The antitrust maximalist movement has been on an extended shopping spree for a tech marketplace remodel in venues around the world, from Congress and state legislatures to the European Union (EU) and United Kingdom (UK), and concurrently, through the federal courts. But in many of these cases, the sought-after sinecure is not in stock. Small business owners are optimistic that this will continue to be the case. With respect to the Department of Justice’s (DoJ’s) lawsuit against Apple, ACT | The App Association members are hoping the complainants are sent home empty-handed.
In Congress, the antitrust advocates’ aspirations were pinned to the American Innovation and Choice Online Act (AICOA) and the Open App Markets Act (OAMA), two bills that would reorient antitrust aims to serve competitors rather than consumers, small businesses, and competition. Embedded in the purposes of AICOA and OAMA are proposed changes to not just the outer edges or finer details of antitrust law, but its core purpose. That is, current antitrust law is primarily concerned with protecting consumers and competition. AICOA and OAMA would upend that framework and put aggrieved competitors’ interests before consumers and competition itself. While this underscores that the advocates were in the right place for what they wanted (changes to federal law must come from Congress), legislators have thus far declined to take the bait. They have proven mercifully indifferent to calls for billion-dollar companies to receive unfair advantages at the expense of smaller companies that leverage online marketplaces.
Wallets stuffed with competitor complaints, the advocates went to federal enforcers where surely, their currency would find purchase. Occasionally open to carving new lanes for liability, the Department of Justice (DoJ) filed the Apple case with the U.S. District Court of New Jersey (the Court), and that brings us to the present. But as Apple’s motion to dismiss (MTD) highlights more clearly than ever, DoJ is in fact looking for a change to the law after all, and not for the Court to apply current prohibitions. Federal courts—charged with applying law to facts and prohibited from making new laws—are the wrong place to achieve that.
How do we know DoJ’s purpose is to change antitrust law? Mainly, it’s because the complaint doesn’t even try to meet the elements of a federal antitrust claim. Specifically, in order to survive dismissal, the claim must allege 1) that the defendant has monopoly power in a relevant antitrust market, 2) that the defendant engaged in monopolization, and 3) that there were anticompetitive effects that resulted from its allegedly anticompetitive conduct. On the question of monopoly power, DoJ asks the Court to believe that the relevant market is “performance smartphones” sold only in the United States. But iPhones are sold globally, and the hardware is not different in other countries. App developers lean on this global distribution and rely on it to reach markets around the world, illustrating that the relevant market does not end at the nation’s borders.
As to whether Apple engaged in monopolization, a federal court has never categorized the conduct DoJ points to as anticompetitive. Apple requiring its business partners to meet certain requirements and refusing to deal with those who do not is famously legal under antitrust law, in large part because antitrust law is not intended to require competitors to help their rivals. That very refusal to deal, especially with bad actors, is what makes Apple’s operating systems and hardware a desirable place to do business for small app developers and connected device companies. DoJ does not point to any conduct that has ever been classified as illegal, so it hasn’t stated a claim on this point.
Lastly, DoJ failed to allege anything to suggest that its conduct negatively affected consumers in the identified markets. For example, DoJ claims that Apple’s limits on “super apps” kept consumers from experiencing “super apps” on Apple’s devices, but this is insufficient because consumers can and do switch to Android devices globally and in the United States. Moreover, DoJ failed to make any argument suggesting that consumers in China, for example, are better off because “super apps” are more ubiquitous there. It is more likely, in fact, that consumers and small businesses would be worse off if their mobile devices were mandatorily agnostic as to whether or not software that runs on mobile devices is readily able to trick and steal from consumers without fear of removal. Similarly, the iOS and Android ecosystems compete for app developers, which more often than not build apps for both platforms while also distributing software over the open internet. Having these differentiated choices benefits app companies and, like individual consumers, they would be worse off in a DoJ world in which they could no longer select the more exclusive or closed option.
Viewed in this light, it is a little shocking that DoJ wants the Court to find Apple liable even though it is a) not a monopoly, b) did not monopolize the market, and c) none of its conduct resulted in anticompetitive effects. Of course, DoJ is free to lobby Congress for the authority to protect its favored competitors, and it has done so. With any luck, Congress will continue to choose small businesses and consumers over those interests. Let’s hope it’s also understood that when DoJ petitions the Court for a fundamental change to federal statute, it might as well be shouting that order at a Wendy’s cashier.