The U.S. Department of Justice and 16 state attorneys general – including California’s – last week filed a far-reaching and dubious antitrust lawsuit against Apple accusing it of monopolizing smartphone markets. The legal action is less an indictment of Apple’s business practices and more of an indictment of the Biden administration’s anti-business philosophy – and its ignorance of how the market economy functions and benefits consumers.
“Apple illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers,” the feds allege in a statement last week summarizing its legal complaint. The government accuses one of the tech industry’s most innovative companies of stifling innovation. The first obvious point is our government doesn’t understand the meaning of the word “monopoly.”
The iPhone has a 60-percent market share in the United States, which hardly makes it a monopoly. Across the globe, Android phones have a much higher share, approximately 70 percent. A monopoly suggests that a company has total control of a commodity or service – not a dominant share. For comparison’s sake, Harley Davidson controls 50 percent of the above-600cc motorcycle market in the United States, but buyers can still choose from dozens of other brands.
Specifically, the complaint claims that Apple charges too high of a price to app developers for access to their Apple App Store. It says Apple blocks companies that offer apps that can be used on other types of smartphones, blocks mobile cloud-streaming services, excludes cross-platform messaging, limits the functionality of non-Apple smartwatches and halts third-party payment processes (digital wallets). As a result, the lawsuit alleges, this harms competition.
But how does this differ from how any business operates? “When I walk into Target, I know I’m going to be presented with a finite number of products that Target bigwigs somewhere have approved for sale,” explains Reason’s Elizabeth Nolan Brown. “Not just anyone can walk into Target and start selling their own stuff. Nor are rival retailers like Walmart or Kohl’s able to set up shop within Target stores.”
That’s exactly right. Apple has every right to determine who sells what products on its device. If it allows payment systems that don’t conform to its security standards, it will upset consumers and undermine the trustworthiness of its iPhones. If it allows its store to be inundated with trashy apps, then its consumers will lose confidence in its system. Consumers have myriad choices in smartphones, so there’s no governmental interest here.
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Brown argues that the lawsuit stems from a radical point of view. She’s entirely right, as it assumes that “Apple should be legally obliged to help random developers – including those competing directly with Apple Messages – expand their user base.” Should the feds force Toyota dealers to sell Fords in their showrooms, or Harley Davidson to sell Kawasaki’s? Since there are other choices in the market, this is indeed a radical interpretation of antitrust law.
The Biden administration has long shown a misunderstanding of the tech industry, and its big-government interventions are sometimes supported by Republicans. Politicians from both parties have various grievances with tech firms, which encourages them to pursue such nonsense.
The lawsuit will increase costs for consumers and potentially make iPhones less secure. Once again, the government’s economic ignorance comes at a high price.
