The DOJ Case Against Apple Looks Pretty Rotten

In an effort to leave no one out, Joe Biden’s antitrust enforcers have sued yet another American technology giant — Apple. Between the Department of Justice (DOJ) — which brought the Apple case — and the Federal Trade Commission, regulators are now in active anti-monopoly litigation against Meta, Google, Amazon, and Apple (conveniently ignoring the fact that all four compete with one another).

The DOJ’s and Apple’s lawyers will spar over each technical and legal particular contained in the government’s 88-page complaint during what promises to be a protracted trial. Already, however, commentators have noted myriad defects in the agency’s reasoning, including the expected market-definition gamesmanship. The DOJ alleges that Apple disadvantaged competitors’ products — particularly with respect to super apps, cloud-streaming apps, messaging apps, smart watches, and digital wallets — to insulate its own market share. The company asserts that its practices benefit consumers, such as by strengthening cybersecurity.

Taken as a whole, the DOJ’s suit could produce a seismic expansion of antitrust enforcement’s role in economic regulation. Once, antitrust provided regulators a tool to corral blatant anticompetitive behaviors like price-fixing. However, the DOJ goes further. It seeks to micromanage Apple, dictating with whom it must do business, to whom it must make its digital infrastructure available, and the minutiae of how it may design its own products. This would inject bureaucrats and judges into highly technical and subjective private-sector decision making. This is precisely the type of decision-making at which central planners invariably fail.

Wiser minds have long recognized these pitfalls. In Verizon v. Trinko (2003), Supreme Court Justice Antonin Scalia cautioned against enforcing antitrust law in a manner that would “require[] antitrust courts to act as central planners, identifying the proper price, quantity, and other terms of dealing — a role for which they are ill suited.”

Scalia’s opinion notes significant constraints on antitrust enforcement. Absent actual anticompetitive conduct, neither being a monopolist nor charging monopolistic prices violates the law, he writes. Neither must a monopolist grant competitors access to its property (with certain exceptions). “Firms may acquire monopoly power by establishing an infrastructure that renders them uniquely suited to serve their customers,” Scalia states. “Compelling such firms to share the source of their advantage is in some tension with the underlying purpose of antitrust law, since it may lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial facilities.”

In fact, Scalia continues, doing so “may facilitate the supreme evil of antitrust: collusion.”

Trinko will likely loom large as the DOJ’s complaint proceeds. According to the complaint’s logic, a judge could impose on Apple — and, through future litigation, other successful businesses — an obligation to provide its competition with the sort of state-compelled assistance the Trinko court eschewed. Also, it is important to note that Apple’s supposed sin (declining in some cases to facilitate non-Apple products and services) is a common practice throughout many economic sectors — from traditional retail to digital services.

Moreover, the patchwork economic narrative the DOJ’s complaint stitches together seems dubious at best. “Despite major technological changes over the years, Apple’s power to control app creation and distribution and extract fees from developers has remained largely the same, unconstrained by competitive pressures or market forces,” the DOJ alleges. Au contraire — Apple is healthily “constrained” by such pressures and forces, but it has overcome them through decades of breakneck innovation. Free markets and consumer choice elevate companies that best fulfill consumer demand — not those favored by Washington bureaucrats.

Consider the record. Since the iPhone’s introduction in 2007 — itself a groundbreaking achievement — Apple has launched hundreds of new products and services, including the new Vision Pro, “the best consumer [augmented reality] headset anyone’s ever made,” according to The Verge. Further, it’s improved each product continuously. The iPhone itself (the center of the DOJ’s complaint) came to market without an app store, yet continues to add and accommodate new features and devices with each generation. Reality is in stark contrast to the DOJ’s complaint.

The DOJ deplores Apple’s “walled garden” — its self-contained ecosystem of phones, computers, accessories, and software — where Apple dictates who may enter and on what terms. The agency, President Biden, the FTC, and congressional technocrats hope to create a walled garden of its own, encompassing the entire U.S. tech sector, in which it can direct innovation and competition. In the DOJ’s regulatory garden, bureaucrats choose winners among market actors. They prescribe and proscribe various modes of competition and carefully prune anything they find subjectively distasteful — all without reference to consumer preferences.

In the regulatory garden, the thorn of central planning — even under the name “antitrust enforcement” — pricks sharply. Propelled by the absence of heavy-handed regulation, American tech companies have dominated global tech markets, providing consumers with revolutionary and ever-improving products. Regulators should not regard this productivity as an unshakable given — they can squelch it easily with foolish economic interventions.

David B. McGarry is a policy analyst at the Taxpayers Protection Alliance.