Apple’s antitrust fight begins | The Vergecast

Intro (00:00:00)

• The Vergecast discusses the news of Apple facing an antitrust lawsuit.
• Nilay Patel is absent, possibly in Florida.
• Lauren Finer joins the show to discuss the lawsuit.

The DOJ's Allegations (00:00:49)

• The DOJ and 16 state and district attorneys general sued Apple for maintaining an illegal monopoly in the smartphone market.
• Apple is accused of making consumers and developers more reliant on its ecosystem through various actions.
• Examples of these actions include disrupting super apps that could reduce the stickiness of iOS and suppressing the quality of messaging between iPhones and Androids.
• The lawsuit alleges that Apple has abused its dominant position in the smartphone market.

Five key areas of the DOJ's complaint against Apple (00:02:23)

• The DOJ's complaint against Apple is divided into five categories.
• Apple is accused of taking actions to prevent competitors and users from getting the most out of their iPhones.
• Consumers are getting worse products for more money that are harder to walk away from.
• Apple's actions are seen as an abuse of its monopoly.
• The DOJ argues that Apple has made it worse to use its products or use someone else's products in combination.
• Apple's actions are designed to incentivize users to stay on Apple platforms.
• The iPhone is seen as bad or not as good as it could be due to Apple's actions.
• Apple is accused of doing this intentionally to prevent people from leaving.
• Super apps: Apple is accused of preventing developers from creating super apps that can offer a wide range of services within a single app.
• Cloud streaming services: Apple is accused of restricting cloud streaming services from accessing the App Store on the same terms as other apps.
• Messaging apps: Apple is accused of favoring its own messaging app, iMessage, over third-party messaging apps.
• Smartwatches: Apple is accused of preventing third-party smartwatches from accessing the same features and functionality as the Apple Watch.
• Digital wallets: Apple is accused of restricting third-party digital wallets from accessing the same features and functionality as Apple Pay.

Super Apps (00:05:55)

• The US Department of Justice (DOJ) filed an antitrust lawsuit against Apple, alleging that the company's practices stifle competition and harm consumers.
• The lawsuit focuses on Apple's treatment of "super apps," highly popular in Asia but not in the United States, arguing that Apple intentionally hinders their success on iOS to prioritize its own services.
• The DOJ also raises concerns about game streaming, messaging apps, smartwatches, and digital wallets, suggesting Apple is attempting to lock down its ecosystem and limit interoperability.
• The debate centers on whether the lack of super apps in the US is due to consumer preferences or Apple's policies, with the US government believing Apple's dominance distorts app usage.
• The lawsuit emphasizes Apple's iPhone mobile device ecosystem and maintaining its monopoly, with less emphasis on web apps.
• The complexity of explaining technical concepts like PWAs and browser engines led to the use of the term "super app" for better comprehension in court.

Cloud gaming on iOS (00:15:14)

• Apple's prevention of cloud gaming services on the App Store in 2019 hindered their growth and popularity.
• Developers faced challenges with Apple's opaque and inconsistent app review process, making it impractical to offer cloud gaming services on iOS.
• The Department of Justice (DOJ) criticized Apple's App Store policies, suggesting they maintain Apple's monopoly rather than benefit users.
• Apple's antitrust fight centers on accusations that its actions harm users and developers.
• EU developers expressed frustration with Apple's requirements, citing complications and no genuine user experience improvements.
• Apple's concerns include the potential decline of hardware significance if cloud gaming becomes the norm, conflicting with its focus on superior hardware production.
• Apple also fears the rise of super apps like WeChat, which could diminish the importance of phone hardware.
• Despite these concerns, skepticism exists about whether users would switch phone operating systems solely for cloud gaming capabilities.
• Many users prioritize affordability and functionality over high-end gadgets, opting for cheaper phones if essential tasks can be performed in the cloud.
• Apple's high-profit margins (30% markup) may deter potential buyers and limit market share.
• The DOJ argues that Apple's practices prevent users from having an equivalent smartphone experience outside the Apple ecosystem, potentially leading to a loss of iPhone users if alternatives were available.
• Cloud gaming services like Luna have not gained significant traction, suggesting that games may not be the primary factor driving consumers' choice of smartphones.

Messaging apps and green bubbles (00:23:48)

• The DOJ is suing Apple for anti-competitive practices, including intentionally creating a worse messaging experience between iPhones and Androids to lock users into the iOS ecosystem, as evidenced by Tim Cook's comment to "buy your mom an iPhone" when someone complained about green text bubbles.
• Apple is also accused of preventing the entry of "super apps" into the US market, fearing that their popularity would reduce the stickiness of iOS.
• The lawsuit mentions specific companies, like Beeper, that are affected by Apple's practices but were not explicitly named in the complaint.
• Apple argues that it is not obligated to make its products compatible with competitors and that doing so would harm its own users, while the DOJ contends that Apple's actions are anti-competitive and that it should be required to allow other messaging apps to access SMS.
• The outcome of the lawsuit could have significant implications for the tech industry and the future of messaging.

Smartwatches (00:30:17)

• Apple is facing an antitrust lawsuit over its dominance in the smartwatch market.
• The complaint alleges that Apple's practices create a poor user experience for non-Apple smartwatches paired with iPhones.
• Apple argues that integrating hardware, software, and services enhances the user experience, while the DOJ argues that it makes alternative options worse.
• The outcome of the case will depend on whether the judge finds legitimate business reasons for Apple's actions or deems them anti-competitive.
• Apple's dominant position in the market raises questions about whether its practices constitute illegal monopolistic behavior.

