Imminent DOJ antitrust case against Apple is in final pre-filing phase -- probably

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The United States Department of Justice seems to be in its final stages before filing an antitrust suit against Apple.

The US DOJ flag. It has an eagle clutching arrows and a branch against the red and white stripes of the American Flag, the background is blue.
United States Department of Justice



It has been a long and winding road if you've been following the DOJ's probe into Apple's business practices. Spotify started the process in 2019 with pushes from Apple's other competitors following suit in 2020, 2021, and 2022.

It was claimed the DOJ was drafting an antitrust complaint against Apple in 2023. Finally, according to a report from Bloomberg, Apple has had the customary pre-filing meeting referred to as "last rites" before a lawsuit is filed.

Despite hearing this song and dance for multiple years in a row, the meeting is the truest sign yet that the United States Department of Justice is ready to file an antitrust suit against Apple. The lawsuit would focus on Apple's practices as the judge, jury, and executioner of the App Store and its locked-down operating systems.

The DOJ was likely waiting to see what Apple's response to the EU's Digital Markets Act would be. It developed over 600 APIs to allow third-party app marketplaces to distribute apps outside the App Store.

Now that these changes are implemented in iOS 17.4, there is a chance that the DOJ will attempt to get the same feature changes in the United States. However, there hasn't been universal praise for Apple's so-called malicious compliance.

The lawsuit took years to develop, so don't expect a swift solution. It could take years of litigation before a solution is agreed upon and implemented, not to mention an impending election that could upend a lot of decision-making.



Read on AppleInsider

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Comments

  • Reply 1 of 25
    Again, just offer up 2 versions.  One that stays locked down as it currently is.   The other is open with side loading and any payment system you desire.
    If you stay with the 'Walled Garden', there is an indication to others (in txt and email etc) that you are more likely to be secure.
    watto_cobra
  • Reply 2 of 25
    The DOJ was likely waiting to see what Apple's response to the EU's Digital Markets Act would be. It developed over 600 APIs to allow third-party app marketplaces to distribute apps outside the App Store.
    Now that these changes are implemented in iOS 17.4, there is a chance that the DOJ will attempt to get the same feature changes in the United States. However, there hasn't been universal praise for Apple's so-called malicious compliance.

    That's not how it works. The EU didn't prosecute Apple in court. They used the legislative process to create a market cap that says certain activities are legal below the cap and illegal above the cap. In other words, they didn't try to prove that Apple was violating existing antitrust laws in the EU. They just created new laws. So the DOJ isn't really going to be waiting on anything related to the EU since it's entirely irrelevant. The DOJ has to prosecute Apple in court. They have to prove that Apple violated existing antitrust law in the United States.

    If the DOJ was going to wait on something it would have been the U.S. Congress. Congress had considered legislation regarding tech companies but it never gained enough momentum to go anywhere. 

    edited February 28 danoxwilliamlondonwatto_cobra
  • Reply 3 of 25
    gatorguygatorguy Posts: 24,211member
    The DOJ was likely waiting to see what Apple's response to the EU's Digital Markets Act would be. It developed over 600 APIs to allow third-party app marketplaces to distribute apps outside the App Store.
    Now that these changes are implemented in iOS 17.4, there is a chance that the DOJ will attempt to get the same feature changes in the United States. However, there hasn't been universal praise for Apple's so-called malicious compliance.

    That's not how it works. The EU didn't prosecute Apple in court. They used the legislative process to create a market cap that says certain activities are legal below the cap and illegal above the cap. In other words, they didn't try to prove that Apple was violating existing antitrust laws in the EU. They just created new laws. So the DOJ isn't really going to be waiting on anything related to the EU since it's entirely irrelevant. The DOJ has to prosecute Apple in court. They have to prove that Apple violated existing antitrust law in the United States.

    If the DOJ was going to wait on something it would have been the U.S. Congress. Congress had considered legislation regarding tech companies but it never gained enough momentum to go anywhere. 

