Apple Rotten, Says US Government.

Photo by Giuseppe CUZZOCREA on Unsplash Is Apple rotten to the core? The US federal government is claiming in a lawsuit that the cell phone giant broke the rules.
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Apple, one of the world’s richest companies, is now being sued by the U.S. government and more than a dozen states, accused of abusing its market power as a monopoly to edge out rivals and ensure customers keep using its products.

Apple first introduced the iPhone in 2007, which soon became incredibly popular, and though expensive, many people bought the device through monthly payments over two years, which made it affordable.

The heart of the current lawsuit centers around claims that Apple stopped smaller companies from accessing the hardware and software in its iPhones, which led to fewer options for customers.

Apple Corporation is worth nearly $3 trillion, making it one of the highest valued companies in the world.

And its iPhone is one of the most popular phones on earth, dominating the global market, according to market analyst firm IDC. (The most popular phone of all time was the inexpensive Nokia 1100 which sold 250 million handsets.)

The Justice Department alleges it’s not purely by chance that  that Apple has been able to ensure its place as the market leader in the United States, though this is by no means the case worldwide.

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” said Attorney General Merrick B. Garland. “If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

The Justice Department says that because Apple imposes contract restrictions on developers, it means new innovation is kept within its ecosystem. The government says this allows Apple to take more money from consumers, developers, content creators, publishers, small businesses and more.

The case will also examine whether Apple making its devices easily integrate with each other, but not with non-Apple products, creates unfair hardware limitations that block competitors from the market.

A recent saga that drew regulators’ attention was, reports The Guardian,  Apple’s interactions with the messaging startup Beeper, which last year launched a product that would allow non-iPhone users to send and receive iMessages. Beeper debuted its “Beeper Mini” app in December, but less than a week later Apple appeared to find ways to disable the app’s functions and issued a vague statement citing privacy and security concerns.

Because of these restrictions, the Justice Departments says Apple has been able to block innovation in super apps with a broad functionality and has ensured its iMessage system keeps people from using cross-platform messaging apps.

For example Whatsapp is a globally popular messenging and calling service used by billions of people, but it is in direct competition with Apple iMessage.

The government also says that Apple has thrown around its power to suppress innovation in streaming services for video games, non-Apple smartwatches, and third-party party digital wallets that let users tap-to-pay.

In a statement reported by Barron’s , Apple said: “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”

In the lead up to this lawsuit, Apple reportedly met with Justice Department officials multiple times, according to the New York Times, but were presumably unable to reach a settlement.

Under the Biden administration, the Justice Department and the Federal Trade Commission have filed antitrust lawsuits against several leading tech companies.

The Department of Justice went to trial against Google parent Alphabet last autumn over allegations that it unfairly blocked competing search engines.

This is the third lawsuit the Justice Department has brought against Apple over antitrust violations in the past two decades. European regulators have also targeted the company over anticompetitive behavior, including allegations that it unfairly blocked competing music streaming service.

Apple has been involved in a number of lawsuits with mixed results. Just last week Apple agreed to pay $490 million to settle a class-action lawsuit that alleged Chief Executive Tim Cook defrauded shareholders by concealing falling demand for iPhones in China.

 

Sources: NPR, news agencies.
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