By Julie Clover
Apple today filed a preliminary letter seeking dismissal of the antitrust case that the U.S. Department of Justice (DoJ) brought against Apple back in March.
In its preliminary letter, Apple states that the government's lawsuit is flawed in many respects and has failed to successfully prove that Apple is a monopoly power. in the relevant market, proven anti-competitive behavior or demonstrated harm to the consumer. From Apple's statement:
This case goes far beyond the scope of antitrust law. A claim under Section 2 of the Sherman Act may survive trial only if the claim alleges (1) monopoly power in the relevant market; (2) anti-competitive behavior; and (3) anticompetitive consequences. […]
This complaint fails on all three fronts. The Supreme Court has repeatedly held that the type of conduct at the heart of this case, namely Apple's decisions about how and whether to grant third parties access to its platform, does not give rise to Section 2 liability as a matter of law. .
The complaint also nowhere links the restrictions it challenges to any anti-competitive effects in the smartphone market. Even so, Apple is not a monopoly, but faces stiff competition from well-established competitors, and the complaint does not allege that Apple has the ability to charge hyper-competitive prices or limit production in its intended smartphone markets, much less it is the market share necessary to establish or determine market power.
The DOJ's lawsuit attempts to create a narrow market category by alleging that Apple dominates the U.S. smartphone market and the U.S. “performance smartphone” market. , but it will be difficult to win even with this definition. Apple has 65 percent of the U.S. smartphone market share and 70 percent in the performance category, but the designation of monopoly power typically requires the company to have a higher market share. Apple argues that a company should be judged by its 20 percent global market share.
Apple notes that Supreme Court precedent favors allowing businesses to set the terms and prices of agreements entered into with third parties, and that is these agreements are what the Justice Department is focusing on in its complaint. The Justice Department alleges that Apple has restricted messaging apps, digital wallet development, and smartwatch integration with the iPhone, among other things, and Apple says courts have historically rejected antitrust claims related to third-party access to the platform.
Additionally, Apple suggests that the DOJ has not demonstrated that Apple's actions had “anti-competitive effects” in the smartphone market. While the lawsuit alleges that Apple's design decisions lock consumers into the Apple ecosystem, Apple says it has no allegations establishing “an actual connection between those decisions and consumers' smartphone purchasing behavior.”
Judge Neals, who is overseeing the case, has required Apple to file a preliminary letter of dismissal by today, with a response from the Justice Department due May 30. After this, both parties will hold a conference with Neals. A full motion to dismiss will then be filed, but is not expected to occur until mid-June.
The government will need to respond 35 days after Apple files the motion to dismiss, and Apple will need to provide a brief response 21 days later. At this point, there may be a hearing, which is not expected to take place until September or later, with a decision on the motion to dismiss rendered in late 2024 or early 2025.
The case will generally be multi-year the process involving Apple's response to the initial complaint, discovery, trial, and additional appeals if the judge does not grant Apple's motion to dismiss the case at this stage. It's unclear how the antitrust case will evolve, as the DOJ's goal is to obtain a ruling that defies antitrust precedent in order to push antitrust law into new areas.
We have the fullApple Guide v. U.S. Department of Justicedetails the case, the Department of Justice's arguments, and what consumers can expect as the litigation progresses.
Tags: Apple Antitrust, Apple Guidance v. Department of Justice, U.S. Department of Justice [ 75 comments]