    Apple fast approaching 65% market share in the US won't be helpful to their defense. 
    edited February 28 muthuk_vanalingam
  • Reply 4 of 25
    gatorguy said: Apple fast approaching 65% market share in the US won't be helpful to their defense. 
    Market share isn't relevant. Apple lost the e-book lawsuit regarding illegal conspiracy at a time when Amazon controlled almost 90% of the ebook market. So the courts didn't care about Amazon's dominance. They cared that Apple was found to have conspired with a group of publishers to raise the price of ebooks on the NYT bestseller list. 

    And the reality is that Amazon has a horrendous commission structure for ebooks relative to the App Store and it doesn't really matter. Amazon takes 30% commission on ebooks priced between $2.99 and $9.99 and a 60% commission on anything above or below that price range. So not only are they taking as high or higher of a cut than Apple does in the App Store, they're also trying to set a specific price range. 
    edited February 28 danoxwilliamlondonwatto_cobra
  • Reply 5 of 25
    gatorguygatorguy Posts: 24,211member
    gatorguy said: Apple fast approaching 65% market share in the US won't be helpful to their defense. 
    Market share isn't relevant. Apple lost the e-book lawsuit regarding illegal conspiracy at a time when Amazon controlled almost 90% of the ebook market. So the courts didn't care about Amazon's dominance. They cared that Apple was found to have conspired with a group of publishers to raise the price of ebooks on the NYT bestseller list. 

    And the reality is that Amazon has a horrendous commission structure for ebooks relative to the App Store and it doesn't really matter. Amazon takes 30% commission on ebooks priced between $2.99 and $9.99 and a 60% commission on anything above or below that price range. So not only are they taking as high or higher of a cut than Apple does in the App Store, they're also trying to set a specific price range. 
    The book case concerned illegal collusion that resulted in price fixing between Apple and the major publishers. 65% market share is absolutely a relevant statistic when it comes to a company's exposure to antitrust claims. 
    muthuk_vanalingam
  • Reply 6 of 25
    gatorguy said: The book case concerned illegal collusion that resulted in price fixing between Apple and the major publishers. 65% market share is absolutely a relevant statistic when it comes to a company's exposure to antitrust claims. 
    No it isn't.

    U.S. antitrust law is primarily based on demonstrating harm to consumers. That's why a multi-company conspiracy TO RAISE PRICES ON CONSUMERS is a violation even though it was limited to NYT bestsellers and not the entire ebook market. Like I noted, Amazon had nearly 90% control of the ebook market and was not subject to any antitrust lawsuits regarding ebooks. And still aren't today despite having a commission structure that makes Apple's look positively timid. How do you explain that if you think 65% market share is important in regards to U.S. antitrust law? Amazon would be a slam dunk for lawsuits if that was important. 
    danoxwilliamlondonwatto_cobra
  • Reply 7 of 25
    gatorguygatorguy Posts: 24,211member
    gatorguy said: The book case concerned illegal collusion that resulted in price fixing between Apple and the major publishers. 65% market share is absolutely a relevant statistic when it comes to a company's exposure to antitrust claims. 
    No it isn't.

    U.S. antitrust law is primarily based on demonstrating harm to consumers. That's why a multi-company conspiracy TO RAISE PRICES ON CONSUMERS is a violation even though it was limited to NYT bestsellers and not the entire ebook market. Like I noted, Amazon had nearly 90% control of the ebook market and was not subject to any antitrust lawsuits regarding ebooks. And still aren't today despite having a commission structure that makes Apple's look positively timid. How do you explain that if you think 65% market share is important in regards to U.S. antitrust law? Amazon would be a slam dunk for lawsuits if that was important. 
    https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=2935&context=faculty_scholarship

    ...and you are right that if market share is important, then an antitrust lawsuit targeting Amazon might be a slam dunk. On that point you and the FTC agree. :wink: 
    https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-sues-amazon-illegally-maintaining-monopoly-power
    Read the accusations the FTC makes against Amazon, because you may see one or two similar antitrust claims made by the DoJ targeting Apple. 
    edited February 28 muthuk_vanalingam
  • Reply 8 of 25
    gatorguy said:
    gatorguy said: The book case concerned illegal collusion that resulted in price fixing between Apple and the major publishers. 65% market share is absolutely a relevant statistic when it comes to a company's exposure to antitrust claims. 
    No it isn't.

