Biden administration to take legal action against Apple in significant antitrust case, sources reveal

The US Justice Department is set to file a significant antitrust lawsuit against Apple on Thursday, as reported by three individuals who are knowledgeable about the situation.

This lawsuit has been highly anticipated and follows numerous claims from critics that Apple has been stifling competition through its strict app store rules, high fees, and its closed-off approach to its hardware and software. In this approach, Apple tightly regulates how third-party tech companies can engage with its products and services.

Apple allows iPhone users to easily share high-quality photos and videos with each other. However, when sending multimedia texts to Android phones, the process is slower and the quality is often lower. Critics argue that even though Apple recently agreed to enhance the quality standard for text messages sent to Android phones, they still maintain the messages in green bubbles, creating a perceived class distinction.

Additionally, Apple grants its own products special access to certain parts of its hardware that it restricts other companies from utilizing. This unique privilege results in a seamless and almost magical user experience for iPhone users with AirTags, while competitors' products have more limited capabilities.

This year, Apple was required by European regulations to allow other companies access to the iPhone's tap-to-pay hardware chip, which has led to the development of competing digital wallets. However, these regulations only apply to the European Union.

Additionally, Apple continues to charge a significant 30% commission on most sales made through its app store. This has been a common grievance among companies attempting to sell subscriptions, as they feel that Apple's dominant position in the smartphone market compels them to pay an unreasonably high commission fee.

For years, Apple has faced legal challenges and criticism accusing the company of anticompetitive practices. Despite this, Apple has maintained a strong consumer reputation and used a precise public relations and legal strategy, similar to the precision seen in the manufacturing and oversight of its products.

The Justice Department's lawsuit is anticipated to address various practices of Apple. This legal action is part of the Biden administration's ongoing efforts to enforce US antitrust laws on Big Tech companies. Notably, Apple is the only major tech company that has not yet been sued by the federal government for alleged antitrust violations.

Apple was mentioned in a detailed House report in 2020, which stated that the company, along with Meta, Google, and Amazon, holds "monopoly power."

This legal scrutiny may impact Apple's stock price, currently valuing the company at just under $3 trillion, and could lead to changes in policies, business strategies, products, and applications. There is even a possibility of Apple having to divest some of its assets. Apple, founded by Steve Jobs in the 1970s, may need to make significant adjustments due to this situation.

Apple’s stock dipped slightly by less than 1% on Thursday, following the widely anticipated lawsuit. The lawsuit against Apple by the DOJ, along with ongoing antitrust cases against Google, is seen as a significant move by the Biden administration to promote competition and reduce prices. This legal action will also serve as a test to determine the extent to which courts are willing to apply long-standing antitrust laws to the current digital economy.

Jonathan Kanter, the top DOJ antitrust official under President Biden, is closely monitoring the Apple case, which is gaining a lot of attention. Kanter, known for previously representing Google's rivals like Microsoft and Yelp, is seen as a new breed of regulators who are focused on addressing corporate consolidation and anticompetitive behaviors that have negatively impacted consumers over the years. Alongside Lina Khan from the FTC, Kanter believes that the U.S. has allowed harmful practices such as higher prices, limited choices, and decreased innovation to persist unchecked for too long.

Eric Migicovsky, a tech entrepreneur, created an app called Beeper Mini to address the "green bubble" issue for Android phone users. This app allowed Android users to message iPhone users without any restrictions. However, Apple quickly shut down the app.

After three days, Apple began to target us," Migicovsky shared. "They put in a lot of effort to disrupt Beeper Mini users by disconnecting the connection or making it less reliable. These actions have led to complaints about Apple's app store being anticompetitive.

In 2020, Apple went head-to-head with Epic Games, the creator of the popular video game "Fortnite."

Federal courts ruled that Apple is not acting as an illegal monopolist when it comes to distributing iOS apps. This decision sheds light on the challenge of accusing Apple of federal antitrust violations. However, Apple was found guilty of breaching a California competition law and made changes to its app store policies as a result of a court mandate.

Legal experts suggest that the Justice Department will face challenges in proving how Apple has harmed competition and whether the benefits to consumers outweigh any antitrust violations. Europe has also taken action against Apple.

Apple faced pressure from both the US government and the European Union to change its business practices. In March, a new European Union law, the Digital Markets Act (DMA), came into effect, requiring Apple to make significant adjustments. As a result, Apple announced that users in the EU will now have the option to download apps from third-party app stores.

Epic and other critics are accusing Apple of violating EU law. Epic filed a complaint with competition authorities before the DMA came into effect, claiming that Apple prevented them from launching their own app store on iOS. The European Commission is currently investigating the matter.

Apple, once a small upstart, has now become a tech behemoth.

Apple has always been known for its reputation as a high-end, stylish brand, focusing on delivering a top-notch user experience and sleek design. This has set Apple apart from competitors like Microsoft and Google for many years. However, as more app developers and consumers began to voice their concerns about Apple's strict policies, the company's approach came under scrutiny.

During the leadership of Steve Jobs, Apple became a cultural icon, representing a clash between traditional business attire and casual clothing. According to James Bailey, a professor at the George Washington University School of Business, Apple was constantly pushing the boundaries of innovation, staying ahead of the game in the tech industry.

Now, Apple's recent progress has been described as more gradual rather than groundbreaking by Bailey. He mentioned that CEO Tim Cook has been concentrating on managing finances and increasing market presence.

Bailey also mentioned that Apple remains financially strong, but their reputation for innovation is starting to fade.

This is a developing story and it will be updated.

Editor's P/S:

The Justice Department's