By David Goldman | CNN
New York — “Buy your mom an iPhone.”
That was Apple CEO Tim Cook’s famous response at Vox’s 2022 Code Conference, when a reporter complained that her mother couldn’t see the videos she texted to her mom’s Android phone because they were grainy and slow.
It’s also a quip that US Attorney General Merrick Garland quoted – and sharply criticized – Thursday at a press conference announcing the Justice Department’s landmark antitrust lawsuit against Apple, in which the Biden administration and 16 states allege Apple is illegally abusing the iPhone’s monopoly power in the smartphone market.
The massive lawsuit against one of the world’s largest companies claims Apple is breaking the law by carefully curating its app store and customer experience, designed to lure customers in and keep them buying Apple products and services – to the exclusion of competitors.
Apple, in a statement, said it disagreed with the lawsuit and would fight it vigorously.
“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” the company said.
If successful, the suit could force Apple to loosen some of the restrictions it has placed on its “walled garden” approach to hardware and software. It could be made to open up its iPhone to alternative app stores and its technologies like iMessage with Android phones.
The Justice Department, in its complaint, highlighted five ways it says Apple is abusing its dominant position to the detriment of Americans.
Green bubbles
With iMessage, Apple created an enhanced text messaging service that allows people to seamlessly communicate with one another, sending rich text, high-quality video and audio that uploads almost instantly – as long as it’s sent to another iPhone customer.
When those messages get sent to people with Android phones, they appear grainy, they can be slow to load, and they can miss out on key features like emoji responses, editing functionality and end-to-end encryption. The dreaded “green bubbles” that mark Android users within iMessage – and particularly the lower-quality performance – are illegal, the Justice Department alleges.
“As any iPhone user who has ever seen a green text message, or received a tiny, grainy video can attest — Apple’s anticompetitive conduct also includes making it more difficult for iPhone users to message with users of non-Apple products,” Garland said on Thursday. “As a result, iPhone users perceive rival smartphones as being lower quality because the experience of messaging friends and family who do not own iPhones is worse — even though Apple is the one responsible for breaking cross-platform messaging. And it does so intentionally.”
Apple last year said it would adopt a new standard of technology for communication with Android phones that will open up some, but not all, of those features. The green bubbles will remain.
Apple Pay exclusivity
Apple helped revolutionize the way we pay for things, tying customers’ credit cards to technology inside iPhones to make payments more secure and seamless. And Apple takes a tiny payment for each transaction.
But Apple Pay is the only way iPhone owners can pay for stuff using that technology on an iPhone. Apple, citing security reasons, doesn’t allow third-party apps to access the chip that allows for iPhones to make mobile payments. It also could entice some customers to stick with iPhones when they’d otherwise switch to a competitor, the lawsuit alleges.
“Apple also deprives users of the benefits and innovations third-party wallets would provide,” the Justice Department said in its complaint. “Cross-platform digital wallets would offer an easier, more seamless, and potentially more secure way for users to switch from the iPhone to another smartphone.”
Making rivals less useful than Apple Watch
Apple Watch, one of Apple’s most successful products, is not compatible with Android phones – on purpose, the Justice Department alleges.
Although some smartwatches work seamlessly with any kind of smartphone, Apple Watches, a market leader, require iPhones to operate. That locks customers into Apple’s ecosystem of hardware and software, forcing Apple Watch customers to buy iPhones.
“Apple uses smartwatches, a costly accessory, to prevent iPhone customers from choosing other phones,” the Justice Department said in its complaint. “Having copied the idea of a smartwatch from third-party developers, Apple now prevents those developers from innovating and limits the Apple Watch to the iPhone to prevent a negative ‘impact to iPhone sales.’”
Banning third-party app stores
The only way to get apps on an iPhone is through Apple’s proprietary app store. Apple has long claimed that its approach to maintaining what apps can and cannot be used on an iPhone helps customers. It prevents spam and harmful apps, Apple says.
It forces apps into Apple’s onerous limitations and expensive 30% commissions, the Justice Department argues. And it limits competition.
For example, the Justice Department cites cloud-based gaming app stores as a service that Apple illegally prevents from appearing on an iPhone. Companies that want to stream games to customers have to load each individual game to the app store, which prevents companies from marketing and selling potentially powerful and popular competitive technology to customers.
Restricting super apps
Apple forces app developers to write code specifically for its operating system, restricting developers from coding using universal languages that could offer a single app experience across any device.
That prevents apps from becoming “super apps” – apps that run identically on Apple’s iOS iPhone operating system and Google’s Android OS. Apple also restricts “mini programs” – apps within apps that effectively run on the web. The Justice Department says that requirement locks developers into Apple’s system.
“Since at least 2017, Apple has arbitrarily imposed exclusionary requirements that unnecessarily and unjustifiably restrict mini programs and super apps,” the Justice Department said in its complaint. “Apple exerted its control over app distribution to stifle others’ innovation.”
Here’s a look at Apple, Inc, creator of the Mac computer and the iPhone.
Facts
The corporate headquarters are in Cupertino, California.
As of September 2023, the company reported that it employs approximately 161,000 people full-time.
Timeline
April 1, 1976 – Apple Computers, Inc. is founded by Steve Jobs and Steve Wozniak. Their first product is the Apple I personal computer.
June 1977 – The Apple II is released.
December 1980 – Apple conducts an initial public offering of 4.6 million shares at $22 per share.
January 1983 – Apple introduces the Lisa, a new brand of personal computer.
January 22, 1984 – The Macintosh computer is introduced with a futuristic commercial that airs during the Super Bowl.
