Tag: antitrust lawsuit

Apple Gets Sued by the US DOJ; Accused of Illegal Monopoly in Smartphone Market

The US Department of Justice and 15 states on Thursday sued Apple as the government cracks down on Big Tech, alleging the iPhone maker monopolized the smartphone market, hurt smaller rivals and drove up prices.

Apple joins competitors sued by regulators, including Alphabet’s Google, Meta Platforms and Amazon.com across the administrations of both former President Donald Trump and President Joe Biden.

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” Attorney General Merrick Garland said in a statement. “If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

The Justice Department said that Apple charges as much as $1,599 (roughly Rs. 1,33,200) for an iPhone and makes larger profit than any others in the industry. Officials also said Apple charges various business partners – from software developers to credit card companies and even its rivals such as Google – behind the scenes in ways that ultimately raise prices for consumers and drive up Apple’s profit.

Dating back to its time as a marginal player in the personal computer market, Apple’s business model has long been based on charging users a premium for technology products where the company dictates nearly all of the details of how the device works and can be used. The Justice Department seeks to unwind that business model by forcing Apple, which has a market value of $2.7 trillion (roughly Rs. 2,24,98,600 crore), to offer users more choices around how apps can tap in to the hardware that Apple designs.

Shares of the iPhone maker fell 4.1 percent to close at $171.37 (roughly Rs. 14,300) on Thursday.

Changes Sought

Apple denied the allegations made by the government.

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect.”

White House assistant press secretary Michael Kikukawa said: “President Biden strongly supports fair and robust enforcement of the antitrust laws.”

The Justice Department, which was also joined by the District of Columbia in the lawsuit, is seeking changes at Apple. An official suggested some form of breakup or reduction of the size of Apple was a possibility when they noted “structural relief is also a form of equitable relief.”

The 88-page lawsuit, filed in US federal court in Newark, New Jersey, said it was focused on “freeing smartphone markets from Apple’s anticompetitive and exclusionary conduct and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future.”

In the lawsuit, the US accused Apple of making it harder for consumers to block competitors and cited five examples where Apple used mechanisms to suppress technologies that would have increased competition among smartphones: so-called super apps, cloud stream game apps, messaging apps, smartwatches and digital wallets.

For example, the US alleges Apple made it more difficult for competing messaging apps and smartwatches to work smoothly on its phones. It also alleges that Apple’s app store policies around streaming services for games have hurt competition.

The Justice Department seeks to define the market as that of smartphones in the United States, where most analysts believe Apple has slightly more than half of the market. Apple representatives said they will try to persuade the court to define the market as the global smartphone market, where the iPhone has only one-fifth of consumers.

The Justice Department quoted an email chain from Steve Jobs, the Apple co-founder who died in 2011, saying that it was “not fun to watch” how easily consumers could switch from iPhones to Android phones and vowing to “force” developers to use its payment systems in an effort to lock in both developers and consumers.

It is unclear what specific changes the Justice Department seeks. The complaint asks a court to prevent Apple from using its control of app distribution, contracts and use of private software interfaces to undermine rivals and to order anything else necessary “to restore competitive conditions in the markets affected by Apple’s unlawful conduct.”

Apple has already been subject to antitrust probes and orders in Europe, Japan and Korea, as well as lawsuits from corporate rivals such as Epic Games.

On Thursday Reuters reported that Apple, Meta Platforms and Alphabet’s Google will be investigated for potential violations of the European Union’s Digital Markets Act that could lead to hefty fines by the end of the year, according to people with direct knowledge of the matter.

In Europe, Apple’s App Store business model has been dismantled by a new law called the Digital Markets Act that went into effect earlier this month. Apple plans to let developers offer their own app stores – and, importantly, pay no commissions – but rivals such as Spotify and Epic argue Apple is still making it too hard to offer alternative app stores.

© Thomson Reuters 2024

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Google to Pay $700 Million to US Consumers, States in Play Store Antitrust Settlement

Alphabet’s Google will pay $700 million (roughly Rs. 5,819 crore) and revamp its Play app store to allow for greater competition as part of an antitrust settlement with US states and consumers, according to the company and filings in San Francisco federal court on Monday.

Google will pay $630 million (roughly Rs. 5,238 crore) into a settlement fund for consumers and $70 million (roughly Rs. 582 crore) into a fund that will be used by states, according to the settlement, which still requires a judge’s final approval.

