On November 20, 2024, the Department of Justice (DoJ) defended its antitrust lawsuit against Apple at an oral argument around Apple’s motion to dismiss (MTD). At several points, DoJ backpedaled, insisting to the judge that no, that’s not what our complaint was saying. We are not pursuing that claim. We never argued that. In all of its efforts to define what its complaint was not, DoJ never got around to articulating exactly what the complaint was supposed to do, which should probably be fatal in an antitrust lawsuit. Most glaringly, DoJ failed to say how its lawsuit actually tries to help consumers of Apple’s products and services. It even at one point describes some of Apple’s top consumers—developers—as “distributors” of Apple’s products, who simply accept prices Apple sets. This comment helps explain how DoJ could miss the mark so badly since the opposite is true: Apple is a distributor of app developer products and services, and developers set prices—not Apple.
Small business app companies sell through the App Store, but in an antitrust sense, they are also consumers of Apple’s products and services. They purchase distribution and related inputs in order to reach their customers, clients, and consumers. On Apple’s App Store, an estimated 90 percent of registered developers are considered small. This makes small business consumers of Apple distribution services arguably the most important constituency that DoJ should be serving as it focuses on Apple’s business.
The problem, of course, is that DoJ doesn’t seem to care at all about small business app makers, focusing instead on serving the largest companies doing business on Apple’s platform, each of which wants specialized and specific kinds of access. As the oral argument illustrated, in trying to accomplish these idiosyncratic access goals, DoJ is in defensive mode as it struggles to articulate what claim it is making and to explain how antitrust liability would help anyone other than the big companies that have been lobbying for this lawsuit in the first place.
Two major problems with DoJ’s defense of its lawsuit as it faces the possibility of dismissal stand out among the others. First, DoJ finds it difficult to wriggle free of Apple’s damning observation that antitrust law generally does not impose a “duty to deal” with rivals on any competitor, even highly successful ones. In its oral argument, DoJ asserts that antitrust law only “protects” an antitrust defendant’s right to be discerning in business dealings, specifically with respect to competitors in the “pled” market. In the instant case, this would mean, absurdly, that the law would only allow for Apple’s refusal to deal with other “performance smartphone” makers, defined loosely as non-entry-level smartphones with relatively more features and higher quality hardware. But even worse than that, DoJ’s complaint seems to pursue a mandate not just to deal with these other competitors but to accede to the idiosyncratic demands specific, large companies have made of Apple, regardless of the consequences of doing so. Under DoJ’s reading, it could challenge any refusal by Apple to accede to another company’s demands in any market, so long as it supported DoJ’s convoluted theory that doing so helped Apple sell more smartphones in a manner that harmed competitors in these other markets. DoJ might respond that, well, Apple ultimately devalued “super apps” by not acceding to all the demands of super app makers. But if it is true that this decision resulted in selling more iPhones, what does that say about smartphone consumer preferences? Isn’t DoJ’s convoluted approach in trying to impose a mandate to accede to competitors’ demands actually anti-consumer?
Second, DoJ completely ignores the fact that individual consumers—and iOS developers—generally choose the App Store because it is the distribution channel to a highly curated and managed ecosystem, not despite its closed nature. Fundamental to the value of iOS is the flexibility its owner has to make design choices that protect consumers from harm. Throwing these elements away to appease specific, large competitors is anathema to the purpose of antitrust law. We elaborated on how the complaint did this more in this earlier post. Most App Association members lack name recognition among individuals in markets around the United States. Many of them must convince consumers to download their software despite the fact that their prospective customers do not yet know the company’s name or reputation. Given that consumers are so concerned about privacy and security when downloading apps from unknown companies, the store must take proactive measures, or else App Association members lack a reliable distribution method.
As new leadership takes the helm at DoJ in 2025, it is important that the agency reassess its priorities. An ethos that prioritizes the complaints of extremely large competitors—while relegating the significance of consumer welfare and small businesses’ competitive prospects—must be left behind permanently. Otherwise, we can expect the same economic misery and investment in gamesmanship—rather than innovation— as we see in Europe.