougher time in
taking on Apple, legal experts said.
The Department of Justice, along with 15 state governments, accused
Apple of unlawfully monopolizing the smartphone market through
restrictions on app developers that curb choice and innovation, which it
said forces consumers to pay higher prices.
Apple said the government is wrong on the facts and law.
The government has to prove that Apple’s business practices were
“exclusionary” and harmed consumers by degrading the quality of rival
products, according to several legal experts.
The government accused Apple of suppressing technologies that would have
increased competition among smartphones in five areas: so-called "super
apps," cloud streamed gaming apps, messaging apps, smartwatches and
digital wallets.
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One example the government gave is familiar to anyone who texts from an
iPhone to a user of an Android phone — the dreaded "green bubble" that
results in hindrances such as grainy photos sent by text that don't
apply when texting between two phones using Apple's iOS operating
system.
Antitrust enforcers said Apple was rapidly expanding its influence and
power in industries including content creation and financial services.
By comparison, Microsoft was accused of abusing its market dominance to
impede users from freely installing software on computers using the
company’s operating system.
That might sound similar to Apple's control over the app store, but
legal experts said there are important differences.
Apple can contract with whom it want and to design products as it sees
fit, legal experts said.
It becomes a problem when a company with monopoly power takes steps to
lessen short-term profit in order to keep rivals out in the longer term,
said Douglas Ross, an antitrust scholar at University of Washington’s
law school.
“The fundamental assumption DOJ seems to have is that Apple must
cooperate with its rivals to allow rivals to compete with Apple," Ross
said. "That has antitrust law backwards."
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![](../images/032224PIX/busine78.jpg)
The iPhone 15 Pro is presented during the 'Wonderlust' event at the
company's headquarters in Cupertino, California, U.S. September 12,
2023. REUTERS/Loren Elliott/File Photo
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Microsoft was forced to open its operating system because it
controlled 95% of desktop operating systems in the 1990s. By
comparison, Apple had 55% of the North American market for
smartphones at the end of September based on shipments, with the
rest largely made up of phones using Google's Android operating
system, according to Canalys, a market analysis firm.
The Justice Department seeks to define the market as that of
smartphones in the United States. Apple representatives said they
will try to persuade the court to define the market as the global
smartphone market.
Apple and rival Samsung Electronics each had about a 20% market
share globally in 2023, though Apple beat Samsung slightly on
shipments, Canalys data showed.
Microsoft "clearly was a monopolist and there were no effective
competitors in the PC operating system space," Ross said. On the
other hand, Android “is very popular, especially in the rest of the
world, and is a very effective competitor with iOS.”
Ross predicted it would be harder for the Justice Department to
prevail against Apple than it was in the Microsoft case.
Some of these allegations have been touched upon before in court.
In 2021, in an antitrust case brought by "Fortnite" creator Epic
Games, a federal judge found after a trial that Epic failed to prove
that Apple users were "locked-in" to their iPhones and would not
switch to Android devices.
Of course, government attorneys know these differences and still
brought the case.
Legal experts said that reflects the viewpoint within the DOJ and
the Biden Administration's Federal Trade Commission about
challenging cases.
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“They are happy to take on the risk of a really big case,” said
plaintiffs' lawyer Patrick McGahan, whose firm is involved in
litigation against Apple.
Litigator Melissa Maxman in Washington said the Microsoft case
changed the tech landscape and lauded the government's lawsuit as a
step toward greater competition in the smartphone market.
"If you open up the market for other competitors to get in you will
see prices go down and quality go up," Maxman said. "That's exactly
what was said in Microsoft — and guess what, it was true."
(Reporting by Mike Scarcella; Editing by Tom Hals and Jamie Freed)
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