The settlement said eligible consumers will receive at least $2 (roughly Rs. 166) and may get additional payments based on their spending on Google Play between August 16, 2016 and September 30, 2023.

All 50 states, the District of Columbia, Puerto Rico and the Virgin Islands, joined the settlement.

Google was accused of overcharging consumers through unlawful restrictions on the distribution of apps on Android devices and unnecessary fees for in-app transactions. It did not admit wrongdoing.

Attorneys for the states and consumers announced the settlement in September, but the terms were kept confidential ahead of Google’s related trial with Fortnite maker Epic Games. A California federal jury last week agreed with Epic that parts of Google’s app business were anticompetitive.

Wilson White, Google vice president for government affairs and public policy, in a statement said the settlement “builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete with other (operating system) makers, and invest in the Android ecosystem for users and developers.”

The company said it was expanding the ability of app and game developers to provide consumers an alternative billing option for in-app purchases next to Play’s billing system. Google said it had piloted “choice billing” in the US for more than a year.

As part of the settlement, Google said it would simplify users’ ability to download apps directly from developers.

California, North Carolina, New York, Tennessee and Utah led the states’ coalition. State regulators spent hundreds of hours negotiating the settlement, Monday’s court filing said.

Democratic North Carolina Attorney General Josh Stein told Reuters on Tuesday that “the changes Google is required to adopt will result in more innovation among app developers and lower prices for consumers, and that was always our number one goal.”

The states’ attorneys said “no other US antitrust enforcer has yet been able to secure remedies of this magnitude from Google” or another major digital platform.

Epic sued for an injunction, but not money damages, and the company next year is expected to make its own proposal to the judge hearing the cases, US District Judge James Donato, about potential changes to Google’s Play store.

In a statement, Epic public policy head Corie Wright said the states’ settlement “did not address the core of Google’s unlawful and anticompetitive behavior.”

Wright said Epic will press at the next phase of its trial “to truly open up the Android ecosystem.”

Epic CEO Tim Sweeney, in a post on social media platform X, said the states could have won a larger damages amount “if they’d stayed in the fight a few weeks longer.”

Google faces other lawsuits challenging its search and digital advertising practices. It has denied any wrongdoing in those cases.

© Thomson Reuters 2023

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Fortnite Maker Epic Games Wins Antitrust Case Against Google Over Play Store Monopoly

Fortnite maker Epic Games has prevailed in its high-profile antitrust trial over Alphabet’s Google, which alleged the Play app store operated as an illegal monopoly, in a ruling that if it holds could upend the entire app store economy.

Jurors found for Epic on all counts, a court filing showed, after more than a month of trial in Epic’s lawsuit, which accused Google of taking action to quash competitors and charge unduly high fees of up to 30 percent to app developers. The court in January will begin work on what remedies to implement.

The ruling marks a stunning defeat for Google, which alongside Apple operates one of the world’s largest app stores. If the ruling holds, it has the potential to give developers more sway over how their apps are distributed and how they profit off them.

Google said it would appeal. “We will continue to defend the Android business model and remain deeply committed to our users, partners, and the broader Android ecosystem,” Wilson White, vice president of government affairs and public policy at Google, said in an emailed statement.

Epic CEO Tim Sweeney on Monday cheered the ruling on social media site X, calling out “the Google Play monopoly.”

Lawyers for the two companies made their final arguments on Monday morning and the federal judge handed the case to the jury less than four hours earlier, with instructions that a decision must be unanimous.

Among Epic’s allegations were that Google illegally ties together its Play store and billing service, meaning developers were required to use both to have their apps included in the store.

While the Play store represents a much smaller chunk of Google’s revenue compared to its massively profitable search business, it is symbolically important as the central gatekeeper to billions of mobile phones and tablets.

Google may be compelled to allow for more app stores on Android-powered devices and lose revenue from the cut it takes out of in-app purchases.

“(Today’s verdict) proves that Google’s app store practices are illegal and they abuse their monopoly to extract exorbitant fees, stifle competition and reduce innovation,” Epic said in a statement on its website.

Google accused of deleting messages

“The trial has shone a very bright light on what Google has done to impair the competition,” a lawyer for Epic, Gary Bornstein, told jurors earlier in the day, adding Google “systematically blocks” alternative app stores on the company’s Play store.

Among the more sensational allegations were that Google had a system for deleting texts and internal messages for the purpose of concealing its anticompetitive behavior. An attorney for Epic instructed jurors on Monday that they could assume the content of the deleted messages was pertinent to the case and “would have been unfavorable to Google.”