1985 – Apple discontinues the Lisa after a disappointing run, and Jobs leaves the company.
December 1996 – Apple buys Jobs’ company, NeXT Software.
1997 – In the wake of corporate shakeups and a sales slump, Apple welcomes Jobs back as interim CEO.
August 15, 1998 – The iMac, a streamlined personal computer, debuts.
January 2000 – Jobs becomes permanent CEO.
January 9, 2001 – iTunes is introduced.
October 23, 2001 – The iPod MP3 player makes its debut.
January 2003 – Apple releases the Safari web browser.
April 28, 2003 – Apple introduces the iTunes Music Store.
January 2006 – Apple rolls out its first Intel-based computers, the iMac and the MacBook Pro.
January 9, 2007 – The iPhone is unveiled.
March 2007 – Apple TV hits stores.
January 27, 2010 – The iPad is announced.
June 6, 2011 – Apple announces iCloud, an online media storage system.
August 24, 2011 – Jobs resigns as CEO. Tim Cook takes his place.
October 5, 2011 – Jobs dies after battling cancer.
February 6, 2013 – Apple announces that iTunes has reached a milestone of 25 billion songs sold.
May 28, 2014 – Apple announces deal to buy Beats for $3 billion.
June 9, 2014 – Apple conducts a stock split, bringing the price down from $647.50 to $92.44.
September 9, 2014 – Apple unveils the Apple Watch, a wearable device.
December 16, 2014 – Apple wins an antitrust lawsuit brought by eight million iPod owners who alleged that Apple abused its monopoly power in the music industry to force out competition.
June 8, 2015 – Apple unveils Apple Music, a streaming music service, live radio station and social network.
February 3, 2016 – A jury orders Apple to pay $626 million in damages after finding that iMessage, FaceTime and other Apple software infringed on another company’s patents. The lawsuit, originally filed in 2010 by the company VirnetX, accuses Apple of violating four patents, which mostly involve methods for real-time communications over the Internet.
February 16, 2016 – Apple refuses to comply with a California judge’s order to assist the FBI in hacking the iPhone of the San Bernardino gunman. A public letter signed by Cook states why the company is refusing to abide by the government’s demands.
March 28, 2016 – The Department of Justice says the FBI has “successfully retrieved the data stored on the San Bernardino terrorist’s iPhone,” and is dropping the case against Apple, since it no longer needs the company’s help.
August 30, 2016 – The European Union rules that Apple must pay Ireland $14.5 billion in back taxes. According to the EU, Ireland had been giving the tech company a break on taxes for more than two decades. Ireland’s finance minister issues a statement criticizing the EU’s ruling and declares that the country does not play favorites with a lower tax rate for certain companies. In a letter, Cook says he anticipates the EU’s tax ruling will be reversed on appeal.
September 12, 2017 – Apple unveils the iPhone X, alongside the iPhone 8 and iPhone 8 Plus – all of which support wireless charging. The iPhone X will also feature facial detection technology, no home button, a 3D camera and an edge-to-edge screen.
December 21, 2017 – Apple issues a statement saying that it has used software updates to limit the performance of older iPhones that may have battery issues that would cause them to turn off suddenly.
December 28, 2017 – Apple apologizes to customers for how it rolled out an update that can slow down older iPhones. It is offering cheaper battery replacements to make up for it.
June 15, 2018 – Oprah Winfrey signs a multiyear deal with Apple to create new original programming.
August 2, 2018 – Apple becomes the first American public company to surpass $1 trillion in value.
October 10, 2019 – In a memo to employees, Cook defends Apple’s decision to pull a map app that Hong Kong protesters used to track police, saying that it had been used in ways that “endanger law enforcement and residents in Hong Kong.”
November 1, 2019 – Apple TV+, a subscription streaming service containing original programming, launches.
November 4, 2019 – Apple announces a $2.5 billion financial package to help address the housing crisis in California, which has worsened in part because of the rapid growth of tech companies.
July 29, 2020 – Cook, Amazon CEO Jeff Bezos, CEO of Google’s parent company Sundar Pichai and Facebook CEO Mark Zuckerberg all testify before a House subcommittee on anti-trust to address concerns that their businesses may be harming competition.
August 20, 2020 – Apple reaches the $2 trillion market value mark.
November 18, 2020 – Apple agrees to pay $113 million to settle an investigation by states including California and Arizona over how Apple wasn’t transparent about its iPhone battery problems that led to unexpected device shutdowns.
December 14, 2020 – Launches Apple Fitness+, a service built around Apple Watch.
November 23, 2021 – Apple files a lawsuit against NSO Group and its parent company, accusing the Israeli firm of violating a federal anti-hacking law by selling potent software that clients have used to spy on Apple customers. The lawsuit alleges that NSO’s spyware, known as Pegasus, and other malware have caused Apple monetary and property damages, and violated the human rights of Apple users along the way.
January 3, 2022 – Apple becomes the world’s first company valued at $3 trillion.
May 10, 2022 – Apple announces that it is ceasing production of the iPod.
June 18, 2022 – Workers in Maryland vote to form the first-ever labor union at one of Apple’s US stores.
June 30, 2023 – Apple’s stock ends trading valued at $3 trillion, the only company ever to reach that milestone.
December 18, 2023 – Apple announces plans to stop selling its Apple Watch Series 9 and Apple Watch Ultra 2 in US due to a patent dispute. In January 2024, a federal appeals court denies the company’s motion to temporarily pause the ban while it appealed the US International Trade Commission ruling.
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The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.