NEW YORK, NY – JANUARY 29: A man checks his phone in an Apple retail store in Grand Central Terminal, January 29, 2019 in New York City. Apple is set to report first-quarter earnings results after U.S. markets close on Tuesday. (Photo by Drew Angerer/Getty Images)

US sues Apple in antitrust lawsuit

Technology

California Attorney General Rob Bonta said in a news conference Thursday that the landmark lawsuit filed against Apple will ultimately be good for business and consumers.

 

“This is a pro-business action,”

Bonta told reporters.

“When we make sure that the rules of the marketplace are being followed, that no one is acting illegally, abusing their power, acting in a way that’s anti-competitive or exclusionary, it provides an opportunity for the next innovator, the next dreamer, the next visionary, the next startup, the next mom and pop to be able to participate in the marketplace and compete, as opposed to being squashed out and pushed out because of the dominant market force.”

California is one of the states participating in the DOJ action against Apple. As the largest state by population and the home state of Apple and many other Big Tech companies, California’s participation was notable.

 

“We need to make sure that consumers and competition in a fair market exist, and that’s what this lawsuit is about,”

Bonta said. He noted that investigators have spent years building the case against Apple. And the bench trial in the US District Court in New Jersey may go on for roughly three years.

 

“It is pro-consumer, it is pro-business, it is anti-monopoly, anti-manipulation,”

the California attorney general added.

As the case moves forward, expect Apple to challenge a vital component of the government’s lawsuit: How it defines the markets that Apple has allegedly monopolized.

 

The US government claims Apple has monopolized two distinct markets: A market for smartphones, and a separate market for “performance smartphones.”

 

Market definitions are critically important to antitrust lawsuits, because the courts can only rule on illegal monopolization claims with respect to specific, well-defined geographic and product markets.

 

The Justice Department describes “performance smartphones” as phones that are made with premium materials such as metal and glass; boast faster and better processors, or bigger storage sizes; and have advanced communications tech inside such as tap-to-pay chips. Performance smartphones are distinct from basic, entry-level devices that don’t have these same features, according to the complaint.

 

Defining the market this way allows the DOJ to make specific claims about Apple’s marketshare.

 

“Apple’s share of the US performance smartphone market exceeds 70% and its share of the entire US smartphone market exceeds 65%,”

Attorney General Merrick Garland said at a press conference.

 

Apple, for its part, accuses the DOJ of using the wrong frame of reference, telling reporters Thursday the market for smartphones is global, not restricted to the US, and that by this measure Apple’s marketshare is closer to 20%.

Minnesota Democratic Sen. Amy Klobuchar is one of several lawmakers who have increased focus and pressure on Big Tech companies in recent years. On Thursday, Klobuchar said she views the DOJ suit against Apple as a key part of Washington’s effort to rein in the tech industry:

 

“Tech monopolies impede competition, harming consumers and small businesses. As the gatekeeper controlling the smartphones used by more than half of all Americans, Apple has restricted consumer choice, raised prices, and preferenced its own products and services — reducing quality and innovation across the digital economy. I strongly support today’s action by the DOJ to put a stop to Apple’s anticompetitive conduct.”

Klobuchar said the case is a bellwether for Washington’s increased focus on competition and regulation of the broader technology sector. Klobuchar and other lawmakers are pushing for new regulations on social media, curbing its harms. And she sees regulatory oversight on Big Tech platforms as part of Washington’s current efforts.

 

Klobuchar is an architect of the American Innovation and Choice Online Act, a bill that aims to force US app stores to be more open. While it has cleared the Senate Judiciary Committee in the past, the legislation has yet to be passed by the full Senate amid stiff industry opposition.

 

“This case demonstrates why we must reinvigorate competition policy and establish clear rules of the road for Big Tech platforms. I will continue to push for updates to the antitrust laws, including the bipartisan American Innovation and Choice Online Act, to promote competition and innovation, strengthen our economy, and make sure consumers and small businesses benefit from free and fair competition.”

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