    U.S. antitrust law is primarily based on demonstrating harm to consumers. That's why a multi-company conspiracy TO RAISE PRICES ON CONSUMERS is a violation even though it was limited to NYT bestsellers and not the entire ebook market. Like I noted, Amazon had nearly 90% control of the ebook market and was not subject to any antitrust lawsuits regarding ebooks. And still aren't today despite having a commission structure that makes Apple's look positively timid. How do you explain that if you think 65% market share is important in regards to U.S. antitrust law? Amazon would be a slam dunk for lawsuits if that was important. 
    https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=2935&context=faculty_scholarship

    ...and you are right that if market share is important, then an antitrust lawsuit targeting Amazon might be a slam dunk. On that point you and the FTC agree. :wink: 
    https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-sues-amazon-illegally-maintaining-monopoly-power
    Read the accusations the FTC makes against Amazon, because you may see one or two similar antitrust claims made by the DoJ targeting Apple. 
    ???

    Your first link is specific to mergers. Are there any controversial mergers that involve Apple? This link doesn't appear to have any relevance at all.

    Your second link specifically states "The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging."

    It goes on to list five specific Amazon actions that are considered to be antitrust violations. Of those five, the only one I can see that MIGHT have relevance to Apple would be biasing search results since Apple does have search in the App Store. 
    williamlondonwatto_cobra
  • Reply 9 of 25
    gatorguygatorguy Posts: 24,211member
    gatorguy said:
    gatorguy said: The book case concerned illegal collusion that resulted in price fixing between Apple and the major publishers. 65% market share is absolutely a relevant statistic when it comes to a company's exposure to antitrust claims. 
    No it isn't.

    U.S. antitrust law is primarily based on demonstrating harm to consumers. That's why a multi-company conspiracy TO RAISE PRICES ON CONSUMERS is a violation even though it was limited to NYT bestsellers and not the entire ebook market. Like I noted, Amazon had nearly 90% control of the ebook market and was not subject to any antitrust lawsuits regarding ebooks. And still aren't today despite having a commission structure that makes Apple's look positively timid. How do you explain that if you think 65% market share is important in regards to U.S. antitrust law? Amazon would be a slam dunk for lawsuits if that was important. 
    https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=2935&context=faculty_scholarship

    ...and you are right that if market share is important, then an antitrust lawsuit targeting Amazon might be a slam dunk. On that point you and the FTC agree. :wink: 
    https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-sues-amazon-illegally-maintaining-monopoly-power
    Read the accusations the FTC makes against Amazon, because you may see one or two similar antitrust claims made by the DoJ targeting Apple. 
    ???

    Your first link is specific to mergers. Are there any controversial mergers that involve Apple? This link doesn't appear to have any relevance at all.

    Your second link specifically states "The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging."

    It goes on to list five specific Amazon actions that are considered to be antitrust violations. Of those five, the only one I can see that MIGHT have relevance to Apple would be biasing search results since Apple does have search in the App Store. 
    OOPS! Dropped in the wrong link originally
    https://www.thepolicycircle.org/minibrief/antitrust-laws/

    Term to know: Bainian market power
    edited February 28 muthuk_vanalingam
  • Reply 10 of 25
    gatorguy said: OOPS! Dropped in the wrong link originally

    https://www.justice.gov/archives/atr/monopoly-power-and-market-power-antitrust-law#:~:text=In%20brief%2C%20anticompetitive%2C%20exclusionary%2C,materially%20raises%20its%20rivals%27%20costs.

