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There are growing concerns that Apple could be facing an anti-trust investigation by the US Department of Justice.

Apple faces antitrust worries

What does antitrust mean?

In most jurisdictions around the world, it is illegal for large companies to band together to form agreements or “trusts” to behave in a particular way – for example, to all sell their products for the same high price. Laws designed to outlaw this type of behavior are called antitrust legislation.

However, the term is used more generally to refer to laws designed to prevent companies from engaging in any kind of anti-competitive action – that is, do anything that would tend to artificially distort competition within a market.

One common myth is that antitrust laws only apply to monopolies. This is very much not the case: They apply to any company large enough to have a dominant position in any market. As we shall see below, the definition of the word “market” can be crucial to deciding whether antitrust concerns arise.

Why is Apple facing antitrust investigations?

First, Apple is a very large company, and it would be very easy for a company of that size to commit antitrust violations, so it is to be expected that any massive corporation would be put under the antitrust microscope.

But in Apple’s case, there are some more specific concerns based on the company”s market dominance in particular areas. These are addressed below.

What are the antitrust concerns with Apple?

There are a number of different ones, in areas as diverse as ad tracking and Sign In With Apple, but here are three of the main ones.

The App Store

The biggest antitrust concern is the App Store.

Apple argues that it does not have a dominant position in this market, as it considers the relevant market to be either “smartphones” or “apps.” Since the company holds a minority share of the smartphone market in most of the countries in which it operates, it believes it cannot be considered to have a dominant position.

Competition regulators tend to take the view that the relevant market is “iOS apps,” and here Apple has a 100% monopoly on their sale and distribution. Edge cases aside, there is no way for a developer to bring an iOS app to market without selling it through the App Store.

Companies like Epic Games argue that they should be allowed to sell in-app purchases without Apple taking a cut of their revenue. The argument here is that Apple harms developers by taking part of their income, and consumers by forcing developers to charge more to make up for Apple’s cut. Apple, in response, says that it is perfectly normal for a company to take a cut of the sales it facilitates.

Default apps

Additionally, some companies accuse Apple of anti-competitive behavior by giving its own apps advantages over third-party ones.

One way that Apple does this, they say, is by pre-installing its own apps. For example, when the Apple Weather app is already installed on an iPhone when you buy it, then Apple’s own app has an obvious advantage over a competing app.

There is overlap here with the App Store concerns. For example, Apple Music and Spotify are competitors, but not only is Apple Music preinstalled, you can subscribe from within the app. If Spotify offered this same ability, it would have to pay Apple a 30% cut. Spotify can’t afford this, so users are forced to take a more long-winded route to subscription, which gives Apple Music an additional competitive advantage.

Relationships with carriers and retailers

Apple has also been found guilty in more than one country of exploiting a dominant position within the smartphone market to place undue demands on carriers and retailers.

Because the popularity of iPhones meant carriers had to sell them, Apple was able to dictate terms. In South Korea, for example, it was accused of imposing three onerous conditions on local carriers:

  • Carriers had to buy minimum quantities of each model, dictated by Apple
  • Carriers had to share the cost of warranty repairs or replacements
  • Carriers had to pay to run Apple’s own TV ads for the iPhone

Budget-focused carriers might, for example, want to buy only older and cheaper models, as that’s what their customers want, but Apple would force them to buy flagship models, too. And if a phone proved faulty, Apple wouldn’t just replace it, but would oblige carriers to meet some of the costs. Finally, although carriers had to pay the full cost of running iPhone ads on TV, they were only allowed to use Apple’s own ads, and the only thing they were permitted to change was adding their own logo to the final frame.

Additional areas of concern range from Apple Pay to a 4K video codec alliance!

What could happen to Apple as a result?

Antitrust outcomes will usually happen on a country-by-country basis, though there are exceptions. In Europe, for example, it is likely that the European Union will act as a bloc, and that any legislation applying to Apple will apply across all 27 member countries.

The worst-case scenario for Apple is for the US government to call for the breakup of the company. For example, it might be ruled that Apple Inc cannot run an App Store while also selling the iPhones on which those apps run. This is not a likely outcome, however.

A more likely scenario is a series of smaller changes. For example, Apple might be required to appoint an independent oversight board to carry out app reviews, or that it must allow Spotify to offer in-app subscriptions without taking a cut.

How is Apple responding?

In public, Apple’s stance is an outraged one, arguing that it does not have a dominant position and is doing nothing wrong. Behind closed doors, the company is aware that it either has to change some of its practices, or be forced to do so by law.

For example, while publicly declaring that a 30% commission on apps was industry standard, Apple made a massive U-turn by introducing the Small Business Program, with a 15% commission instead. Although touted as applying to the smallest developers, it in fact applies to 98% of them. It would be more accurate to say that the App Store now has a standard commission rate of 15%, with a higher 30% rate applying only to a tiny minority of companies.

