The Department of Justice Takes Aim at Apple’s iPhone Empire
“The ubiquity of iPod and iTunes on Windows, in part because of a successful antitrust enforcement action against Microsoft, contributed to the development and success of Apple’s next flagship product—the iPhone,” the complaint explained. “But after launching the iPhone, Apple began stifling the development of cross-platform technologies on the iPhone, just as Microsoft tried to stifle cross-platform technologies on Windows.”
Part of that dominance comes from the App Store, where iPhone users can install a wide variety of apps by third-party developers onto their devices. For the overwhelming majority of iPhone owners, the App Store is the exclusive means by which they can download these programs. Apple, according to the government, wields near-dictatorial power over developers who want to distribute apps through the App Store, mainly through contractual conditions and lack of alternatives. It also collects hefty fees on every transaction through the store, in what the complaint described as “monopoly rents.”
“As Apple exercised its control of app distribution and app creation, Apple slowed its own iPhone innovation and extracted more revenue and profit from its existing customers through subscriptions, advertising, and cloud services,” the government alleged. “These services increase the cost of switching from the iPhone to another smartphone because many of these services—including its proprietary gaming, cloud storage, and news service—are exclusive to the Apple ecosystem, causing significant frictions for iPhone users who try to use alternative services on another smartphone.”