Apple is the latest tech giant under siege

Apple is the latest tech giant under siege

To understand the extent to which the US government’s new lawsuit goes to the heart of the identity Apple has forged for itself, let’s first consider the firm’s fan base.

Apple has a unique position as a technology brand.

I’ve been to a lot of Apple events in my time, both virtual and in person, and one thing that always makes us journalists raise our eyebrows is the cheers and cheers of the audience whenever a new feature, no matter how small or incremental, is announced.

When a new hardware product goes on sale, Apple employees form a guard of honor outside the store and applaud its first buyers – some of whom will camp outside for hours beforehand, and spend thousands of dollars (who else can get away with charging $3,500 /£3,499, for a VR headset?).

People get distinctive Apple fruit logo tattoos.

“Apple is like a strange drug that you can’t get enough of,” wrote Leander Kahney in his 2006 book The Cult of Mac.

It’s a “strange drug” or “magical experience,” as Apple put it in a statement on Thursday, that is now under attack.

So far, the Apple ethos is a very successful business model. As I write, the firm is worth $2.6 trillion.

Analytics firm CCS Insight estimates that 72% of smartphone handsets purchased in North America alone in the last three months of 2023 will be iPhones. Samsung takes 25%, leaving only 3% for everyone else in the cell phone business.

One of Apple’s big selling points is its focus on privacy and security. But the question is whether it achieves this by shutting out the competition.

The tech giant has engineered an illegal monopoly in smartphones, according to a US Justice Department lawsuit filed on Thursday.

Apple routinely blocks web trackers – an annoyance for web users but also an important revenue generator for other digital businesses.

It also operates a “walled garden”. This means all Apple products work seamlessly together, and every app, payment method and operating system update is reviewed and approved by the tech giant. It is, effectively, a closed ecosystem and keeps it safe.

Developers feel they have to pay to get in, and also have to follow Apple’s strict rules: but Apple says in return they get access to a huge market of potential customers.

The music streaming platform, Spotify, and Epic Games, which makes Fortnite, are the two biggest commercial names against it. Fortnite has been removed from the App Store: Spotify didn’t go this far, probably because it has millions of iPhone-based subscribers.

Apple’s biggest smartphone rival is Google’s Android, which is a much broader affair. Its operating system has to work across dozens of different devices made by various manufacturers over the years. As a result, it offers users more choice – and is inevitably less secure as well.

The US Department of Justice (DOJ) is not the only authority that has decided to take a closer look at Apple’s unique position.

Twice now the tech giant has been reluctant to open its gates – and both times because of the European Union.

It recently had to open up to other app stores in Europe. It does so hesitantly, with many warnings of the evil that lurks beyond its own digital paradise.

Until recently the iPhone didn’t use the same charging cable as almost everything else – most models required a bespoke lightning cable. But the EU brought in common charger rules, and Apple now sells lightning cable adapters, as well as switching its latest models to more ubiquitous USB-C ports.

The DOJ does not have the same authority, however.

This is going to be a court process where it has to convince a judge, and it doesn’t have a very successful track record of doing that.

“The last time a US court found a Big Tech company guilty of monopolization was in 2001 (Microsoft),” said Anne Witt, Professor of Law at the EDHEC business school in France.

That’s about the dominance of Microsoft’s Internet Explorer web browser, which is installed by default on millions of machines running Windows.

However, keep in mind that Apple is not holding its customers hostage, forcing them to embrace it.

“Every case against Apple portrays its users as consumers without free will. I really struggle with that,” said Carolina Milanesi of tech industry analysis firm Creative Strategies.

I know I have friends with iPhones who have refused the “faff” to switch to another brand, even though they like the look of something different.

But that doesn’t mean that Apple is actively blocking them — even if CEO Tim Cook’s once-dismissive comments are coming back to bite him.

A journalist mentioned in an interview that he could not share the video with his mother, who has a different phone.

“Buy your mom an iPhone,” the Apple CEO joked.

Apple has vowed to “vigorously” fight the lawsuit and denies the allegations.