Merrick Garland’s Remarks on the Lawsuit Against Apple’s Supposed Monopoly

Attorney General Merrick Garland:

When an iPhone user puts a credit or debit card into Apple Wallet, Apple inserts itself in a process that could otherwise occur directly between the user and card issuer. This introduces an additional potential point of failure for the privacy and security of Apple users.

Apple Pay through Wallet obfuscates your actual credit card numbers, which retailers infamously use to track customers. It’s far more private than using your credit card itself. I highly doubt any banks or credit card issuers would do this themselves if given access to NFC tap-to-pay.

[Update: Whoops, I was wrong about that. Matt Birchler, who works in the payments industry, has a great explainer about how this works, and it turns out major banks and credit cards do generate per-merchant “DPAN” numbers for tap-to-pay transactions. I stand by my argument that Apple Wallet is at least as, if not more secure than, any digital payment app provided by a card issuer.]

And that is just one way in which Apple is willing to make the iPhone less secure and less private in order to maintain its monopoly power. The Supreme Court defines monopoly power as “the power to control prices or exclude competition.”

As set out in our complaint, Apple has that power in the smartphone market.

Defining the iPhone as a monopoly when it has somewhere around 55 percent market share in the U.S. is obviously the first thing the DOJ needs to prove. Microsoft had roughly 95 percent market share of the PC operating system market when the DOJ sued them in the late 1990s. The DOJ tries to get around the uncomfortable fact of Apple’s mere 55 percent share by defining a market for “performance smartphones”. I don’t really see how Apple has any power over the price of phones made by other companies.

Now, having monopoly power does not itself violate the antitrust laws. But it does when a firm acquires or maintains monopoly power — not because it has a superior product or superior business acumen — but by engaging in exclusionary conduct. As set out in our complaint, Apple has maintained its power not because of its superiority, but because of its unlawful exclusionary behavior.

Completely backwards. Superiority is exactly what made the iPhone what it is — superior hardware, superior software, superior integration. Even a superior retail experience. Not only is the DOJ’s take on the iPhone’s success a complete misunderstanding of the actual market dynamics for phones, it’s flabbergastingly insulting.

Thursday, 21 March 2024