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The Courts United States Apple

Apple Says US Antitrust Lawsuit Should Be Dismissed 64

Posted by msmash from the take-it-back dept.
Apple said on Tuesday it plans to ask a U.S. judge to dismiss a lawsuit filed by the Justice Department and 15 states in March that alleged the iPhone maker monopolized the smartphone market, hurt smaller rivals and drove up prices. From a report: In a letter to U.S. District Judge Julien X. Neals in New Jersey, Apple said "far from being a monopolist, Apple faces fierce competition from well-established rivals, and the complaint fails to allege that Apple has the ability to charge supra-competitive prices or restrict output in the alleged smartphone markets." In the letter to the judge, Apple said the DOJ relies on a new "theory of antitrust liability that no court has recognized."

The government is expected to respond within seven days to the Apple letter, which the court requires parties to submit, hoping to expedite cases before advancing to a potentially more robust and expensive effort to dismiss a lawsuit. The Justice Department alleges that Apple uses its market power to get more money from consumers, developers, content creators, artists, publishers, small businesses and merchants. The civil lawsuit accuses Apple of an illegal monopoly on smartphones maintained by imposing contractual restrictions on, and withholding critical access from, developers.
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Apple Says US Antitrust Lawsuit Should Be Dismissed More

Apple Says US Antitrust Lawsuit Should Be Dismissed

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  • First step in every single trial (Score:5, Insightful)

    by Tony Isaac ( 1301187 ) on Tuesday May 21, 2024 @05:32PM (#64488865) Homepage

    Any competent defense lawyer will always, always start by asking the judge to dismiss the case. This has no relevance to the merits of the complaint, it's just the first step in the process. Sometimes, they get lucky. Usually, not so much.

    • Seems to me Apple raised some significant legal questions in their initial letter. Those then become issues for the judge to address as a 'matter of law'.

      IANAL, but seems to me Apple raised some very legitimate legal issues in their letter. I'd expect the judge would want to resolve those kinds of questions rather than being overturned on appeal.

      • Re: (Score:2)

        by mysidia ( 191772 )

        Seems to me Apple raised some significant legal questions in their initial letter.

        It doesn't matter.. They are raising questions, but questions to be addressed at trial.

        Every civil case should start with a motion to dismiss. It's the very first thing. Unless the DOJ failed to state a lawful claim properly or failed to state factual allegations that would sufficiently support the claim if true; the motion to dismiss would almost certainly fail.

        • Re: (Score:2)

          by tlhIngan ( 30335 )

          Every civil case should start with a motion to dismiss. It's the very first thing. Unless the DOJ failed to state a lawful claim properly or failed to state factual allegations that would sufficiently support the claim if true; the motion to dismiss would almost certainly fail.

          Exactly.

          But sometimes the claims will get narrowed down as well during the dismissal process - just because your claim for dismissal failed doesn't mean there isn't going to be some element of success if you can toss out some of the c

        • Seems to me Apple raised some significant legal questions in their initial letter.

          It doesn't matter.. They are raising questions, but questions to be addressed at trial.

          Every civil case should start with a motion to dismiss. It's the very first thing. Unless the DOJ failed to state a lawful claim properly or failed to state factual allegations that would sufficiently support the claim if true; the motion to dismiss would almost certainly fail.

          Some of the DOJ's Claims border on Frivolous and Vexatious.

          If Apple's Smartphone US Marketshare is Dwindling Y-O-Y, then how can they be "ensnaring" Users with Dreams of Blue Bubbles?

          https://9to5mac.com/2023/10/18... [9to5mac.com]

          Gimme a Break!

      • Re:First step in every single trial (Score:5, Informative)

        by dgatwood ( 11270 ) on Tuesday May 21, 2024 @07:31PM (#64489103) Homepage Journal

        Seems to me Apple raised some significant legal questions in their initial letter. Those then become issues for the judge to address as a 'matter of law'.

        IANAL, but seems to me Apple raised some very legitimate legal issues in their letter. I'd expect the judge would want to resolve those kinds of questions rather than being overturned on appeal.

