Image credit: Mike Segar, Reuters, via NYT
22 years ago, Microsoft settled an antitrust lawsuit with the U.S. government, which had accused it of monopolizing the web browser market for Windows for its browser, Internet Explorer. The settlement stipulated that Microsoft would share its application programming interface (API) with third parties, allowing for greater third-party interoperability with Windows products and easing the monopoly Microsoft held over web browsers.
The antitrust suit Apple faces today (which Katie introduced in the preceding post) isn’t identical (it targets the smartphone market as a whole, not primarily a market for software), the DOJ certainly sees a similarity, with “Microsoft” occurring 26 times in their complaint, according to the New York Times. Windows was criticized for providing access to Internet Explorer more easily than other browsers could be accessed; similarly, Apple has been criticized for favoring its own software (App Store, Apple Wallet) and forcing third parties to accept Apple’s solutions rather than developing competing software — though a piece from the New York Times is fair to point out that this case is more ambitious, given the idea that Apple ought to ease cross-platform communications, and that the iPhone’s market share is less than Windows’ back in 1998.
There are also concerns that Apple has a legitimate interest in building its monopolistic walled garden — Dave Lee, in an opinion piece for Bloomberg, opines that if Apple loses the lawsuit, it will result in a more complicated, insecure, and overall worse phone. Framing Apple’s role as a sort of natural monopoly, he describes how it uses “its maniacal control over the user experience on the iPhone to make it a vastly superior smartphone,” going on to explain that while Android phones are more open, they are also more complicated and less easy to use. Comparing the forced use of Apple Wallet for apps on the iPhone to physical wallets, Lee asks "How many physical wallets does the typical person carry?” While this is a fair point, it's also worth considering the fact that computers allow for passwords and payment information to be stored in different places — different browsers, password managers, and more — and yet this freedom of choice does not seem to confuse or negatively impact most users.
Apple’s conduct isn’t only to improve or simplify its phones, though. Beeper Mini, an Android app, allowed for users to send texts to iPhones using the iMessage protocol, which allowed for end to end encryption, or E2EE (supported by the iMessage protocol but denied to Apple–Android communications), higher resolution photos and videos, and other perks. Yet Apple shut down Beeper by repeatedly making access to their iMessage protocol more difficult on grounds of it posing a “security and privacy risk.” Given that, without Beeper, the presence of a single Android device in a group chat would prevent any communications in the chat from being encrypted, the claim that Beeper posed a security risk seems odd. Moreover, users can use iMessage on Mac computers without need for an iPhone, an intended feature, yet when Beeper allowed for users with Android phones to communicate over iMessage via their Macs, Apple revoked their Mac computers’ access to iMessage — penalizing these users by disabling a feature available by default.
Dave Lee, for Bloomberg, argues that limited Apple-Android texting isn't inherently illegally anticompetitive — users can still use services like Signal and Whatsapp that allow for end to end encrypted messages to be sent between devices — though he does concede that arguments against the dreaded “green bubble” have some credibility. Yet, to echo the arguments against Microsoft two decades ago, a company can be anticompetitive even without fully blocking competition — thus, as Microsoft’s video showing the process of installing a rival web browser did not make up for the process being slow enough to be considered anticompetitive, and the fact that it is possible to install other E2EE messaging software may not excuse the hurdles that Apple puts along the way.
But the changing political context around Big Tech antitrust suits is also worth considering — David McCabe, for the New York Times, describes the head of the DOJ’s antitrust division, Jonathan Kanter: “a lead architect of the most significant effort to fight the concentration of power in corporate America.” Along with antitrust suits against Google and suit to stop JetBlue from buying Spirit Airlines, this case is another effect of a growing willingness in the government to press antitrust law more heavily. This sentiment isn’t only in America — recently, the European Commission fined Apple $1.8 billion for unfair practices regarding its dominant App Store, and it’s due to the EU’s Digital Markets Act that Apple has to allow third party app marketplaces in the EU.
