Tech Giant Under Fire: Unravelling Apple’s Anti-trust Battle

Commercial Awareness Update – W/C 27th May 2024

May 28, 2024

Interview with Caroline Harbord, a solicitor at Forsters LLP

May 30, 2024

Published by Shwetha Sivaraman at May 28, 2024

Article by Janav Singh

Apple is among the select few technology giants that have wielded unprecedented power and influence in shaping the data technology landscape of today. It currently dominates the smartphone market with a 28.46% global market share and boasts over a billion iPhone users. However, recently, the giant has come under the spotlight as the Department of Justice (DOJ) has brought a lawsuit against Apple, alleging that it has been engaging in anti-competitive behaviour. The suit incites questions about Apple’s restriction on consumer choice, regulation of the digital market, and market dominance. The DOJ has claimed that Apple has been monopolising its market share and has consequently “smothered an entire industry” with such practices.

The lawsuit claims that Apple has exploited its control over the AppStore to create unfavourable regulations on developers looking to distribute their services, engaging in exclusionary practices by restricting consumer choice and creating an ecosystem where consumers find it challenging to switch to other platforms. In an age where technology is developing at an extraordinary pace, such practices have the effect of creating harsh barriers to entry and create a system where tyrannical policies suffocate innovation and growth. As a result, the DOJ seeks to challenge the alleged anti-competitive behaviours and hopes to establish a more conducive and competitive environment while holding companies accountable for any anti-competitive actions.

Apple has denied all allegations and maintains that its practices adhere to regulations. Specifically, regarding the AppStore ecosystem, it has been argued that instead of stifling competition, they have enabled developers to reach billions of customers through their platform. Instead, they argue that such lawsuits threaten the competitiveness of Apple’s products. As a result, if successful, this lawsuit sets a dangerous precedent where government intervention is prioritised over innovation and platform autonomy.

While this may be concerning, other regulatory bodies seem to have taken a similar approach to enforcing anti-competitive regulation. For instance, the EU recently fined Apple €1.84bn for abusing its dominant market position by restricting consumer choice for music streaming services on the AppStore. In particular, Apple’s practices were found to be in breach of the EU’s anti-steering provisions as the company denied developers the opportunity to inform IOS customers about cheaper alternative services and hadn’t provided instructions on how to access the said services. Instead, Apple has benefitted by charging a premium on its streaming platforms, deeming their practices neither “necessary nor proportionate” in their effect on the IOS user’s experience. If these practices persist, consumers will be forced to be at the mercy of giants such as Apple. Therefore, such aggressive enforcement of anti-competitive and anti-steering behaviours may be deemed necessary.

Indeed, the introduction of the Digital Markets Act has curtailed anti-competitive behaviours by forcing “gatekeepers” of the Digital Markets to companies with stricter regulation and allows for contestability in the markets. Similarly, the UK’s CMA has recently found an “interconnected web” of partnerships created by BigTech companies, including Apple, Microsoft, Meta, Amazon, and Google, at the forefront of developing AI foundation models. It warns of the risk of anti-competitive behaviour. It has been suggested that it is “determined to apply the lessons of history” in the emergence of novel technologies and protect the markets from the insulation of established firms.

These regulatory bodies’ actions demonstrate a stricter approach to determining anti-competitive behaviour. Although they might be disadvantaged in enforcing laws against companies with immense power and resources, they are determined to create a more competitive environment in the digital markets and reduce hurdles for new technology firms to enter this market.