Trustbusters will be unable to smash Apple down

Here, Google controls its key technologies just as tightly as Apple. It’s also squeezed the hardware manufacturers hard, removing much of their ability to differentiate or develop their own services.

More of a problem is that iPhone owners seem fairly happy with the proposition that they pay more upfront for an invigilated and controlled experience. It means Apple’s devices work more smoothly together, are more secure, and tap into a range of superior Apple accessories, from smart tags to headphones.

When consumers can afford to, they choose Apple: market share seems closely correlated with income.

Nor is the premium price tag quite what it seems. Apple supports its devices for five years, and thanks to robust design and engineering, they often keep going for even longer. So the entry ticket to Apple’s ecosystem is a refurbished iPhone that costs around £150 second hand.

That’s good enough for many – and a market that is booming in the UK. The US lawsuit also sneers at Apple’s privacy position, calling it an “elastic shield” but perhaps it’s a prophylactic consumers seem to value.

Apple has used some of these counterpoints effectively in a series of competition cases, most recently when it fended off Epic Games’ attempt to loosen the company’s grip on its app store.

So it isn’t clear that the bunker buster of a government antitrust suit is the most effective tool, particularly when it packs so little explosive punch. Surgical strikes may be more effective, such as the UK’s ongoing probe into the Apple app store and forays made under the umbrella of the EU’s Digital Markets Act.

For example, after competition action Windows users in the EEA (European Economic Area) no longer need to sign into Microsoft Bing, or have Microsoft’s Edge browser rammed down their throats. In fact, they can uninstall both completely.

Covering technology cases for two decades, I’ve never seen one so bereft of the damning, jaw-dropping quotes from executives that the discovery process can unearth, and which give us journalists so much pleasure. Where are the Apple insiders bragging that they have crushed their rivals?

Announcing the lawsuit, US Attorney General Merrick Garland grasped for some big historical comparisons such as the Rockefeller Standard Oil lawsuit, but it highlighted the lack of punch in this case.

The problem with giant technology platforms today is both deeper and more subtle. They have replaced open markets with something much closer to a Soviet-style planned economy: not “socialism in one country”, but a “market in one company”.

This allows them to do something unprecedented: manipulate both supply and demand, and starve producers and consumers of the information they need. 

Free market orthodoxy is struggling to adjust to this new world. But Apple engages in such practices only a little, compared to say Amazon Marketplace or the closed box auctions which have earned Meta and Alphabet their fortunes. It doesn’t have to.

What next for Apple? As with any successful company, its worst enemy is not the government but itself. The iPhone barely changes from year to year. Growth now comes from eking out service revenue and selling accessories to the existing market. 

Apple recently cancelled its Apple Car project, according to reports, while its $3,499 Vision Pro VR headset is years away from yielding a lucrative mass market.

Competition regulators have been able to argue that previous technology lawsuits have invigorated the market and stimulated innovation.

Decades of litigation against IBM allowed the PC to flourish: Big Blue was obliged to create an open design for its first microcomputer, creating a machine that could be cloned. It was Bill Gates’ biggest break.

Two decades later, concerns about Microsoft’s dominance of the newly emerging internet encouraged startups like Google to grow with confidence.

But it’s difficult to imagine how tweaks to Apple’s platform can have similar results. Apple becomes the fourth Big Tech giant to be sued since 2020, and perhaps for the Government, it’s another box ticked.

One thing is for sure, though: a new era of competition regulation is now in full swing. The Apple lawsuit drew support from the Heritage Foundation and other conservative groups. 

So whether Republican or Democrat wins the White House this November, Big Tech’s wrangles have only just begun.