The gargantuan Department of Justice lawsuit filed at Apple last week could ultimately result in Apple being forced to break up as a company, just like Microsoft nearly was in its spat with the DOJ back in 2001.
Unless you’ve been hiding under a rock for the last few days, you’re undoubtedly aware that the DOJ has filed the lawsuit of the century against the iPhone maker. Apple vs. the United States claims the company has a monopoly on its iPhone ecosystem, stifling competition and blocking out rivals from access to some of its platform systems such as Apple Pay. Now, a new report reveals that the DOJ wants all options on the table including a break-up order, something that could inspire the EU to seek a similar remedy on the other side of the pond.
The DOJ lawsuit seeks “relief as needed to cure any anticompetitive harm,” an open-ended request that could possibly include Apple being forced to sell off parts of its business. As Reuters reports, “The U.S Department of Justice on Wednesday warned Apple, a $2.7 trillion company, that a break-up order is not excluded as a remedy to restore competition.” Reuters further reports that “people with direct knowledge of the matter” believe that Digital Markets Act violations “could lead to hefty fines and even break-up orders for repeated breaches.” The EU announced yesterday that it was investigating both Apple and Google’s compliance with its new laws.
I remember when we broke up
As the report notes, EU competition chief Margrethe Vestager “said that requiring Google to sell some of its assets seemed to be the only way to avoid conflicts of interest as it would prevent Google from allegedly favoring its own online digital advertising technology services versus advertisers and online publishers.” Another European parliament member reiterated “If they don't comply with the DMA, you can imagine what Parliament will ask for. Break-ups. The ultimate goal is to make markets open, fair and allow more innovation.”
The recourse of breaking up either Google or Apple would be reminiscent of the initial resting place of the DOJ case against Microsoft at the turn of the millennium. A district court in the DOJ case against the Windows maker over its monopoly on the web browser market for Windows initially ordered a breakup of Microsoft as the best course of action. Microsoft would have been forced to split into two companies, one to make Windows, and the other to make all of its other software. An appeal court overturned that ruling in 2001.
It seems then that lawmakers on both sides of the Atlantic are at least tabling the idea that Apple might have to divest some parts of its business in order to fully comply with regulations. However, it’s possible this is nothing more than legal saber-rattling. One anonymous Commission official noted that in the EU there is much less of a tradition of splitting up companies, describing it as a “last resort.” As per Max von Thun, director of the advocacy group Open Markets, “What's more likely is they (DOJ) go for remedies like opening up hardware functionality or making sure developers aren't being discriminated against in terms of pricing.” Von Thun reckons the DOJ “want to say that everything's on the table, but it doesn't necessarily mean they'll choose that path.” Another legal expert quoted told the outlet that breakups are “very tricky” and face “formidable legal challenges.” Furthermore, Apple’s integration of its software and hardware products would also make a proposed break-up more complicated, “You are talking about something that is integrated, for example you can't force Apple to divest its App Store,” said Geradin Partners lawyer Damien Geradin.
The DOJ lawsuit against Apple is likely to take years to unravel. Meanwhile, the EU has opened its aforementioned investigation into Apple’s compliance with the DMA. In a statement, an Apple spokesperson told iMore “We’re confident our plan complies with the DMA, and we’ll continue to constructively engage with the European Commission as they conduct their investigations. Teams across Apple have created a wide range of new developer capabilities, features, and tools to comply with the regulation. At the same time, we’ve introduced protections to help reduce new risks to the privacy, quality, and security of our EU users’ experience. Throughout, we’ve demonstrated flexibility and responsiveness to the European Commission and developers, listening and incorporating their feedback.”
