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US moves closer to filing sweeping antitrust case against Apple

US moves closer to filing sweeping antitrust case against Apple

The Justice Department is in the final stages of its investigation into Apple and may file a broader antitrust case in the first half of this year targeting the company's strategies to protect its iPhone dominance, three people with knowledge of the matter said. Case.

The agency is focused on how Apple has used its control over its hardware and software to make it more difficult for consumers to abandon the company's devices as well as for rivals to compete, the people said, who spoke anonymously because the investigation was active.

Specifically, investigators have examined how the Apple Watch works better with iPhones than other brands, as well as how Apple blocks out competitors from its iMessage service. The people said they also investigated Apple's payment system for the iPhone, which blocks other financial companies from offering similar services.

Senior leaders of the Justice Department's antitrust division are reviewing the results of the investigation so far, the two people said. Agency officials have met with Apple several times, including in December, to discuss the investigation. No final decision has been made about whether the lawsuit should be filed or what it should include, and Apple has not had any final meeting with the Justice Department in which it can make its case to the government before filing the lawsuit. .

The Justice Department is completing the most consequential federal antitrust lawsuit challenging Apple, the world's most valuable technology company. If the lawsuit is filed, it would be less than five years before US regulators sued the four largest tech companies for monopolistic business practices. The Justice Department is currently facing two antitrust cases against Google, focused on its search and ad tech businesses, while the Federal Trade Commission has sued Amazon and Meta for suppressing competition.

The Apple suit will likely be even broader than previous challenges to the company, attacking its powerful business model that combines the iPhone with devices like the Apple Watch and services like Apple Pay to attract and keep consumers loyal to its products. Brings. Rivals have said they have been denied access to key Apple features such as the Siri virtual assistant, prompting them to argue that these practices are anti-competitive.

A Justice Department spokesperson declined to comment for this article. Apple also declined to comment.

The company has previously said its practices do not violate antitrust law. Having defended his business practices against critics in the past, Apple said Its “vision has always been to grow the pie” and “to create more opportunities not only for our business, but for artists, creators, entrepreneurs and every 'mad person' with a big idea.”

The company is proud of the way the iPhone integrates hardware and software to create a seamless customer experience. In 2020, Apple Chief Executive Tim Cook said The company redefined mobile phones with “its intuitive user experience, simplicity of design, and high-quality ecosystem” during testimony before the Congressional Antitrust Committee. He said Apple competed against Samsung, LG, Google and other smartphone makers that offered a different approach.

“Apple does not have dominant market share in any market where we do business,” Mr. Cook said at the time. “This is not just true for the iPhone; This is true for any product category. ,

The case will add to growing regulatory pressure at home and abroad, impacting Apple's business, currently valued at $2.83 trillion.

This year, European regulators are expected to force Apple to adjust its App Store beyond its limits under the Digital Markets Act, a law passed in 2022 to rein in tech giants. Similar actions against app stores have been taken or are under consideration in South Korea and Japan.

Additionally, the European Commission said in 2021 that Apple violated its antitrust laws by imposing App Store fees on competitors for its Apple Music product. The Commission's investigation is ongoing in this matter.

The resolution of the Justice Department's investigation could be affected by how Apple complies with European regulations, said two people with knowledge of the matter, who spoke anonymously because the investigation was ongoing.

Apple is facing increasing regulatory pressure due to slowing business. Last year, the company reported that its annual revenue fell 2.8 percent to $383 billion, its first decline in a fiscal year since 2019, as sales of iPhones, iPads and Macs slowed. Nevertheless, the company sold more than 200 million iPhones and Accounts for nearly three-quarters of smartphones Analysts estimate they were worth more than $600 worldwide.

When the Justice Department began its technical investigation in 2019, it prioritized its antitrust review of Google over Apple because it did not have the financial resources and resources to fully evaluate both companies, according to two people with knowledge of the matter. There was a shortage of personnel. This changed after the department's budget increased in 2022.

Six people with knowledge of the meetings said the investigation covered a broader scope of Apple's business interests than previously reported. This also includes how Apple has blocked cloud gaming apps, which let users stream many of the titles offered in its App Store to their phones.

Investigators spoke to executives at Bluetooth tracking service Tile about Apple's competing AirTags product and the company's restrictions on outside parties accessing the iPhone's location services. Executives at Beeper, the start-up that provides iMessage on Android phones, spoke to investigators about how Apple prevented it from making the messaging offering possible on competing smartphone operating systems. The investigators also spoke with banks and payment apps about how Apple prevents them from accessing the tap-to-pay function on iPhones.

Tile and Beeper declined to comment for this article.

They also look at how the Apple Watch works better with the iPhone than other competing smartwatches. Users of Garmin devices have complained in Apple's support forums that they are unable to use their watches to respond to certain text messages from their iPhone or tweak the notifications they receive from the iPhone that they have sent to their watch. Is connected to.

Apple's new privacy tool, App Tracking Transparency, which allows iPhone users to explicitly choose whether or not an app can track them, came under scrutiny due to cuts in user data collection by advertisers. Advertising companies have said the tool is anti-competitive.

Facebook and Instagram owner Meta encouraged the Justice Department to look into the issue in its talks with the agency, two of the people said. The company – which makes most of its money from advertising – said in 2022 that the changes could cause it to lose about $10 billion in revenue that year. Meta declined to comment. Investigators have also examined Apple's policy of imposing fees on purchases made inside iPhone apps, which companies like Spotify and dating app powerhouse Match Group say are anti-competitive.

In 2020, Epic Games, creator of the popular game Fortnite, sued Apple over the App Store's requirement that developers use the tech giant's payment system. A federal judge found that Apple does not have a monopoly in mobile games, dealing a major blow to Epic's claim.

When Epic Games sued Google over similar claims, it got a different result. A jury ruled in December that Google's App Store policies violated antitrust laws. Google plans to appeal the decision.

The Justice Department last sued Apple in 2012, accusing it of conspiring with book publishers to raise the price of digital books. Apple lost the case and paid $450 million.

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