Will the US demolish Apple’s digital fortress?
The US Justice Department accuses Apple of hindering competition and innovation in the smartphone market with its "walled garden" approach. All the details
The US Department of Justice today announced a broad antitrust lawsuit against Apple. The Cupertino technology company, best known for iPhones, is accused of building an illegal monopoly in the smartphone industry that impedes competition and innovation.
THE BIDEN ADMINISTRATION'S AGGRESSIVE ANTITRUST
As reported by the Associated Press , President Joe Biden has asked the Department of Justice and the Federal Trade Commission (the government agency that deals with consumer protection and the prevention of anticompetitive business practices) to forcefully apply antitrust law, with the objective of guaranteeing fairness and competitiveness on the market.
This approach, also made up of greater controls on company mergers, has been criticized by some American business leaders, while it is praised by more progressive circles who recognize themselves for example in the figure of Lina Khan, the young president of the Federal Trade Commission known for his hostility towards Amazon .
WHAT IS APPLE'S "WALLED GARDEN".
According to the Department of Justice, Apple has built a sort of "digital fortress", i.e. a closed ecosystem, around its products (iPhones, iPads, iMacs, the Apple Watch and more), strengthening the interconnection between their own hardware and software but significantly limiting the possibilities of contact with the devices and programs of other companies. This Apple exclusivity is often referred to as a " walled garden". However, it is a strategy that has borne fruit, given that the company can show an annual turnover of almost 400 billion dollars and, until recently, a market value of more than 3000 billion.
APPLE'S DEFENSE
In fact, Apple defends its walled garden , describing it as a necessary feature appreciated by users of its products because it would guarantee high protection for their personal data. Apple's exclusivity is also a way to underline the differences with smartphones and other mobile devices that use Google's Android software, which is decidedly less restrictive and in fact licensed to a large number of manufacturers.
WHAT THE AMERICAN ANTITRUST THINKS
The Department of Justice thinks differently, however, and believes that the walled garden is a tool that Apple uses to fend off competition and create market conditions that allow it to raise sales prices (therefore to the detriment of consumers), while stifling innovation.
In a statement, Attorney General Merrick Garland said that “consumers should not have to pay higher prices because companies violate antitrust laws. We believe Apple has maintained monopoly power in the smartphone market not simply by positioning itself ahead of the competition on the merits, but by violating federal antitrust law. If left unchallenged, Apple will continue to strengthen its monopoly on smartphones."
AND IN EUROPE?
In the European Union, Apple had to partially open its "walled garden" to comply with the Digital Markets Act, the law for the promotion of competition on digital markets which requires the so-called Big Techs not to favor their own services on their platforms over those of other companies. For this reason, Apple had to allow the possibility of downloading and installing applications on iPhones from stores other than its own.
European authorities recently imposed a fine of 1.8 billion euros on Apple for the accusation of having damaged competition in the sector of music streaming through the iPhone (the leader of this market, however, is the app Swedish Spotify).
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/apple-causa-antitrust-dipartimento-giustizia/ on Thu, 21 Mar 2024 15:26:57 +0000.