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US Files Antitrust Lawsuit against Apple, Alleging iPhone Monopoly

Here we go again. The US Justice Department, 15 states, and the District of Columbia have filed a lawsuit against Apple, accusing it of violating antitrust laws to maintain an illegal iPhone monopoly. The lawsuit focuses on five areas: super apps, cloud streaming game services, messaging apps, smartwatches, and digital wallets, arguing that Apple explicitly took steps to prevent other companies from competing with Apple on the iPhone platform. Apple’s stance has long been that it restricts what third parties can do on the iPhone platform to protect users.

Some of the lawsuit’s arguments are more compelling than others, such as those related to cloud gaming. Apple’s claims that allowing an app that could stream multiple games would be a security risk always seemed overblown, and in January 2024, Apple opened up to streaming game services. It wouldn’t seem that additional remedies would be necessary here.

Similarly, restricting tap-to-pay payments using the iPhone’s NFC chip to Apple Pay seems to have been purely a business decision—Apple takes a cut of all Apple Pay transactions—since Apple now says it will “provide third-party developers in the European Economic Area with an option that will enable their users to make NFC contactless payments from within their iOS apps, separate from Apple Pay and Apple Wallet.” If it can be done in Europe, it could happen in the US.

In other cases, the lawsuit’s arguments seem more problematic, such as when it accuses Apple of blocking super apps like the Chinese version of WeChat, which offers nearly 1.3 billion users messaging capabilities, digital payments, an app ecosystem, livestreaming, location services, and more. Given the current tension surrounding TikTok’s privacy abuses and Chinese ownership, it’s awkward to argue in favor of inviting Asian super apps like WeChat into the US. More generally, apps that attempt to integrate too many unrelated functions usually do many of them poorly.

The lawsuit also calls out Messages, which Apple privileges for SMS messages, and accuses Apple of a degraded SMS experience with unencrypted conversations, grainy videos, and a lack of typing indicators. Indeed, third-party apps can’t send or receive SMS messages (I had to check—it’s not a thought that had ever crossed my mind), but you can’t blame Apple for the primitive nature of SMS/MMS and carrier restrictions on file sizes. The suit also criticizes Apple for identifying SMS conversations with green bubbles—would it be better if there was no way to tell that an SMS conversation lacked certain features? Also, Apple has said it will support RCS, the next standard in carrier-level messaging (see “Apple to Support RCS in Messages Next Year,” 17 November 2023), so criticisms here seem misplaced.

Some of the lawsuit’s harshest words are reserved for the Apple Watch but seem to get cause and effect backward. No one buys an expensive smartphone to be compatible with their less-expensive smartwatch—it’s the other way around. Of course, it’s in Apple’s interests to make devices that work exceptionally well together, and that’s especially true in the case of a smartwatch that can do relatively little on its own.

Overall, though, the complaints in the lawsuit aren’t misinformed or necessarily even wrong. Apple is all about platform lock-in. That’s an aspect of Apple’s tight integration between devices, apps, and services. There’s a reason “it just works” has become a catchphrase in the Apple world (even if it’s often used ironically when things don’t work). On the developer side, it’s hard to resist the massive size of the iPhone user base, even when Apple’s restrictions make it infeasible to develop certain kinds of solutions.

We can debate whether Apple should do this or that, but nothing Apple has done violates any laws—unless the company is deemed a monopoly. The lawsuit claims that Apple’s iPhone market share by revenue in the US is 70% of the “performance smartphone market” and over 65% of the overall smartphone market.

Those statistics will come under scrutiny. Apple’s market share by revenue is higher than Android’s in large part because iPhones are more expensive. The market share of users is much more equal, with Statstista saying that the iPhone holds 54% of the market share compared to Android’s 45%. Even more telling is the iPhone’s global market share, which Statista puts at 20.1%. That makes Apple foremost in the global smartphone market by manufacturer (Samsung is second with 19.4%), but it is far behind in platform, given Android’s nearly 80% share. (Are there any other smartphone operating systems of any import?)