We know from class that monopolies aren’t inherently illegal. Natural monopolies, in which a single producer can supply a good more efficiently or cheaply, make economic sense, and Apple’s control over the iPhone has made it, if restricted, a functional and easy to use device, especially given that the phone market serves as an economy of scale. But have anticompetitive practices imposed a cost on the users? Does the 30% share Apple takes from all App Store purchases — the only way for developers to distribute apps unless they’re in the EU — drive up prices for apps in a way a more competitive market wouldn’t? Do green bubbles, and their limitations, discourage people from moving to Android regardless of the iPhone’s merits? We’ll have to see what the courts decide, but I don’t think it’s too wrong to look at a few specific issues (i.e. the Beeper Mini saga) and the overall shift in political context with regards to Big Tech antitrust and predict that we might get some change.
Sources:
https://www.nytimes.com/2024/03/23/business/dealbook/apple-microsoft-antitrust.html
https://www.nytimes.com/2024/03/22/business/dealbook/apple-justice-antitrust.html
https://www.nytimes.com/2024/03/22/technology/jonathan-kanter-apple-antitrust.html
https://www.nytimes.com/2023/12/22/technology/apple-iphone-beeper-mini.html
https://www.nytimes.com/2024/03/21/technology/apple-regulators-world.html
https://www.nytimes.com/2024/01/26/technology/apple-messaging-crackdown-beeper.html
4 comments:
I disagree with the argument that Apple has a natural monopoly on technology because the products they create don't require enough infrastructure to make the cost of production drastically cheaper when there is only one company involved. However, I can see how this argument would be used by Apple to attempt to avoid anti-trust action. I also doubt that Apple's heavily controlled user experience does actually make for a significantly better product as increased competition for each type of application will naturally lead to better applications and user experience overall.
Great post! Just to elaborate a bit more on Ben's point about “Given that, without Beeper, the presence of a single Android device in a group chat would prevent any communications in the chat from being encrypted, the claim that Beeper posed a security risk seems odd”.
Green texts mean you're using SMS (I'm pretty sure) which is a less safe and MUCH less feature-rich form of messaging than blue texts (in which I believe you are using MMS). Beeper Mini allowed Android users (with a subscription fee) to send messages to iPhone users with MMS. There is honestly no way in which Beeper Mini “took away” anything. It was a gross positive for iPhone AND Android users.
The whole green vs. blue messages thing seems pretty silly but Apple DOES benefit from it. A big reason Apple is so dominant in the U.S. (while in other countries it is MUCH less widespread) are the “walls” it has built to keep people within in the Apple ecosystem. One of those walls is the fact that people regularly do choose iPhones over Androids because they will be able to use MMS with everyone else (who generally are also already using iPhones).
There's a MKHBD video on the whole green vs. blue message thing if you're interested: https://www.youtube.com/watch?v=BuaKzm7Kq9Q
I would argue against the "natural monopoly" claim, though I can definitely see how it could be argued. Apple is very deliberate about curbing any attempts to undermine the power it has over the technological industry. Especially considering that only apps designed specifically for iPhones can be downloaded through the App Store, Apple seems to be maintaining a fairly steely grip on the industry and really is stomping out any attempts for outside developers who don't ally with Apple exclusively to succeed. According to the suit, this power is used to block apps that could "erode" Apple's monopolistic power, and that, in essence, is the issue here. If Apple really was a natural monopoly, then the company wouldn't really need to go so far as to block apps to secure its influence.
While I understand the concerns about Apple's alleged monopolistic practices, I believe the company's tight control over its ecosystem is crucial for maintaining a superior user experience and robust security. Apple's integrated approach ensures that iPhones are easy to use and less prone to the complexities and security vulnerabilities that can plague more open systems like Android.
The Beeper Mini case is a point of contention, but Apple's argument that it protects user privacy and security by limiting access to its iMessage protocol is valid. Opening up the iPhone to third-party app stores and payment systems could lead to a fragmented and less secure user experience, undermining what makes Apple products appealing.
The current political climate's push for more aggressive antitrust enforcement may not fully consider the benefits of Apple's model. While competition is essential, so is the quality and safety of the user experience. I believe Apple’s approach has created a reliable, cohesive, and secure ecosystem that many users prefer, and disrupting this balance could do more harm than good.
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