Case Highlight: U.S. vs Apple Inc.
By Cole Snyder ‘27
In March of 2024, the Department of Justice, along with sixteen other states, filed suit against Apple over violations of the Sherman Antitrust Act. This complaint alleges that Apple intentionally developed and held a monopoly over the smartphone market in the United States, violating federal law. They allege that Apple actively worked to retain users, developers, and services through unfair restrictions rather than by, “making it attractive for them to stay,” allowing Apple to use its monopoly power to extort and harm consumers and developers alike.
The Sherman Antitrust Act was passed by the U.S. Congress in 1890 to reduce unfair business practices that harm consumers. Proposed by Ohio Senator John Sherman, this act outlawed any kind of business practices, including contracts and conspiracies, that serve to reduce trade and create monopolies in certain industries. This act came during a term when large corporations, such as Standard Oil and the American Railway Union were viewed with an unfavorable eye by the general public.
The Sherman Antitrust Act was amended by the Clayton Antitrust Act of 1914 which closed certain loopholes and banned specific practices that were not previously covered. One such practice the Clayton Antitrust Act prohibits is any single person making business decisions for two different companies that are competing in the same market. The Sherman Antitrust Act and the Clayton Act can impose civil and criminal penalties on companies and individuals that violate their terms. While these penalties have changed over time, parties currently found guilty could serve up to ten years in prison. Imposed financial penalties can be up to $100 million for a corporation and $1 million for an individual. The government also has the power to set the fine at double the amount the perpetrators earned for their illicit acts.
The complaint filed against Apple alleges that the company has purposefully engaged in business practices that restrict development and harm users as it identifies two main methods of control Apple uses. The first is described as a “web of contractual restrictions” that allow Apple to restrict how apps can function on their platform. The operating system present on iPhones allegedly allows Apple to deny “key points of connection” between developers and users. The complaint goes on to highlight different technologies that have been suppressed as a result of Apple’s conduct. The first of which is “super apps” which allow for a seamless experience across all of a user’s devices even if they run on different operating systems. Also mentioned are smartwatches; Apple has consistently denied users certain services and interfaces, such as responding to notifications and texts when they choose to go with a non-apple brand smartwatch. The complaint goes on to allege that reducing innovation in these areas, as well as others, has consistently harmed both developers, whose user market is being limited by Apple, and consumers.
In response to this complaint, Apple’s attorneys filed a motion to dismiss on August 1st, 2024. In their motion, they explain that Apple is not a monopolist because Google owns the world’s leading mobile operating system and Samsung is the world’s leader in smartphone sales. They explain the suit by the federal government should also be dismissed because Apple has not engaged in “exclusionary conduct” which is required for a Section II claim under the Sherman Act. They say that a company is allowed to dictate the terms in which third parties can interact with their business and products. Apple’s attorneys claim that allowing this case to move forward would be an attempt by the DOJ to “forge a new theory of antitrust liability” and an attempt to force Apple to deal with third parties in a way that benefits their rivals.
Judge Julien Xavier Neals in the District of New Jersey heard Apple’s Motion to Dismiss on November 20th. The hearing lasted 3 hours and 55 minutes with fifteen total attorneys from both sides being present. At the time of writing no decision has been issued by Judge Neals on this matter and we can expect it in the coming months.
Cole Snyder is a sophomore majoring in Physics.
Sources
Rasure, E. (2024, April 21). Sherman Antitrust Act: Definition, History, and What It Does. Investopedia. Retrieved November _______30, 2024, from https://www.investopedia.com/terms/s/sherman-antiturst-act.asp
Palmer, S. (2024, March 22). United States v. Apple. Shelly Palmer. https://shellypalmer.com/2024/03/united-states-v-apple/
United States of America V. Apple Inc., 2:24-cv-04055 – courtlistener.com. Court Listener. (n.d.). _______https://www.courtlistener.com/docket/68362334/united-states-v-apple-inc/
United States of America vs. Apple Inc., Case No. 2:24-cv-04055 (U.S. District Court District of N.J 2024) _______https://storage.courtlistener.com/recap/gov.uscourts.njd.544402/gov.uscourts.njd.544402.86.1.pdf
United States of America vs. Apple Inc., Case No. 2:24-cv-04055 (U.S. District Court District of N.J 2024) _______https://www.justice.gov/opa/media/1344546/dl?inline
United States of America vs. Apple Inc., Case No. 2:24-cv-04055 (U.S. District Court District of N.J 2024) _______https://storage.courtlistener.com/recap/gov.uscourts.njd.544402/gov.uscourts.njd.544402.86.1.pdf