The company has also quietly made a number of other changes in direct response to antitrust concerns, for example, opening up the Find My app to third-party accessories, and allowing people to change their default email app and web browser.

However, Apple is still sticking its head in the sand and hoping the issue will go away – when it absolutely won’t.

EU investigating Apple’s response to Spotify complaint [U]

Apple under 4th DMA non-compliance investigation | Apple Park campus

The European Union is investigating Apple’s response to a Spotify complaint, to determine whether the anti-steering changes made by the Cupertino company are sufficient to comply.

Update: GamesFray had suggested that this amounted to a fourth DMA non-compliance investigation into Apple, but it’s now my understanding that they have misinterpreted remarks made by a regulatory risk company …

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App Store guidelines now allow game emulators; music apps in the EU can take users to an external website

Apple antitrust probe | App Store image

After the EU commission fined Apple $2 billion and announced that it’s not satisfied with the changes the company made to comply with the Digital Markets Act (DMA), Apple on Friday updated the App Store guidelines again. This time, the company is making it easier for music streaming apps to redirect users to an external website in the EU. And for the first time, Apple will allow game emulators on its platforms.

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Installing a third-party app store takes a dozen ‘irritating and scary’ screens

Installing a third-party app store | Programmable calculator and physics notes

Installing a third-party app store is now possible for iPhone owners in the EU – but it’s not exactly a quick-and-easy process.

It seems a safe bet that this is a deliberate move on Apple’s part to deter people from doing it – something which is likely to land the company in court on antitrust charges …

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EU may require Apple to let iPhone owners delete the Photos app

EU may let us delete the Photos app

A remark by EU competition head Margrethe Vestager has suggested that Apple may be required to let iPhone owners delete the Photos app.

While this possibility hasn’t previously been raised, Vestager mentioned in a brief speech that this was one of the things Apple had failed to do in its DMA response – and it would obviously involve a massive change to the way iOS works …

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Jon Stewart interviews FTC head Lina Khan, says Apple wouldn’t let him do it

Jon Stewart interviews FTC head Linda Kahn | The Daily Show promo image

Jon Stewart interviewed Federal Trade Commission (FTC) head Lina Khan yesterday, saying that he’d wanted to do it while his show was hosted on Apple TV+, but the company wouldn’t allow it.

The revelation comes after one of the (many and varied!) complaints in the DOJ’s antitrust lawsuit was that Apple was controlling content and impacting on free speech …

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DOJ compares AAPL share buybacks with R&D spend as ‘evidence’ of lack of competition

AAPL share buybacks | Apple Park campus

A new report highlights what probably amounts the most most absurd stretch in the DOJ’s antitrust lawsuit. A section notes that Apple last year spent half as much on research and development (R&D) as it did on AAPL share buybacks, presenting this as ‘evidence’ of the lack of competition faced by the company.

It contrasts this with Google, whose R&D spend matched that of its share buybacks, suggesting this means the search giant faces greater competition …

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Following DOJ, Apple faces new class action lawsuits alleging the iPhone is a monopoly

It’s not just the US Department of Justice setting its sights on Apple this year. Since the DOJ announced its lawsuit last week, Apple has been hit with a wave of new lawsuits from consumers accusing the company of monopolizing the smartphone market.

These consumers say Apple “inflated the cost of its products through anticompetitive conduct.”

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DOJ antitrust lawsuit complains that iPhones are cool, says lawyer

DOJ antitrust lawsuit complains that iPhones are cool, says lawyer | Boxed iPhone 15 Pro

One element of the DOJ antitrust lawsuit against Apple addresses iMessage, and Apple’s decision to keep the app exclusive to iPhone. But it goes further than arguing that this is anti-competitive, and attacks the use of green chat bubbles for Android users as creating “social stigma.”

A lawyer commenting on this claim says that it effectively amounts to the Department of Justice complaining that people think the iPhone is cooler than Android phones …

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EU rejects Apple’s European App Store changes: Company could be fined 10% of global turnover

App Store proposals rejected | Case full of $100 bills

The EU has today announced that it is not satisfied that Apple’s App Store changes comply with the Digital Markets Act (DMA), and the company is now officially under investigation for non-compliance.

If that investigation confirms that Apple failed to comply with the antitrust law, then the iPhone maker could be fined up to 10% of its worldwide turnover – increasing to 20% for repeat infringements …

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Apple’s best defence against the DOJ antitrust lawsuit is its customers

Apple's best DOJ antitrust lawsuit is its customers | Crowds at Apple Store Battersea opening

After literally years of investigation, the DOJ antitrust lawsuit is finally official. Apple is accused of using a dominant market position to lock in customers, block competitors, profiteer, and stifle new technologies.