    "We can illustrate these concepts by considering a hypothetical market for a hypothetical good called widgets. [FN48] If there are no good substitutes for widgets and only one firm produces widgets, that single firm will have the ability to exercise Stiglerian monopoly power directly by reducing its output and raising its price, and therefore the market price, to the monopoly level. [FN49]Consumer welfare and allocative efficiency are sacrificed because the firm foregoes sales to those consumers who would be willing to buy widgets at a price above the cost of production but who are unwilling to buy at the price set by the firm. [FN50]

    Bainian market power can be described by altering the market structure in the previous example. Suppose instead that 100 firms with identical, rising supply curves make widgets and that each produces an equal amount. Suppose further that gadgets, a second product, are a good substitute for widgets and vice versa. Given this market structure, consider the effect of a strategy by the widget manufacturers that significantly raises the cost of manufacturing gadgets, thereby effectively removing all gadgets from the market. [FN51] This would represent an exercise in Bainian monopoly power."

    Not seeing how either of those would apply to Apple. Prices for apps on iOS are in line with what exists on Android. Both iOS/Android generally have lower prices for apps than for Windows/Mac or for Xbox/Playstation/Switch. So Stiglerian doesn't apply. Bainian would require collusion by more than one App Store to raise prices for other app stores. Does that exist? Would it even be possible? Apple doesn't set prices on its own App Store much less collude to control how prices worked on others.  

    edited February 28 watto_cobra
  • Reply 11 of 25
    "malicious compliance"

    Why give Tim Sweeney so much credibility here? He's just a whiny little greed monster and now his phrase is used not only to ding Apple but make it sound like it's an official judgment and that Apple is in the wrong here. "Not universal praise" sounds like more than one disagreeable (by nature) biased asshat.

    Someone in the DOJ is looking to make a name for themselves, very much like the entire Hunter Biden fiasco where a couple of bad actors are the ones pulling the strings.
    edited February 28 watto_cobra
  • Reply 12 of 25
    gatorguygatorguy Posts: 24,211member
    I see how they apply to a potential competition lawsuit filing by the DoJ. You don't. As far as I know neither of us have legal training, so one or both of us could be mistaken. It won't be very long before we BOTH know what the DoJ action is, and what the claims are, if any.  Then we'll know if there's any pertinance attached to market share. 
  • Reply 13 of 25
    gatorguy said: I see how they apply to a potential competition lawsuit filing by the DoJ. 
    Then explain how you think they apply. You brought up Bainian market power...provide your example of Apple using that power. 
    williamlondonwatto_cobra
  • Reply 14 of 25
    gatorguygatorguy Posts: 24,211member
    gatorguy said: I see how they apply to a potential competition lawsuit filing by the DoJ. 
    Then explain how you think they apply. You brought up Bainian market power...provide your example of Apple using that power. 
    Could doing so change your opinion that market share isn't pertinent? Nope. I understand why I believe it's important. I put some effort into offering discussion links indicating why it would be important. You agreeing isn't important. You would disagree anyway. If market share is important then the actual lawyers will raise that point, and they won't care if any of us here agree with them either. 
    muthuk_vanalingam
  • Reply 15 of 25
    gatorguy said:
    gatorguy said: I see how they apply to a potential competition lawsuit filing by the DoJ. 
    Then explain how you think they apply. You brought up Bainian market power...provide your example of Apple using that power. 
    Could doing so change your opinion that market share isn't pertinent? Nope. I understand why I believe it's important. I put some effort into offering discussion links indicating why it would be important. You agreeing isn't important. You would disagree anyway. If market share is important then the actual lawyers will raise that point, and they won't care if any of us here agree with them either. 
    The difference between your own disagreement and my disagreement is that I provide a reason for disagreeing. There's a thought process behind it. Your disagreement is just some links and antitrust vocabulary terms with no thought process. You posted "Bainian market power" without having any idea why you were posting it. 
    edited February 29 williamlondonwatto_cobra
  • Reply 16 of 25
    carnegiecarnegie Posts: 1,078member
    gatorguy said: Apple fast approaching 65% market share in the US won't be helpful to their defense. 
    Market share isn't relevant. Apple lost the e-book lawsuit regarding illegal conspiracy at a time when Amazon controlled almost 90% of the ebook market. So the courts didn't care about Amazon's dominance. They cared that Apple was found to have conspired with a group of publishers to raise the price of ebooks on the NYT bestseller list. 