The other awkward part of the lawsuit claiming that users have been harmed by Apple’s monopolistic actions with the iPhone is that people like their iPhones. Even if Apple’s claims of 99% customer satisfaction are overblown, independent reports show the iPhone as having an extremely high 81% customer satisfaction index. Sure, no one would complain if iPhones cost less, but in a world where inexpensive Android smartphones are readily accessible, the only way a premium-priced product like the iPhone could rise to a dominant position is by offering a compelling value proposition.

Apple will undoubtedly fight this lawsuit to the bitter end, so we can look forward to years of legal wrangling. Perhaps an antitrust lawsuit was inevitable, given the power of the tech giants and the amount of money sloshing around in the tech industry. Nevertheless, just as with the EU’s recent ruling (see “The EU Forces Open Apple’s Walled Garden,” 29 January 2024), it feels as though Apple brought this on itself through arrogance and refusal to play nice with developers.

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Comments About US Files Antitrust Lawsuit against Apple, Alleging iPhone Monopoly

Notable Replies

  1. Indeed, third-party apps can’t send or receive SMS messages (I had to check, too—it’s not a thought that had ever crossed my mind)

    One slight exception: if you are on Verizon, you can install the app Message+, which allows you to, indeed, send and receive SMS/MMS messages - in fact, you can do so when you are outside Verizon coverage and are using WiFi and not roaming, or on your non-cellular tablet (and it looks like you could install it on Apple Silicon Macs). (And, yes, I know that you can use SMS forwarding from your phone to various devices, but this works even if you lose your iPhone, it breaks, etc.)

    I have the app myself for the specific use case of traveling internationally and having my Verizon SIM fail somehow (so far that’s never happened.) Since there is no way to get a new Verizon SIM at a location outside the US (without having Verizon send by international dispatch), or I think even activate it if you are roaming off the network (so tat would rule out eSIM), this lets me still receive text messages.

  2. That works because the app doesn’t use your phone’s SMS capability, so there’s to action to run afoul of Apple’s API restrictions. It isn’t using your phone to send/receive SMS, but goes through a proprietary Verizon Internet gateway server.

    This is similar to the (now defunct) vtext.com web site that used to let you send SMS from a web browser.

    Unfortunately, Message+ is going to be turned off in June. The article I read (linked below) doesn’t say what replacement might be available. They mention that Andoid users can run Google Messages, but that doesn’t help iOS and desktop users.

    See also:

  3. Well now - that’s a bummer. If they sent me a notice of this, I never received it.

  4. My only comment at the moment is the blue-green bubble controversy.

    If it’s a blue bubble then you know the person you are contacting is also iMessage (on a Mac, iPhone, iPad, etc.). So you know your messaging doesn’t cost extra money, even if it’s in another country.

    If it’s a green bubble then you can encounter texting fees - especially if international. In that case, I seek another method, like the VOiP app I use for a U.S. number or WhatsApp or Messenger.

    The blue bubble is actually informative I think.

  5. I agree, it is indeed. IMHO there’s nothing wrong with a special color for iMessage for the exact reasons you mention (as well as signifying encryption).

    What could be improved IMHO is adding RCS instead of just falling back to SMS for Android. Apple is rumored to be doing exactly that with iOS 18 and if so good for them.

    Once they have it implemented this will become a moot point which strengthens Apple’s defense. OTOH having this charge hang over their heads is likely to pressure them to move quickly and IMHO that’s a good thing. Just like forcing them to adopt USB-C for charging iPhone or forcing them to allow links to external pages that explain alternate options vs. App Store.

  6. I don’t think the DOJ agrees. The complaint mentions the upcoming RCS addition and says this.

    Recently, Apple has stated that it plans to incorporate more advanced features for cross-platform messaging in Apple Messages by adopting a 2019 version of the RCS protocol (which combines aspects of SMS and OTT). Apple has not done so yet, and regardless it would not cure Apple’s efforts to undermine third-party messaging apps because third-party messaging apps will still be prohibited from incorporating RCS just as they are prohibited from incorporating SMS.

    Really the DOJ wants apps like WhatsApp to be able to be the system SMS/MMS app as well as send their own encrypted messages.

