Speaker 1: The US Department of Justice is suing Apple over what it calls an iPhone monopoly, and the government wants Apple to change the way Apple products are designed to work. The case revolves around the Apple ecosystem and this idea of the walled garden where users can feel locked into stain with an iPhone when certain Apple Services only work with Apple products, or how the Apple Watch only works with the iPhone or how it can be difficult or expensive for users and app makers to leave the iPhone [00:00:30] to use another app store. The lawsuit even calls out how tap to pay on the iPhone is also locked down to the Apple wallet and the 88 page lawsuit. Prosecutors say Apple deployed what it called a playbook to keep the iPhone on top with its app store that would extract higher fees thwart innovation and offer a less secure or degraded user experience and throttle competitive alternatives.
Speaker 1: In a statement, apple says this lawsuit threatens [00:01:00] who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple where hardware, software ends services intersect. Apple goes on to say that this lawsuit would set a dangerous precedent empowering government to take a heavy hand in designing people’s technology. The New York Times reports that Apple plans to file a motion to dismiss the case in the next 60 days, and Apple will [00:01:30] emphasize that it is legal to adopt policies or designs that competitors may not like. If it makes using the iPhone a better experience, this may become a landmark case and the legal battle could stretch out for years. It could be similar to when the Department of Justice sued Microsoft in 1998 accusing Microsoft of monopolizing Internet Explorer for Windows, and it resulted in Microsoft changing its practice.
Speaker 1: But as for this case against Apple, the US government has joined forces with 15 states and the District of Columbia to lay [00:02:00] out a number of examples of Apple hindering competition and it sweeps across several of Apple’s products. The lawsuit starts with a tail of an unnamed Apple executive who went straight to Steve Jobs in 2010 to complain about the way an ad showed a woman switching from her iPhone to an Android to use her Kindle e-reader. Prosecutors took a sharp jab at Jobs himself saying that he was clear in his response. Apple would force developers to use its payment system [00:02:30] to lock in both developers and users. The app store is a big focus. It says Apple is imposing restrictions, fees, and taxes on how apps are created and distributed. The lawsuit points to how Apple blocks in-app payment methods. And another issue is around cloud streaming apps.
Speaker 1: Claiming Apple prevented developers from offering cloud gaming apps that would reduce dependence on the iPhone. There’s another focus around text messaging and how iMessage is made to be easier to use other third party [00:03:00] messaging apps. And yes, the green versus blue bubble debate is part of this. The lawsuit claims iMessage undermines the quality and functionality of rival smartphones. When an iPhone user chats with someone on Android, it shows their chat bubble is green and that means the person’s conversation cannot be encrypted. Their videos shared are pixelated and grainy, and the users in those convos can’t edit messages or see typing indicators and it signals to a family that if they don’t have an iPhone, well the experience is worse. And the DOJs argument [00:03:30] is that Apple could change that. The lawsuit points to Apple executives that said, moving iMessages to Android would hurt Apple and CEO.
Speaker 1: Tim Cook was also called out right when Apple launched the iPhone 14. Cook was on stage at Vox Media’s code 2022 conference and on stage he was asked if Apple could fix the iPhone to Android messaging problem. So it would be easier to text seamlessly with a parent who has an Android phone. And to that cook said, buy your mom an iPhone. The [00:04:00] lawsuit also goes into the Apple Watch how it only works with the iPhone and not Android. And if you have another brand of smartwatch, your abilities of what it can do with the iPhone are limited. Certain notifications on the iPhone may not come through on another smartwatch, or a user may not be able to take the same actions like they could with an Apple watch. There are complaints in this lawsuit about how Apple restricts cross platform digital wallets blocking other developers from making a digital wallet that has tap to pay, [00:04:30] and the lawsuit also calls out Apple pay for extracting fees from banks for transactions saying that Samsung and Google do not charge banks.
Speaker 1: So what comes from all of this, prosecutors are asking that a federal judge label Apple and unlawful monopoly and force Apple to stop engaging in anti-competitive practices. That could include forcing Apple to let the Apple watch work with Android or a leading you tap to pay with an iPhone and use something besides Apple Pay. It could mean Apple would need to allow [00:05:00] apps that work across platforms. And in the end, all of this could make it easier for consumers to switch their life over to Android or mix and match their smart accessories or digital services with ones not made by Apple. And yes, it could be the end of the green and blue iMessage bubbles, or at least end some of the annoyances that happen when an iPhone user texts with an Android user. We will be hearing more about this over time, so be sure to subscribe as we keep following the developments. But for now, sound off in the comments [00:05:30] about what are your first reactions to this lawsuit? Is the apple walled garden a problem for you? Would you want to see something changed? Let us know and thanks for watching.