    And the reality is that Amazon has a horrendous commission structure for ebooks relative to the App Store and it doesn't really matter. Amazon takes 30% commission on ebooks priced between $2.99 and $9.99 and a 60% commission on anything above or below that price range. So not only are they taking as high or higher of a cut than Apple does in the App Store, they're also trying to set a specific price range. 
    Market share is relevant when it comes to U.S. antitrust law though, of course, it isn't the only thing that matters and its relevance depends on which aspect of antitrust law is at issue. Further, if Apple had 65% market share in a properly defined relevant antitrust market that could be important in potential antitrust actions brought against it. Anything below 50% market share is generally considered indicative of a lack of monopoly power, but 65% market share is in a gray area where it may or may not be indicative of monopoly power.

    There are three primary aspects of U.S. antitrust law: Sherman Act Section 1, Sherman Act Section 2, and the Clayton Act. The Clayton Act relates to whether potentially anitcompetitive mergers and the like are allowed. Sherman Act Section 1 prohibits agreements which unreasonably restrain competition - e.g., Apple and Google agreeing to policies which would make it more difficult for others to compete in a smartphone OS market. Market share doesn't necessarily matter when it comes to Sherman Act Section 1 violations. Sherman Act Section 2 is generally about single firm conduct - unlawful monopolization or monopolization attempts. There market share matters because:

    The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.


    See U.S. v Grinnell (1966). That's black letter U.S. antitrust law that you'd find quoted in some form in countless antitrust decisions. The elements that need to be established for a successful Section 2 action are: (1) monopoly power and (2) anticompetitive behavior. Market share is an important factor that goes into determining whether the first element is present.

    The Apple e-book decision you refer to was based on Section 1 of the Sherman Act so Apple's market share didn't really matter there.


    muthuk_vanalingamwilliamlondongatorguywatto_cobra
  • Reply 17 of 25
    carnegiecarnegie Posts: 1,078member
    gatorguy said: The book case concerned illegal collusion that resulted in price fixing between Apple and the major publishers. 65% market share is absolutely a relevant statistic when it comes to a company's exposure to antitrust claims. 
    No it isn't.

    U.S. antitrust law is primarily based on demonstrating harm to consumers. That's why a multi-company conspiracy TO RAISE PRICES ON CONSUMERS is a violation even though it was limited to NYT bestsellers and not the entire ebook market. Like I noted, Amazon had nearly 90% control of the ebook market and was not subject to any antitrust lawsuits regarding ebooks. And still aren't today despite having a commission structure that makes Apple's look positively timid. How do you explain that if you think 65% market share is important in regards to U.S. antitrust law? Amazon would be a slam dunk for lawsuits if that was important. 
    Amazon is subject to an antitrust lawsuit relating to its eBook business. There's one going on now in a federal district court in the Southern District of New York - In Re Amazon.com, Inc. eBook Antitrust Litigation. In that case a magistrate judge recommended that Section 2 claims against Amazon shouldn't be dismissed based in part on findings that the plaintiffs adequately pled that Amazon has monopoly power based on its high market share. Amazon's eBook market share is definitely relevant in that antitrust action.

    That said, an antitrust allegation wouldn't necessarily be a slam dunk just because a defendant has high enough market share in a relevant market. That's because there's another element to Section 2 violations... anticompetitive behavior.
    muthuk_vanalingamwilliamlondongatorguywatto_cobra
  • Reply 18 of 25
    gatorguygatorguy Posts: 24,211member
    gatorguy said:
    gatorguy said: I see how they apply to a potential competition lawsuit filing by the DoJ. 
    Then explain how you think they apply. You brought up Bainian market power...provide your example of Apple using that power. 
    Could doing so change your opinion that market share isn't pertinent? Nope. I understand why I believe it's important. I put some effort into offering discussion links indicating why it would be important. You agreeing isn't important. You would disagree anyway. If market share is important then the actual lawyers will raise that point, and they won't care if any of us here agree with them either. 
    The difference between your own disagreement and my disagreement is that I provide a reason for disagreeing. There's a thought process behind it. Your disagreement is just some links and antitrust vocabulary terms with no thought process. You posted "Bainian market power" without having any idea why you were posting it. 
    I know precisely why I posted, and understand why the comments seem pertinent. Expecting you to agree in any way is not pertinent, changes nothing.

