Is Apple the cause of Amazon and Microsoft’s smartphone flop?

With the aim of trying to “restore competition” in the smartphone market on behalf of American consumers, the US Department of Justice antitrust accused Apple of making it more difficult for Americans to switch smartphones, undermining the innovation of apps, products and services, and imposing extraordinary costs on developers, companies and consumers. A monopoly which, in the past, may have prevented companies like Amazon and Microsoft from making inroads into the smartphone business of which Apple is the leader today.

Last week, the division antitrust of the US Department of Justice he accused Apple to have a monopoly in the smartphone market. Accusations collected in a long 88-page document, which states how the Cupertino company has created a closed ecosystem of hardware, software and services products and “excluding” which leaves no room for competition. A “conduct”, this one by Apple, which would lead users and developers to pay more than they could pay in a market with greater competition, and capable of making it more difficult for American users to even change smartphones.

It is difficult to think of a government against a giant like Apple, but as stated by Deputy Attorney General Lisa Monaco:

“No matter how powerful, no matter how prominent, no matter how popular, no company is above the law. Through today’s action, we reaffirm our firm commitment to this principle.”

Acting Associate Attorney General Benjamin C. Mizer added:

“When companies engage in anticompetitive conduct, the American people and our economy suffer. Today’s action against Apple sends a strong signal to those seeking to eliminate competitors and stifle innovation: that the Department of Justice is committed to using every tool available to promote economic justice and root out anticompetitive practices, wherever they may be. present.”

Apple accused of monopoly, US Department of Justice opens case against the Cupertino company

The complaint, filed in the United States District Court for the District of New Jersey, alleges that the Cupertino company illegally maintains a monopoly on the smartphone market. Having limited competition in this business is one of the points on which the lawsuit against Apple is based. In this regard, it is interesting to note how the antitrust division of the US Department of Justice believes (pages 68-69 of the document) how Apple’s monopoly may have damaged competing players such as Amazon and Microsoft, which in the past have tried to enter the smart phones.

“Apple undermines apps, products and services that would otherwise make users less dependent on iPhone, promote interoperability and lower costs for consumers and developers. Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses and merchants, among others.”

According to antitrust, “many major, well-financed companies have attempted and failed to successfully enter relevant markets” due to barriers imposed by Apple. Among these, the document states how an iPhone user is discouraged from switching to an alternative platform, for example Android, because “would have to relearn how to use their smartphone using a new interface, transfer large amounts of data (e.g. contacts), purchase new apps, or transfer or purchase new subscriptions and accessories.”. A whole series of “passage costs and limits” which become more important when “software applications, APIs and other features do not help different devices and operating systems communicate and interact.”.

In fact, if a consumer has an Apple tablet, an Apple computer, an Apple TV, an Apple Watch and other ‘Apple’ products at home, when he finds himself having to change his old iPhone he would hardly opt for the purchase of an Android smartphone, even if on paper it could offer superior features to the latest iPhone released, for example because he would no longer be able to use his Apple Watch.

Apple’s response

Even if the case is between the United States and Apple, it is worth remembering that the Cupertino company is the leading smartphone supplier by number of shipments globally in 2023, according to Canalys, followed by Samsung.

In an Apple statement reported by CNN, the Cupertino company defends itself by saying that it creates the technology that its customers and fans love. Products capable of working together perfectly, thanks to the development of an ecosystem that can guarantee privacy and security for people. Regarding the lawsuit opened against the company, Apple believes that it could prove to be a threat to Apple’s identity and the quality that distinguishes the company’s products.

Additionally, Apple shared with BusinessInsider his concern that any unfavorable outcome for the Cupertino company could constitute a “dangerous precedent” which would allow the US government to control how technology intended for people is designed. Furthermore, it would hinder Apple’s ability to createthe type of technology people expect from Apple, with hardware, software and services intersecting“.

Apple accused of having limited competition in the smartphone market to the detriment of Amazon and Microsoft

Returning to companies that in the past have tried to enter the smartphone business without success, the document of the antitrust case against Apple mentions Amazon, which launched its Fire phone in 2014 but without “be able to sustain your business profitably” exiting the business in 2015. Amazon tried to enter the smartphone business by offering a device with features dedicated to shopping on Amazon, such as Firefly to recognize objects and search for them in the e-commerce catalogue.

But not only that, the antitrust document also mentions the attempt to Microsoft, which in 2016 decided to exit the smartphone business after having entered it in 2013 by purchasing the division of Nokia that dealt with the development of telephones. In the antitrust document there are also mentions of HTCexited the smartphone market with the decision to sell this business to Google in September 2017, and LGwhich will exit the smartphone market in 2021.

The US Department of Justice emphasizes that, today, only Samsung And Google can be considered “significant competitors” in the US high-performance smartphone market. Google would be in third place behind Apple and Samsung, in a rather distant position despite the Mountain View company having control of the development of the Android operating system.

Apple would also limit competition in the smartwatch market

In addition to monopolizing the smartphone market, Apple would also limit competition in the smartwatch market. An accessory that doesn’t cost cheap and that must be paired with a smartphone in order to be used to its fullest, for example to receive notifications and calls on your wrist. According to the antitrust document, the fact that the Apple Watch cannot be used in combination with an Android smartphone is limiting. Taking the example above, an iPhone and Apple Watch owner would hardly change his smartphone to an Android model because, otherwise, he would also have to change his smartwatch:

“Apple uses smartwatches, an expensive accessory, to prevent iPhone customers from choosing other phones. After copying the idea of ​​a smartwatch from third-party developers, Apple now prevents these developers from innovating and limits the Apple Watch to the iPhone to avoid a ‘negative impact on iPhone sales’.
(…) Apple’s smartwatch, the Apple Watch, is only compatible with the iPhone. Therefore, if Apple can direct a user towards purchasing an Apple Watch, it becomes more expensive for that user to purchase a different type of smartphone because doing so requires the user to ditch their expensive Apple Watch and purchase a new smartwatch compatible with Android.
(…) Smartwatches are an expensive accessory that generally must be paired with a smartphone. Smartwatches that can be paired with multiple smartphones allow users to maintain their investment in a smartwatch when they switch phones, thus reducing, among other things, the literal cost associated with switching from one smartphone to another. By suppressing key functions of third-party smartwatches, including the ability to respond to notifications and messages and maintain consistent connections with the iPhone, Apple has denied users access to high-performance smartwatches with preferred styling, user interfaces, and services better or better batteries, and has hurt smartwatch developers by diminishing their ability to innovate and sell products.”

And Apple, from what we learn, is aware of this:

“Apple recognizes that pushing users to buy an Apple Watch, rather than a third-party cross-platform smartwatch, helps boost iPhone sales and strengthen the moat around the smartphone monopoly. For example, in a 2019 email the vice president of product marketing for Apple Watch acknowledged that the Apple Watch “could help keep iPhone customers from switching.” Surveys have reached similar conclusions: Many users say that other devices connected to their iPhone are the reason they don’t switch to Android.”

In contrast, cross-platform smartwatches can reduce iPhone users’ dependence on Apple’s proprietary hardware and software:

“If a user purchases a third-party smartwatch that is compatible with iPhone and other smartphones, they can switch from iPhone to another smartphone (or vice versa) by simply downloading the companion app on the new phone and connecting to their smartwatch via Bluetooth. “

Apparently, the US Department of Justice has a lot of material against Apple, we invite those who want to learn more to read the complete document of the open case between the US Department of Justice antitrust at www.justice.gov/opa/media/ 1344546/dl.