Google has denied wrongdoing, arguing that it competes “intensely on price, quality, and security” against Apple’s App Store.

A lawyer for Google, Jonathan Kravis, told jurors that “Google does not want to lose 60 million Android users to Apple every year.” Google lowered its fee structure to compete with Apple, Kravis said.

“This is not the behavior of a monopolist,” he said.

Google settled related claims from dating app maker Match before the trial started. The tech giant also settled related antitrust claims by US states and consumers under terms that have not been made public.

Epic lodged a similar antitrust case against Apple in 2020, but a US judge largely ruled in favour of Apple in September 2021.

Epic has asked the US Supreme Court to revive key claims in the Apple case, and Apple is fighting part of a ruling for Epic that would require changes to App Store rules.

Epic purposefully violated Play store rules by skirting its billing systems allowing for customers to make in-app purchases directly with Epic, an attorney for the gamemaker said on Monday. As a result, Google banned Fortnite and Epic filed its suit in response.

© Thomson Reuters 2023

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US Court Refuses Appeal to Revive Antitrust Lawsuit Against Meta’s Facebook

A US appeals court on Thursday refused to revive a lawsuit filed by states against Meta’s Facebook that alleged the company had broken antitrust law.

Dozens of states led by New York asked the US Court of Appeals for the District of Columbia last year to reinstate the lawsuit, which US District Judge James Boasberg of the District of Columbia rejected, saying they had waited too long to file.

Both the Federal Trade Commission and the states had asked the court in 2020 to order Facebook to sell Instagram, which it bought for $1 billion (nearly Rs. 8,120 crore)  in 2012, and WhatsApp, which it bought for $19 billion (nearly Rs. 1,55,330 crore) in 2014. The FTC case is going forward.

The three-judge unanimous appeals court panel said it agreed that “the states unduly delayed in bringing suit.”

“The States were on notice of Facebook’s two major acquisitions. Both were publicized,” Circuit Judge A. Raymond Randolph wrote, noting that the FTC had investigated both transactions.

Neither the New York attorney general’s office nor Facebook immediately responded to a request for comment.

In February this year, Meta registered another win as a judge released a ruling denying the Federal Trade Commission’s request to stop Meta Platforms from buying virtual reality content maker Within Unlimited, rejecting the regulator’s concerns the deal would reduce competition in a new market.

A December trial to decide if Meta could go forward with the relatively small deal was seen as a test of the FTC’s bid to head off what it sees as a repeat of the company acquiring small upcoming would-be rivals to dominate a market, this time in the nascent virtual and augmented reality markets.

Judge Edward Davila of the US District Court for the Northern District of California said the FTC had failed to show that Meta would have entered the market to make dedicated fitness content if it was unable to buy Within.

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Google to Argue Against Allegations of US Antitrust Law Violations Over Search Engine Dominance

Google will likely argue Thursday that the US Justice Department’s allegations that it broke antitrust law to build and maintain its dominance of search are flawed and that its lawsuit should be thrown out, according to court filings.

The government, which filed its lawsuit in the waning days of the Trump administration, will likely defend its complaint, which said that Alphabet’s Google acts illegally in paying billions of dollars each year to smartphone makers like Apple, LG, Motorola, and Samsung, carriers like Verizon and browsers like Mozilla to be the default search for their customers.

Google has argued in court filings that the payments are legal revenue-sharing deals and not illegal efforts to exclude rivals.

The case is being heard by Judge Amit Mehta of the US District Court for the District of Columbia. The case is slated for trial in September.

Google’s motion is the Internet company’s latest attempt to get out of several costly and time-consuming lawsuits from state and federal governments aimed at reining in its market power.

The Justice Department sued Google in 2020, accusing the $1 trillion company of illegally using its market muscle to hobble rivals in the biggest challenge to the power and influence of Big Tech since it sued Microsoft for anti-competitive practices in 1998. A settlement left the company intact although the decision to rein in Microsoft left room for Google, which was founded in 1998, and others to thrive.

Since this lawsuit was filed, Google has been hit with other antitrust complaints. The Justice Department filed a second lawsuit in January accusing the company of abusing its dominance of the digital advertising business.

A group of states led by Texas also sued on ad tech in 2020 while states led by Utah filed a lawsuit in 2021 saying the company broke antitrust law in handling its play store.

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