This administration is aggressively pursuing antitrust cases against tech companies. The Department of Justice (DOJ) lawsuit against Apple is just the latest development in a much larger trend.
The DOJ’s lawsuit argues that Apple has designed its iPhone to limit competition by preventing iPhone users from being able to easily switch to alternative devices. The DOJ argues that Apple’s policies create a “moat” around their products which makes it very difficult for competition.
This isn’t the first time antitrust regulators have assumed consumers are locked in to a single product or platform.
The Federal Trade Commission (FTC) tried to stop Microsoft’s acquisition of Activision out of concerns that Microsoft would leverage its position to either make Activision’s best-selling games exclusive to their consoles or degrade the experience on competing consoles to bolster their own position.
In their lawsuit against Google, the FTC made similar arguments claiming that Google used its position in the digital advertising market to shut out competition and lock users in to their advertising systems.
The FTC underestimated how Microsoft’s cloud gaming services could actually expand access to Activision’s games. For players without a console or high-end PC, cloud gaming makes the games playable on many devices that can connect to the internet. In a similar manner, Apple argued against the idea that users are stuck with Apple products and that it has taken steps to make it easy to switch to an Android device if they choose to.
Framing tech platforms as closed than they are not seems to be a running theme in recent antitrust lawsuits regarding technology.
In addition to underestimating interoperability, misleading market definitions appear in recent lawsuits as well. In the Microsoft case, the FTC defined the market as being high-performance consoles which only included the latest Xbox and PlayStation consoles, while ignoring Nintendo Switch despite it outselling Microsoft in this generation of consoles.
This pattern can also be found in the FTC’s lawsuit against Meta regarding their acquisition of Instagram and WhatsApp. Meta argued that the FTC defined the relevant market too narrowly and excluded platforms like TikTok. Meta described it as gerrymandering the market definition.
Much like the Microsoft complaint, the Apple lawsuit defines the relevant market as high-performance smartphones, excluding less expensive and less powerful “entry level” smartphones, and notes that Apple has 65 percent of the smartphone market share. Not everyone agrees with these definitions nor how this figure was calculated.
Apple stated that these numbers were based on revenue rather than unit sales; if market share were measured by unit sales, Apple has less than 50 percent. Exactly what Apple’s market share is will likely become clearer as the trial goes on. However, given past cases it is possible that the DOJ manipulated the market definition.
While it is still too early to know how the DOJ’s lawsuit will play out, the complaint is part of the Biden administration’s wider push to go after major companies by redefining market penetration and overestimating how restrictive the platforms are.
Trey Price is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.