    Apple does raise the costs of competitors in a few ways, with the most visible one being handicapping competing services in demanding a high percentage of their revenues within the App Store, while at the same time disallowing the iPhone app sales that take part outside of Apple's own services without taking a cut for themselves. 

    You can add agreements between the company and Amazon that restrict competing sellers' access to one of the world's premier marketing sites. Then add in using their market power to shift promotion and some support costs to carriers rather than Apple, fees typically borne by the manufacturer of competing handsets. 

    Bainian market power as I understand it.

    So I'll presume you'll now be patient enough to see if the DoJ legal professionals educated in antitrust law raise any of those same points and how they present the case, assuming there is one. It's absolutely beyond you or me to affect it. 
    edited February 29 muthuk_vanalingam
  • Reply 19 of 25
    carnegie said: The Apple e-book decision you refer to was based on Section 1 of the Sherman Act so Apple's market share didn't really matter there.
    And Section 2 of the Sherman Act is unlikely to apply to the App Store. Epic already tried that in federal court and failed. 

    "Anticompetitive conduct is evaluated under the "rule of reason." Id. at 991. First, plaintiff must show "diminished consumer choices and increased prices" as "the result of a less competitive market due to either artificial restrains or predatory or exclusionary conduct" by the defendant. Id. Then, "if a plaintiff successfully establishes a prima facie case ... by demonstrating anticompetitive effect, then the monopolist may offer a ‘procompetitive justification’ for its conduct." Id. (internal quotation marks omitted) (quoting Microsoft , 253 F.3d at 59 ). For example, the monopolist may show "that its conduct is ... a form of competition on the merits because it involves, for example, greater efficiency or enhanced consumer appeal." Id.(internal quotation marks omitted) (quoting Microsoft , 253 F.3d at 59 ). Finally, if defendant offers a non-pretextual procompetitive justification, the burden shifts back to the plaintiff to rebut defendant's claim or "demonstrate that the anticompetitive harm of the conduct outweighs the procompetitive benefit." 

    https://www.justice.gov/archives/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-1#:~:text=Section%202%20of%20the%20Sherman%20Act%20makes%20it%20unlawful%20for,foreign%20nations%20.%20.%20.%20.%22

    How are you going to establish "diminished consumer choices" when app developers like Epic can release their products on multiple platforms? Fortnite wasn't even developed for mobile originally. Epic made huge amounts of $$ on consoles/PC before porting the app to mobile platforms. Another app developer, BlueMail, had their antitrust lawsuit against Apple dismissed by a judge that cited their own marketing which touted the success of the app on other platforms. How are you going to establish "increased prices" when Apple doesn't set the price of apps on the App Store? I certainly don't remember any criticism of Fortnite's pricing scheme on iOS relative to other platforms when it was originally launched. Like I've pointed out before, prices for apps on iOS are in line with Android and both iOS/Android have app prices that are generally lower than either Windows/Mac or Xbox/Playstation/Switch. That's reality. The mobile era didn't result in higher prices for consumer apps. If anything, it resulted in lower prices. 
    edited March 1
  • Reply 20 of 25
    gatorguy said: So I'll presume you'll now be patient enough to see if the DoJ legal professionals educated in antitrust law raise any of those same points and how they present the case, assuming there is one. It's absolutely beyond you or me to affect it. 
    If the DOJ cites Bainian market power as part of their lawsuit then it won't have anything to do with the App Store, which in turn won't have anything to do with the EU or the DMA.
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