    When blue vs green bubbles is mentioned in the next paragraph of the complaint, the DOJ also notes that there is no way to send an encrypted message to an Android user. Apple will support RCS, yes, but not Google’s encrypted extensions to RCS. Messages will still be sent unencrypted whether the fallback is SMS/MMS or RCS. However, RCS should improve one thing mentioned by the DOJ - the reduced quality of photos and videos sent to non-iMessage clients over MMS.

  7. M C

    If you look at the lawsuit from a disgruntled developer perspective, it might make sense. Kind of. I bet the AGs all consulted the state IT department and got some very bad advice.
    But for consumers, and this is what the AGs are mostly referencing or eluding to, it is a badly thought out lawsuit.
    Like we all say, we are happy with the Apple way. We do not want change. It feels like the lawsuit is telling us we need some more stuff. No, we don’t. Oh, we know there is more stuff but, we choose Apple to keep away from the jungle. We picked one system focused on ensuring simplicity (mostly) and keeping the junk out (I really do not want the thousands of junky Android apps that might be added, we have enough junk in the App store already!)
    There are plenty of alternative apps too, of which many compete directly with Apple (Spotify, Amazon Music, Tidal, Pandora, Freegal (free music streaming via libraries), Facebook Messenger, MS Office, on and on, etc.) and they all poke in. But not to excess or risk or so old (see phone companies) it is junk. I think for the AGs to go more into it like they are saying, means they are running the company and not the shareholders, employees, and most importantly, the customers. Hey Apple user, you are going to get some junk you do not want because we, the AGs say so. Eh no…
    Hovering over all of this is the hypothesis of an Apple monopoly. Well, it seems the AGs got Android and Apple confused because Android is the monopoly. Indeed, there are no other viable competing smart phone systems out there because Android is so open, no one has gone in to compete! They can’t. The jungle is flooded.
    But, the one, the one company that can compete with Android uses a different model and has done so very well. The Apple canoe floats above the Androids in the jungle river. I like being in the canoe to avoid the caimans.
    This lawsuit is doomed to fail. I can hear the Apple legal department sharpening their swords on this one. I’ll put my money on Apple. I predict, total victory over this silly lawsuit.

  8. For all kinds of reasons I will not message passwords to Android or Green bubbles. Or Credit Card numbers. Or similar. DOJ wants to to NOT be able to tell if I trust the other end.

  9. I’m going to expand on this. The DOJ says Apple must let others use secure messaging but not be able to tell of the other end is secure.

    Sorry but these things are NOT separatable.

    EDIT:
    By this I mean allowing a message to appear to be secure when sent but not being able to judge the security at the other end is a totally bad idea.

  10. I am typing all of this in no way because I agree that this complaint is valid, but, to comment:

    I really don’t think that’s the DOJ point when they bring up blue vs. green bubbles, and you are really proving their point. This is what the complaint says:

    1. … For example, if an iPhone user messages a non-iPhone user in Apple Messages—the default messaging app on an iPhone—then the text appears to the iPhone user as a green bubble and incorporates limited functionality: the conversation is not encrypted, videos are pixelated and grainy, and users cannot edit messages or see typing indicators. This signals to users that rival smartphones are lower quality because the experience of messaging friends and family who do not own iPhones is worse—even though Apple, not the rival smartphone, is the cause of that degraded user experience. Many non-iPhone users also experience social stigma, exclusion, and blame for “breaking” chats where other participants own iPhones. This effect is particularly powerful for certain demographics, like teenagers—where the iPhone’s share is 85 percent, according to one survey. This social pressure reinforces switching costs and drives users to continue buying iPhones—solidifying Apple’s smartphone dominance not because Apple has made its smartphone better, but because it has made communicating with other smartphones worse.

    I think what the DOJ is alleging is that Apple should do at least one of two things that they have not done:

    1. Make an iMessage app for Android so that Android users can participate in encrypted chats.

    2. Allow a third party app, like WhatsApp, to act as the default messaging app, to make it easier for people to switch to another platform (let’s face it - the only choice really is Android) without losing all of their messages history, since there is no iMessage capability for Android.

