The Justice Department’s antitrust lawsuit against Apple aimed at getting the tech giant to reduce entry barriers to its app store is likely to clash with the U.S. goal of preventing apps like TikTok from getting on Americans’ smartphones.
In the lawsuit, the Justice Department and attorneys general of 15 states and the District of Columbia allege that Apple Inc. violated antitrust laws by using its dominant iPhone platform to freeze out competitors and used its app store clout to keep some apps out and raise prices for consumers.
Attorney General Merrick B. Garland said that Apple “selectively restricts access to the points of connection between third-party apps and the iPhone’s operating system, degrading the functionality of non-Apple apps and accessories.” The goal of the lawsuit, Garland said, is not to stop Apple from vetting apps but to ensure that Apple does not engage in “exclusionary” actions that affect competitors.
Just a week earlier, the House overwhelmingly passed legislation that would require Apple and Google to stop allowing TikTok on their app stores unless ByteDance, the Chinese owner of the app, divests it to a company not owned by a foreign adversary. Lawmakers are concerned that TikTok is sending Americans’ data to Chinese authorities.
The Senate has yet to take up the measure. President Joe Biden has said he would sign the bill if it clears Congress.
The two actions appear to contradict each other in terms of the role that the U.S. government expects app store owners to play, said Daniel Castro, vice president at the Information Technology and Innovation Foundation, a think tank that focuses on innovation policies.
Congress wants “these platforms to be gatekeepers only sometimes, when they want them to potentially block TikTok. But they don’t want them to be gatekeepers when they are doing things to ensure the privacy, security and integrity of their platforms,” Castro said.
“You can’t have it both ways,” he said.
Apple has said its iPhone platform and the app store policies are designed to protect users’ privacy and security and ensure that different Apple devices “work seamlessly together.” The company intends to “vigorously defend” the allegations of the lawsuit, a company spokesperson said in an email.
Sen. Amy Klobuchar, D-Minn., who chairs the Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust and Consumer Rights, welcomed the Apple lawsuit.
“As the gatekeeper controlling the smartphones used by more than half of all Americans, Apple has restricted consumer choice, raised prices, and preferenced its own products and services — reducing quality and innovation across the digital economy,” Klobuchar said in a statement.
Klobuchar said she would continue to press for her legislation that calls for app store owners to stop giving preferences to their own apps and services over those of competitors.
While the United States is grappling with the twin challenges of the security risk posed by TikTok and ensuring that the tech marketplace remains fair and open, across the Atlantic the European Union’s Digital Markets Act went into effect March 6. The EU law requires Apple and Google to allow consumers to access and load apps that are outside the two companies’ app stores.
Separately, the EU also imposed a $2 billion fine on Apple in early March for unfairly favoring its own music streaming service and forbidding rivals like Spotify from offering cheaper subscriptions outside the Apple app store.
The EU approach would “basically allow sideloading of apps,” letting iPhone users put whatever apps they want on their smartphones, “which completely undercuts Apple’s closed model,” Castro said.
The U.S. antitrust lawsuit’s goal of opening up Apple’s platforms to third-party payment systems, smartwatches, messaging apps and streaming services could not only pose security and privacy risks to consumers but also help non-U.S. tech companies gain ground on American companies, Castro said.
Justice Department officials, including acting Associate Attorney General Benjamin Mizer, have compared the latest lawsuit to the department’s 2001 antitrust action against Microsoft alleging that the company used its Internet Explorer web browser to shut out competition.
Although the U.S. District Court for the District of Columbia ruled that Microsoft’s actions amounted to an unlawful monopoly, the decision was partially overturned on appeal. The two sides later reached a settlement, and Microsoft agreed to change some of its practices.
At a news conference last week, Mizer and Assistant Attorney General Jonathan Kanter said the Microsoft case paved the way for the launch of “iTunes, iPod and eventually the iPhone, free from anti-competitive restrictions, excessive fees and retaliation.”
The officials said the current case against Apple could spur innovation and new technologies from other companies.
But the rise of tech competitors from China and other parts of the world could mean that weakening Apple may not necessarily lead to other U.S. companies taking its place but rather companies outside the U.S. stepping in to take advantage, Castro said.
“The global economy and competition looks very different today than it did 25 years ago,” Castro said. “There’s no reason to think that the next messaging apps, streaming services and digital payment systems will necessarily be built in the United States” if Apple and other U.S. companies are weakened as a result of antitrust actions, Castro said.
After all, TikTok, one of the most successful social media apps, was not built in the United States, Castro said.
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