        I'm a bit concerned that their lawyers my have a very casual relationship with the truth. They didn't even make it through the first sentence without saying something that is flatly wrong as a matter of law:

        "A Section 2 Sherman Act claim can move past the pleadings only if the complaint alleges (1) monopoly power in a relevant market;"

        That is, of course, not even remotely true. The section of the legal code in question begins "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States ...". An attempt to monopolize, by its very definition, does not require monopoly power in a relevant market. It merely requires taking actions that attempt to create unreasonable market power.

        It doesn't get any better from there:

        "The Supreme Court has repeatedly held that the type of conduct at the core 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."

        Also no. More on this below.

        "and the complaint fails to allege that Apple has the ability to charge supra-competitive prices or restrict output in the alleged smartphone markets"

        ... none of which is per se required for an antitrust claim.

        They then proceed to cite two cases as precedent that are about phone companies and line sharing agreements, which while somewhat related to the antitrust concerns that might be raised by, for example, Spotify, are about limits on who those companies do business with, which is not material when the company is actively preventing other companies from doing business with the consumer directly. If Verizon or PacBell prevented, for example, Comcast from physically running lines to the houses of people in its territory unless they sold their houses and bought new houses somewhere else, the situation would perhaps be more directly applicable to a case about Apple preventing users from installing apps on their phones without selling those phones and buying phones made by another company.

        The Novell v. Microsoft case is not even tangentially related; the primary antitrust claim was rejected because the statute of limitations had expired, leaving only a secondary claim that Microsoft hadn't made APIs available that Novell wanted, and the courts rightfully concluded that any harm to Novell's business was from dragging their heels at bringing their software to Windows 95, rather than because of those relatively minor APIs.

        New York v. Meta Platforms is similar to the telecom cases, but more hilariously, was dismissed not because it was without merit, but because the state was prohibited under the doctrine of laches from even making the case after such a long period of time. And although this could theoretically apply to this case, that isn't the argument that Apple is making. It also isn't clear that litigation over a pattern of ongoing behavior would be estopped by laches — merely retroactive damages for behavior prior to a certain point — unless Apple can somehow prove that obeying the law in the future would cause irreparable harm. [insert laughter here]

        They then try to distance themselves from United States v. Microsoft Corp. by pointing out that Microsoft had a 95% market share. While true, Apple's 52% market share in the U.S. isn't far enough away from that number for such a claim to hold up, IMO, and it seems highly likely that the court will agree.

        They also say "Apple, by contrast, does not restrict third parties’ abilities to deal with competitors." Except that in the Microsoft case, the one small part of that case that fell into that category involved Microsoft restricting third-party hardware manufacturers from making other operating systems and apps available as an out-of-the-box experience. Apple effectively does *both* of those things, just a little bit differently.

        In Apple's case, they make all iOS hardware themselves, so you can say that there isn't a conspiracy involved, but that isn't necessary to cause consumer harm. And Apple *does* *actively* prevent third-party operating systems from running on their hardware, which from a consumer perspective, is not meaningfully different. Ironically, by mentioning that, Apple runs the risk of the DOJ adding additional charges.

        The same is true for Microsoft preventing OEMs from pre-installing Netscape on computers. Apple prevents anyone, including consumers, from installing Firefox (a real version, not the WebKit skin) on any hardware running iOS. The fact that Apple no longer licenses their operating systems to third parties, again, doesn't fundamentally change the character of the concern.

        But the gut punch is this line from the U.S. v. Microsoft case:

        "It is therefore proper to define a relevant market that excludes the Mac OS."

        Using that standard, one could argue that Apple's lawyer's initial statement is, in fact, even more incorrect, because it is arguably proper to define a relevant market that excludes Android, Windows Mobile, etc.

        The last part of that section basically comes down to a matter of opinion about whether they are showing a theory of harm. This is unlikely to fly, given that Apple is basically arguing that they should skip the part of the trial where such a theory would be demonstrated. Were this at the certiorari stage, it might be a reasonable argument, but as a pretrial motion, it falls flat.

        Part II, again, is similar, in that they're arguing for skipping the actual arguments, and they seem to be conflating two different types of consumer harm — the harm from lock-in at a platform level with the harm from lock-in at the app level — both of which are presumably alleged.

        Part III raises the same nonsense about monopoly power. If those apps existed in separate markets, you'd be able to buy them without going through Apple. The fact that more than half the smartphone users in the U.S. can't is per se evidence that their argument is at best laughable, and at worst, in bad faith.

