The Department of Justice made good on whispers of a major, imminent antitrust enforcement action against Apple by announcing the lawsuit Thursday, accusing the iPhone giant of violating the law by exerting its “monopoly power” to stay ahead of smartphone competition.
U.S. Attorney General Merrick Garland said that the DOJ, 15 states, and Washington, D.C., have joined in a New Jersey-based federal lawsuit that alleges Apple has violated § 2 of the Sherman Antitrust Act, which “prohibits monopolization or attempts at monopolizing any aspect of interstate trade or commerce.”
That offense, the law says, can subject Apple to a fine “not exceeding $100,000,000.”
“Apple has maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits, but by violating antirust law,” Garland said, adding that the alleged anticompetitive conduct “hurts consumers” with higher prices and stifled innovation and hurts developers forced to compete on an uneven playing field.
Garland said Apple’s engaged in “exclusionary, anticompetitive conduct” by imposing “contractual restrictions and fees that limit the features and functionality that developers can offer iPhone users” and by “selectively restrict[ing] 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.”
In essence, Apple “consolidated” its monopoly power “not by making its own products better but by making other products worse,” Garland said. He mentioned “green text” messages — as opposed to the blue ones that iPhone to iPhone users will see — as an example of Apple “deliberately” lessening its own products’ “functionality” to hurt competition.
“As any iPhone user who has ever seen a green text message or received a tiny, grainy video can attest, Apple’s anticompetitive conduct also includes making it more difficult for iPhone users to message with users of non-Apple products,” he said. “It does this by diminishing the functionality of its own messaging app and by diminishing the functionality of third-party messaging apps.”
Though most users wouldn’t know it, the attorney general continued, the difference between a green text actually affects user privacy.
“For example, if an iPhone user messages a non-iPhone user in Apple Messages, the text appears not only as a green bubble, but incorporates limited functionality: The conversation is not encrypted; Videos are pixelated and grainy; and Users cannot edit messages or see typing indicators,” Garland said.
Deputy Attorney General Lisa O. Monaco in brief remarks emphasized that “no company is above the law” and asserted that Apple should be held accountable for “locking its customers into the iPhone while locking its competitors out of the market.”
“Apple has gone from revolutionizing the smartphone market to stalling its advancement. This shift has smothered an entire industry. From users to app developers to the next generation of innovators,” Monaco said.
“Apple’s anticompetitive conduct must stop. 16 other attorneys general agree, and have joined us in bringing this lawsuit against Apple.”
Apple, vowing to combat the lawsuit “vigorously,” has called the DOJ’s case “wrong on the facts and the law.”
This is a developing story.
The post DOJ takes direct shot at ‘green’ text messages while unveiling major lawsuit against Apple for wielding ‘monopoly power’ over smartphone market first appeared on Law & Crime.
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Author: Matt Naham
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