The US is suing Apple for anti-competitive practices.But a technology ecosystem surrounded by corporate walls has driven that bold innovation.

With 60% of the US smartphone market, Apple is undoubtedly huge, but it's not a clear monopoly.

But Apple's years of innovation have effectively given it its own proprietary technology ecosystem. Now, the US Department of Justice (DOJ) has claimed that this ecosystem is undermining competition and innovation through Apple's unique market power.

The department's lawsuit will face several major hurdles. Perhaps the most important of these is that many of the anticompetitive systems that Apple has built are precisely the ones that enable the bold innovations that Apple is famous for.

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Apple is the latest major US technology company to be investigated by the US government for alleged anti-competitive conduct.

The Justice Department explains the lawsuit through five consumer-relatable examples of how Apple's iPhone ecosystem stifles competition.

The department blames Apple's closed technology ecosystem for the lack of competitors for super apps like WeChat in the United States.All Me/Shutterstock

iPhone cannot provide full functionality for super apps like WeChat

Game streaming app limitations

Functional split between blue bubble friends and green bubble friends on iMessage

Poor connection between non-Apple smartwatch and iPhone

Digital wallet technology that locks out third parties.

Read more: Why are Apple, Amazon, Google, and Meta facing antitrust lawsuits and huge fines? And can they protect consumers?

In the United States and other jurisdictions, tech giants have already taken steps to address some of these concerns.

However, the Department of Justice emphasizes that these complaints are not exclusive or exhaustive. These are examples of how Apple's closed ecosystem locks customers into what his Apple has built.

Private innovation requires private infrastructure

Part of the problem for the Justice Department is that the world of technology has been left to private design for three decades. To enjoy strong growth and innovation, we must rely on private infrastructure.

Having the most disruptive idea may capture the attention of consumers, but a huge infrastructure will keep them as customers (for example, OpenAI's partnership with Microsoft).

Our research group considers how digital innovation is shaping the infrastructure that guides our increasingly digital lives.

Despite sticking to the Lightning connector for years, Apple was heavily involved in the development of USB-C technology. Ivan_Shenets/Shutterstock

Consider Apple's influence on everyday and technological things like USB-C technology. Or amazing cultural changes like Airpods. And how iPhone technology effectively launched Instagram culture.

The Justice Department's central argument is that Apple's business model has now shifted from leading innovation to controlling its cultural and technological infrastructure.

Such changes are not necessarily planned evil. Infrastructure can lead to further infrastructure with new benefits. It's no coincidence that the internet's fiber optic cables follow old railroad tracks on land, and telegraph cables lie under the sea.

However, over time, the combination of cultural and technological infrastructure built by powerful companies may dominate the market. If you want to know where the story ends, think about Boeing.

apple monopoly definition

Another problem for the Justice Department is that it is difficult to define the markets that Apple allegedly monopolizes or seeks to monopolize. Such a definition is required to apply the Sherman Antitrust Act of 1890 to corporations.

It makes sense that the department would use this law against Google, which controls more than 90% of the search market. But Apple's market share is much lower, accounting for less than half of mobile phone sales worldwide.

To avoid this, the ministry argues that Apple's market is unique. Apple is famously good at creating its own markets by reinventing the familiar (hard drives and MP3 files) and creating novel products (iPods) that are relevant to consumers and suppliers.

Apple's competitive advantage lies in the creation of a proprietary platform, which is currently being pursued.

As many of you may remember, before the iPhone was introduced, people didn't browse the Internet on their mobile phones. Before iTunes, digital music was either a hassle or illegal.

For millions of Apple fans across the United States, the Justice Department's logic is difficult to understand.

reliable intermediary

A particular recurring theme in this case is the need for disintermediation, meaning cutting out middlemen who take a cut between customers and suppliers.

The Department of Justice says that Apple is pushing consumer choice by restricting interoperability with other products and imposing a 30% fee on businesses on Apple platforms (the so-called Apple tax). , claims that Apple acts as such an intermediary.

The challenge is that in a world of bad guys (bad guys or incompetents) on the internet, people actually seem to love Apple's ability to mediate.

The company has enabled growth across its platform with tight controls over its apps, products, and services, and has strengthened its reputation as a great intermediary for privacy, ease of use, and other consumer concerns.

For example, Apple's Wallet was launched to avoid sending credit card numbers to merchants, which regularly fall victim to data breaches and leaks. This provided an intermediary solution in the presence of many malicious (and incompetent) attackers.

Apple Wallet securely completes transactions without sharing your credit card details with merchants.Kaspar Grinvalds/Shutterstock

The departments argue that this practice creates additional privacy points of failure and provides inconsistent security.

An extensive history of cybercrime incidents around the world shows that retaining customer data is not only an asset but also a liability for consumers, credit card companies, and merchants.

During the pandemic, Apple's trusted intermediary capabilities also facilitated the success of Exposure Notifications, a privacy-preserving contact tracing system that keeps individuals' exposure data away from governments and other parties.

However, in other areas, the ministry alleges that Apple is using this reputation in self-serving ways.

Fortnite developer Epic Games' ongoing negotiations with Apple over its policy of charging a 30% surcharge on in-app purchases is one key example.

Epic Games sued Apple after being banned from the App Store for adding a direct billing mechanism.Mundissima/Shutterstock

Many developers would likely follow Epic's lead, if not out of fear of retaliation from Apple, then to keep their customers' cash out of Apple's hands.

But Epic Games largely lost to Apple in U.S. courts, with the Supreme Court refusing to hear its appeal this year. This loss may have forced the Justice Department to act.

Read more: Apple, Google and their Fortnite stash is a classic example of how far big tech companies will go to stay in power

Even if this lawsuit is successful, there is no guarantee that it will result in beneficial changes for Apple or consumers.

In Europe, the tech giant has already demonstrated its expertise in malicious compliance after complying so viciously with the European Union's new Digital Markets Law policy that its solutions rarely worked and It is currently being re-examined.

All in all, it's not that Apple is necessarily a bad Apple, but it is that comparing Apple to the US allows us to think differently about what really drives innovation in modern technology.

Sources 1/ https://Google.com/ 2/ https://theconversation.com/the-us-is-suing-apple-for-anti-competitive-behaviour-but-the-companys-walled-off-tech-ecosystem-has-driven-its-bold-innovation-226512 The mention sources can contact us to remove/changing this article

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