        Then, they again claim that Apple does not have monopoly power in the smartphone market, which brings us back to the point from U.S. v. Microsoft, and the little problem of Apple selling more smartphones in the U.S. than literally all of the other smartphone manufacturers combined. What's the threshold in their minds at which a company has monopoly power?

        And finally, in the very last paragraph, they finally mention attempted monopolization as an afterthought, almost as if one of the authors suddenly realized at the last minute, "Oh crap, there's this other huge part of that statute that we completely ignored for the whole letter." Intent to monopolize can be shown through a pattern of monopolistic behavior, which Apple has, IMO, exhibited on an ongoing basis for at least the last decade, and possibly longer. So again, this seems to come down to an attempt to keep the government from actually presenting its arguments. And again, if this were certiorari, they might have a chance, but not for a pretrial motion.

        In short, I see nothing in that letter that is, at least in my mind, a "very legitimate legal issue". It's the usual sort of pretrial motion that Apple files in response to every lawsuit against them, and they rarely have much luck with them. I expect this one to be no different in that regard.

        • Good analysis.

          Do you think a company can be hit as a monopolist when they only have 60% of the very competitive market? Normally 90% is a monopoly.

          Market share is critical. Saying, "well they tried to be a monopolist" is insufficient to make them guilty of anything. For example, a company with 2% market share is trying soooo hard to be a monopolist. Uh, yeah, no one cares at 2%. DoJ wouldnt even blink in the 2% direction.

          I don't agree with your split of the iPhone hardware vs software. Phones are not

          • Re: (Score:3)

            by dgatwood ( 11270 )

            Good analysis.

            Do you think a company can be hit as a monopolist when they only have 60% of the very competitive market? Normally 90% is a monopoly.

            There is no hard limit for being declared to have monopoly power of a market. The general consensus is that it isn't typically used for companies with less than 50% market share, but Apple is above that threshold in the United States. I'm not sure where you get the 90% number, but that has no basis in the law. Even at 90%, a company can not be a monopoly if there are no real barriers to entry, and even at 50%, a company can be found to have monopoly power if the barrier to entry is high enough.

            And either

            • 90% isn't carved in stone which is why I chose the word "normally". The DoJ can go after the 2% company if they want but it's not likely to go anywhere under anti trust.

              I'm not familiar with the ebook case so I'll take your word on that one. My -guess- is the ebook market is highly fragmented so 10% was a lot but as I said, not familiar.

              My car actually does have apps. I can run things like Spotify, a weather app, and there's an App Store with more crap I haven't dug into but Spotify is definitely a third

              • Re: (Score:2)

                by dgatwood ( 11270 )

                My -guess- is the ebook market is highly fragmented so 10% was a lot but as I said, not familiar.

                It's not. It's barely lost in the noise compared with Amazon. That particular case was about collusion to raise prices. The thing is, Apple's contracts with ~500,000 developers who have apps on their iOS App Store, if found to be behaving in a way that effectively raises prices, would make the size of the eBook price fixing cabal seem tiny by comparison. As soon as multiple companies and contracts get involved — which is absolutely the case when you're talking about a closed ecosystem like iOS

                • Ebooks: thanks for explaining.

                  Car: If I rip open my car my warranty is void so no I can't do that any differently than I can dual boot my car or iPhone. My Spotify app uses their logo and brand name. Can't do that without cutting a deal with Spotify. The same as me wanting to write my own car and iPhone app. And unlike my phone I have no way to install my own car app, nor does GM provide any sort of documentation or new app upload App Store site for me as a random developer to do so. Very locked in to

                  • Re: (Score:2)

                    by dgatwood ( 11270 )

                    Ebooks: thanks for explaining.

                    Car: If I rip open my car my warranty is void so no I can't do that any differently than I can dual boot my car or iPhone.

                    No it isn't. Magnusson Moss et al ban such practices. If you break something while changing the radio, the warranty won't cover that damage, and they potentially won't warrant the radio if you're using it outside of your car, nor the new radio that they didn't sell you, but it does not affect the overall car warranty at all. By law.

                    My Spotify app uses their logo and brand name. Can't do that without cutting a deal with Spotify.

                    Sure. That's not the same thing as Spotify writing the app. And either way, that's largely moot for the other reasons mentioned below.

                    The same as me wanting to write my own car and iPhone app.

