Is It Time That Local Authorities Move On Apple In An Effort To Stop Their Monopoly Practises?

Is it time for State and Federal Authorities in Australia to take action against Apple, after the US Justice Department and 16 other state and district attorneys generals took against Apple for ‘monopolisation and the attempted monopolisation of the smartphone markets.’The DOJ claims Apple is actively building a new “moat around its smartphone monopoly” making it deeper and wider, so that in effect, iPhone owners can’t escape.

Government officials on two Continents claim Apple creates services such as Apple Pay, Apple TV, Apple Music, Apple News, Apple Arcade, and Apple Fitness, then uses its ability to write the rules for the App Store and other means to hobble those services’ competitors.

Peter Costello, former federal treasurer, and chairman of Nine Entertainment Co (publisher of The Australian Financial Review) has accused America’s tech giants of operating “monopolies on a global scale that would make Rockefeller blush.”

ACCC chairwoman Gina Cass-Gottlieb has similarly expressed surprise that organisations such as Apple are not facing the same level of scrutiny as they are in Europe and the USA.

The way Apple operates in Australia with their walled garden approach and the conditions they place on retailers, developers of apps and key partners in the Apple Store is no different in Australia than in the US.

Or are we facing a situation where the Federal Government attitude is that it’s simply okay to operate in Australia the way Apple does, much to the detriment of Apple customers, because an investigation or legal action similar to what the EU and the US are undertaking will cost time and money.

The crux of the claim is that Apple has stifled competition and innovation in the smartphone market in various heavy-handed ways which US authorities considers illegal, so what’s different in Australia other than a lack of action by authorities who are supposed to stamp out monopolies.

In Australia Apple selectively imposes contractual restrictions on developers while dictating to retailers how and what they are allowed to sell.

Both US and EU officials claim Apple undermines third party apps, products, and services that would otherwise make users less reliant on the iPhone itself, and ‘exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.’

There is no doubt that Apple products whether it’s Beats headphones or Apple iPhones drive traffic to stores and while the likes of Motorola have to hand over significantly higher margins to retailers, Apple on the other hand pay significantly less while also dictating terms with supply often priotised to their own stores, even after retailers have invested in floor space.

“Apple has monopoly power in the smartphone and performance smartphones markets, and it uses its control over the iPhone to engage in a broad, sustained, and illegal course of conduct,” states the US Department of Justice.

“This anticompetitive behaviour is designed to maintain Apple’s monopoly power while extracting as much revenue as possible.”

More specifically, the lawsuit identifies five areas in which it alleges Apple has done this:

‘Blocking innovative super apps’ – which relates to apps with ‘broad functionality’ that might make it easier for consumers to switch between iOS and Android, for example.

‘Suppressing mobile cloud streaming services’ – Apple is accused of blocking the development of cloud-streaming apps and services that would allow high end gaming and other cloud-based services without the need for top spec handsets, which is what it specialises in.

‘Excluding cross-platform messaging apps’ – Apple has allegedly made the quality of cross-platform messaging ‘worse, less innovative, and less secure for users so that its customers have to keep buying iPhones.’

‘Diminishing the functionality of non-Apple smartwatches’ – the functionality of third-party smartwatches has apparently been limited by Apple, and those who have bought an Apple Watch face ‘substantial out-of-pocket costs’ if they do not keep buying iPhones. Again, this is around the theme of ecosystem lock-in.

‘Limiting third party digital wallets’ – Apple is alleged to have prevented third-party apps from offering tap-to-pay functionality, inhibiting the creation of cross-platform third-party digital wallets, which is also the subject of ongoing litigation in the EU.

The DOJ complaint also Claims that Apple’s misdeeds extend beyond these five main areas, pointing more broadly to web browsers, video communication, news subscriptions, entertainment, automotive services, advertising, and location services.

Apple claim they “innovate every day” this is despite there being little in the way of innovation since the early iPhone, and iPad with the business struggling in the VR market and having just written off billions on an electric car concept.

Authorities claim that “Consumers should not have to pay higher prices because companies violate the antitrust laws,” told US Attorney General Merrick B. Garland.

“We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law.

If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.

The Justice Department will vigorously enforce antitrust laws that protect consumers from higher prices and fewer choices.

Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division added: “For years, Apple responded to competitive threats by imposing a series of “Whack-A-Mole” contractual rules and restrictions that have allowed Apple to extract higher prices from consumers, impose higher fees on developers and creators, and to throttle competitive alternatives from rival technologies. Today’s lawsuit seeks to hold Apple accountable and ensure it cannot deploy the same, unlawful playbook in other vital markets.”

Apple as you might expect isn’t taking these charges lying down claiming “At Apple, we innovate every day to make technology people love—designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users.

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.”.

Competitors Spotify, Deezer, and other Apple critics are over the moon the Department of Justice’s action against Apple.

This comes in addition to Apple’s woes in Europe, where it is mitigating compliance with the Digital Markets Act and has been ordered to pay a A$3 billion fine following a complaint made by Spotify.

In 2020, medical technology company Masimo who also owns the former Sound United business, sued Apple for infringing on 10 of its patents, including technology to measure blood oxygen levels and heart rate.

Apple lost the case and US Authorities banned the sale of the Apple Watch in the USA, the same ban did not apply in Australia because US laws do not apply here, Apple knows this which is why Apple is quite happy to keep hitting local consumers with excessive pricing. In the past an Apple iPhone cable cost up to $39 extra over a similar power supply cable for a Samsung or Android device simply because Apple demanded and got a licence fee from the likes of Belkin and Cygnett for a cable that powered an iPhone.