The lawsuit mirrors moves made in the EU, most notably through the Digital Markets Act (DMA), which obliges Apple and other tech giants to adopt a less aggressive approach to protecting their own financial interests against competition …

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DOJ lawsuit misunderstands CarPlay, claiming it too is anticompetitive

DOJ lawsuit misunderstands CarPlay | Extended instrument cluster feature shown

The DOJ lawsuit is 88 pages long, and I freely confess I haven’t yet finished reading it, but it seems one tech writer has – finding a claim that CarPlay is anticompetitive.

As the piece notes, it seems clear that the Department of Justice doesn’t actually understand what CarPlay is, or how it works, as the claim simply makes no sense …

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Apple could be in trouble over DMA security warnings, as well as Core Technology Fee

Core Technology Fee and security warnings | App Store 3D logo

It was already clear that Apple’s Core Technology Fee would come in for close scrutiny by the EU, but an interview with the bloc’s antitrust chief has revealed that the company could also be headed for trouble with its security warnings about alternative app stores.

While Apple was not directly named, there was little doubt who Margrethe Vestager was referencing when she described such warnings as “unwise” …

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Brave Browser sees sharp increase in take-up as Apple prompts EU users to choose

Brave browser iPhone installs | Logo with graph

One change Apple made in iOS 17.4 has resulted in a notable increase in the number of iPhone owners choosing to install the Brave Browser app to use in place of Safari.

The EU’s Digital Markets Act (DMA) required Apple to prompt European iPhone users to choose their default browser, with its own Safari app merely listed as one of the options …

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The law doesn’t allow Apple to threaten Epic, says EU commissioner

The law doesn't allow Apple to threaten Epic | Abstract image of man silhouetted against red smoke

Apple appeared to threaten Epic Games, when the company cancelled its developer account for the second time, and cited the developer’s public criticisms of the iPhone maker as one of the reasons.

The European Commissioner, who heads up the executive branch of the European Union, has now suggested that this breaks the law …

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Apple’s Epic ban is questioned by EU regulators, as more details emerge

Apple's Epic ban | Photo of lawyer fastening jacket

Apple’s Epic ban – which saw the iPhone maker again terminate a developer account used by the games company – is being questioned by EU antitrust regulators.

More details also emerged of follow-ups to Phil Schiller’s demand for written assurances of good faith by both Epic CEO Tim Sweeney and Apple’s lawyers …

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Apple’s DMA response could render the law toothless, say campaign groups

Apple's DMA response | Rainbow Apple logo on iPhone

Campaign groups say that if the EU lets Apple get away with its response to the Digital Markets Act (DMA), then the law will be rendered toothless.

Apple, Amazon, Google, and Meta have all taken the same approach to the antitrust law, say the groups: to seek technical compliance while ensuring that their market dominance remains protected …

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Spotify comment on Apple’s $2B antitrust fine hints at possible malicious compliance

Spotify comment on Apple | Headphones next to iMac on desk

We noted yesterday that Spotify welcomed Apple being fined $2B for antitrust offences relating to streaming music services.

The tone of the company’s response, however, strongly suggests that it believes the iPhone maker will repeat what some have described as Apple’s “malicious compliance” in another antitrust case …

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Spotify and other companies criticize Apple in letter to EU commission

Apple App Store EU

Apple will soon roll out major changes to iOS users in the EU as part of the Digital Markets Act (DMA) antitrust legislation. However, many developers have been unhappy with Apple’s proposals to comply with the DMA. Because of this, Spotify and dozens of other companies have now shared a letter to the European Commission complaining about “Apple’s lack of DMA compliance.”

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Apple makes last-minute plea to DOJ not to file US antitrust suit

US antitrust suit decision close | Man and woman making their case in a meeting

Apple lawyers reportedly met with the Department of Justice last week, to make a last-minute plea for the agency not to file a US antitrust suit against the company.

Neither Apple nor the DOJ commented on the meeting, which follows the iPhone maker being accused of “malicious compliance” in its response to both the Supreme Court decision on the App Store, and European antitrust legislation taking effect next month …

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Meta and Microsoft ask EU to reject Apple’s new app store terms

Meta and Microsoft ask EU to reject Apple's new app store terms | 'Denied' stamp over App Store icon

Apple’s new app store terms have come under fire for what many are describing as ‘malicious compliance’ with the EU’s Digital Markets Act – that is, technically complying with the antitrust law while completely negating its intent.

A new report says that both Meta and Microsoft have now lobbied the EU, asking it to reject Apple’s new terms as “onerous” and “prohibitive” …

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