                    No, it isn't, because your car isn't a

      • Re: (Score:2)

        by dbialac ( 320955 )
        How much has Apple jacked up the price of their phones in the last 10 years? And while Samsung is somewhat guilty of the same, they actually do new things like flip phones that Apple then copies and charges even more for.

  • This is not news. (Score:4, Insightful)

    by Required Snark ( 1702878 ) on Tuesday May 21, 2024 @06:05PM (#64488943)
    Every big company that gets sued by the DOJ ask for a dismissal, often more then once. It is completely standard legal practice, and the client might even be able to claim legal malpractice it it wasn't done.

    So in sense of providing new information this has no value. Why waster the bandwidth?

  • If you want to know where corruption lies, follow the money. Specifically, if the DOJ were to win this case, who gets the money? The taxpayers sure as hell don't get the money. The so-called smaller rivals, even if they existed, wouldn't see a dime. No, folks, the money all winds up in the government slush fund to spend however they see fit and you, dear reader, will never know what the money got spent on. The money got laundered in one step by the simple fact that it went into the treasury. It's not

    • Please look up the word "fungible".

    • Re: (Score:2)

      by dgatwood ( 11270 )

      If you want to know where corruption lies, follow the money. Specifically, if the DOJ were to win this case, who gets the money? The taxpayers sure as hell don't get the money.

      In a manner of speaking they do, because that money pays down the national debt a tiny bit. But more importantly, cases like this are intended to be punitive. If the company fails to stop doing whatever they're doing wrong, penalties can stack up rapidly until they do.

      So no, this is not a shakedown. This is the U.S. government seeing the EU take similar actions against Apple, and deciding to follow suit in an effort to change Apple's behavior. All Apple has to do is stop acting like a monopolist, and al

  • Why is it considered news when someone says something that is 100% predictable?

  • Shouldn't it be: Megacorp Lets Pets Know They Are Misbehaiving

    Break up every large corp by not letting a corporation own a corporation.

  • Depends on a monopoly actually existing. So does Apple have 90% market share? Higher?

    It is not illegal to have a monopoly. It is not illegal to attempt to retain customers. It is only illegal to have a monopoly AND abuse that position to prevent effective competition. DOJ will have difficulty proving their case.

    • Indeed. iPhone US market share is 60%.

      I don't see how there's an anti trust case here, either.

      • Re: (Score:2)

        by dgatwood ( 11270 )

        Maybe that's because you still think market share is the sole determinant of whether a company has monopoly power. It isn't. Multiple court rulings have made it clear that there is no bright line at any particular number. Circumstances have to be taken into account, regardless of the specific numbers, though as far as I'm aware, no case has ever been successfully brought against a company with less than 50% market share unless it involved collusion with other companies that, when added up, totaled more

        • Do we really want to label the death of Adobe Flash as an "anticompetitive" thing? I say good riddance. Leave it in the past with old Geocities stuff like blink and marquee tags on websites.

          • Re: (Score:2)

            by dgatwood ( 11270 )

            Do we really want to label the death of Adobe Flash as an "anticompetitive" thing? I say good riddance. Leave it in the past with old Geocities stuff like blink and marquee tags on websites.

            Oh, don't get me wrong, I think that the death of Flash was a good thing, because it was a blight on the world in every respect, from performance to security, but it still demonstrates Apple's power to dramatically manipulate related markets, which makes it important from a legal perspective.

    • Really depends on how they have the defined the specific market. DOJ did the same to Microsoft, they had to exclude Apple hardware so they could get the monopoly charges against them at the time.

  • This is just another example of how the government is failing to do any consumer protection so ends up having to contort itself to make a lawsuit work.

    IANAL, so I'm just a nerd with an opinion, but the antitrust claim is mostly nonsense. They had to invent a new category, Apple STILL only has 70% of that category, and there are plenty of premium phones out there that people enjoy. Samsung is already popular, Google's phones are getting more and more popular every year. To me that's the biggest thing, but ev

  • The definition of a monopoly is irrelevant to the modern age, and needs to be updated—the purpose here is helping the consumers. Period.

    Instead with tech it should be separating platform providers from content providers. If you have an open platform others use, you cannot also provide content on that alongside others as that becomes a conflict of interest. Split up companies who do this into separate entities that have to compete equally along with other people.

    Changing the law like this will be nigh

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