    Some more from the complaint:

    1. Apple recognizes that its conduct harms users and makes it more difficult to switch smartphones. For example, in 2013, Apple’s Senior Vice President of Software Engineering explained that supporting cross-platform OTT messaging in Apple Messages “would simply serve to remove [an] obstacle to iPhone families giving their kids Android phones.” In March 2016, Apple’s Senior Vice President of Worldwide Marketing forwarded an email to CEO Tim Cook making the same point: “moving iMessage to Android will hurt us more than help us.”

    2. In 2022, Apple’s CEO Tim Cook was asked whether Apple would fix iPhone-to- Android messaging. “It’s tough,” the questioner implored Mr. Cook, “not to make it personal but I can’t send my mom certain videos.” Mr. Cook’s response? “Buy your mom an iPhone.”

    3. Recently, Apple blocked a third-party developer from fixing the broken cross- platform messaging experience in Apple Messages and providing end-to-end encryption for messages between Apple Messages and Android users. By rejecting solutions that would allow for cross-platform encryption, Apple continues to make iPhone users’ less secure than they could otherwise be.

    This last paragraph, of course, ignores the fact that the app in question could have jeopardized user security by connecting to Apple’s servers in an unauthorized way, but I think that this is just a poor way for DOJ to continue to insist that Apple should open iMessage to other platforms. There is iCloud Drive for Windows, Apple Photos for Windows, Apple Music for Android - why not iMessage for Android? Why no Google’s RCS encrypted extensions on the iPhone Messages app?

    But, again, what the DOJ is complaining about is exactly what you say: by showing green bubbles in the Messages app, Apple is signaling to you that you cannot send an encrypted message with that app to that person or group, and they should create a way so that can happen. (Ignoring that you can easily just decide to use one of many cross-platform encrypted messaging apps and services like WhatsApp, Signal, Threema, etc.) But - I see what the DOJ means - requiring users to make this choice makes it, arguably, unnecessarily hard to send and receive encrypted messages.

  11. I agree with you. It seems that these law agencies, courts and the EU are only listening to these pathetic developers and not to consumers. I may have missed something, but in the Epic coverage, EU DRM debates, etc I have never read that these agencies and courts have sought or received evidence from consumers. Probably because these consumers would be saying that they are happy with the way things are with Apple.

    I don’t want to expose my phone and computer usage to scammers, dubious payment gateways, viruses, and the rest. I am happy with the Apple walled garden. I don’t care if some app developers find it difficult to business with Apple, and heaven forbid, have to pay to use Apple’s app shop and services. They just want to be free-riders. I don’t care if they go out of business. Most apps appearing these days in the Apple store are not worth considering - they are just low grade copies of copies.

  12. I think that this is similar to penis envy; others want what Apple has and want it THEIR WAY! Apples system works great and as a retired Senior Systems Programmer that I know something about systems and interoperability. I worked in the Natural Gas industry for many years where interoperability is required between components and companies; their Suppliers need data online as do Shippers, Pipelines, and Customers.

    Who ever said that EVERY product had to work with every SYSTEM or PRODUCT anyway? Is this a law? I don’t think so! This looks to me to be the DOJ sticking its nose in where it isn’t supported by LAW. Please, someone, are there laws to back their position up or are they overreaching?

    I have bought Apples products for decades because they WORK, are interoperable between products, and have lasting value.

    It might be nice if EVERYONES products worked with each other but then all products would have to share the same infrastructure, standards, languages, and more. Many of these are patented and they and other components change frequently. The cost of keeping up with this would likely bankrupt many or most developers.

    The DOJ’s next demand could well be that every APP must work on ALL PLATFORMS and support ALL LANGUAGES. All of this seems like overreach - overkill.

    One person’s thoughts.

  13. Garland is probably the worst AG since John Mitchell. How could he allow such a frivolous case be filed? I haven’t always liked some of the App Store policies, and I try not to use the Mac App Store if I can help it, but this lawsuit seems to be tailor-made to help producers of malware. One just has to look at, as a developer of the system calls it, the toxic hell-stew of Android.

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