Apple's control over NFC and transactions (00:35:04)

• Apple is facing an antitrust lawsuit from the DOJ over its digital wallet practices and other anti-competitive behaviors.
• The lawsuit alleges that Apple restricts third-party access to its secure enclave, making it difficult for users to switch to non-Apple messaging services, limits the functionality of third-party iOS web browsers, restricts the use of eSIMs to Apple devices, controls cloud storage options, and limits the functionality of Siri.
• Fintech companies have raised concerns with the DOJ about Apple's restrictive practices, arguing that they hinder the development of competing payment products and features.
• Developers who have long complained about Apple's practices are excited about the lawsuit and see it as a significant step towards addressing their concerns.

Nilay joins us from vacation (00:42:00)

• The DOJ is suing Apple for allegedly monopolizing the tech industry, drawing parallels to the Microsoft case from 25 years ago.
• The DOJ claims that Apple's practices, such as preventing platforms from enhancing the next one, have hindered technological progress.
• Apple is accused of using super apps to control the market, similar to Microsoft's use of middleware in the Windows case.
• Web apps have not emerged as strong competitors to native apps on iPhones, despite initial expectations.
• Apple's response emphasizes its business model of creating integrated products and services, positioning itself as a safeguard against capricious banks.

Google's market dominance (00:48:59)

• The DOJ's case against Apple is similar to the Google antitrust trial, where Google argued its market share was due to its good products, while the government argued otherwise.
• Proving Apple's monopoly may be challenging as the DOJ needs to demonstrate a causal link between the iPhone's quality and Apple's market dominance.
• Apple claims the iPhone could be better if there was more competition, suggesting they don't feel competitive pressure.
• Internal Apple documents reveal that the company's marketing manager believed the iPhone was "too good" and didn't need further expensive features.
• The DOJ argues that without competition at the application layer, the iPhone could become disintermediated, similar to what happened with Windows.
• Super apps or the web could potentially bypass the iPhone's app store, forcing Apple to compete more directly.

Middleware and the future of apps (00:51:51)

• The DOJ argues that Apple is hindering technological progress by preventing the application layer from transitioning to super apps, the web, or AI.
• Apple's success was a result of the application layer moving to the web, allowing them to launch the iMac and gain market share from Windows.
• The complaint against Apple includes quotes from executives discussing the hindrance of QuickTime on Windows, suggesting Apple's actions were motivated by a desire for control.
• The complaint raises valid concerns about the evolution of technology and the need for innovation in the smartphone market.
• Apple is facing an antitrust lawsuit over its control of the iOS app ecosystem.
• Facebook's attempt to become a super app failed due to clutter and complexity.
• Apple fears Android's ability to provide a great user experience on inexpensive devices through cloud services.
• Designers are switching from MacBooks to Chromebooks due to Figma's improved efficiency on the latter.
• Apple's defense arguments are predictable and unsurprising.

Apple's defense (00:58:51)

• Apple emphasizes the importance of security, especially for devices like iPhones that are constantly carried around.
• Apple highlights its unique integration of hardware, software, and services as a core aspect of its business.
• Apple argues that power constraints, small device size, and network limitations on mobile phones justify its tight control over applications.
• Apple claims that its actions are primarily driven by privacy and security concerns, rather than a desire to protect its services revenue.
• Apple points to China and India as examples of countries that heavily regulate its operations, suggesting that its decisions are influenced by regulatory pressures.
• Apple asserts that super apps already exist and that its actions are intended to protect user privacy and security.
• Apple highlights China and India as countries that have expressed interest in regulating its practices.
• Apple mentions that China has pushed for the adoption of RCS messaging, potentially compromising its encrypted iMessage service.
• Apple acknowledges the significant influence of Reliance Jio, India's largest carrier, in shaping the country's smartphone market.
• Apple notes the rapid pace of smartphone launches in India, indicating frequent switching among users.
• Apple's response appears to be based on background information rather than direct statements from Apple executives.

The Open Web (01:02:18)

• The US government's antitrust complaint against Apple focuses on the company's actions to maintain high prices by preventing new application models and restricting competitors like Xbox from accessing the iPhone.
• The complaint also includes concerns about iMessage, super apps, wallets, and smartwatches.
• The DOJ is portraying Apple as the villain rather than seeking a specific victim, as companies like Google and Meta are also involved in the case.
• The EU is currently investigating Apple for antitrust violations, with the case expected to last a decade.
• Apple is making changes to comply with EU regulations, which may shorten the duration of the case.

Lightning round (01:13:22)

• YouTube is expanding its multi-view feature, currently available for sports, to the iPad and iOS devices.
• Peacock will introduce multi-view streaming with up to four streams for the Olympics and plans to extend it to sports and possibly scripted content.
• The concept of watching multiple streams simultaneously on different screens is gaining popularity, with sports podcasts discussing the benefits of switching between a game and a movie during commercials.
• Beeper, a cross-platform messaging app, has released a new Android app that is superior to the iOS version.
• Beeper aims to organize all messages from various platforms, including Signal, WhatsApp, LinkedIn, and X, into a single inbox.
• The European Union is advocating for interoperability among messaging apps, potentially leading to significant changes in the messaging landscape.
• The future of messaging could involve accessing all messages from different platforms in one place, similar to early 2000s apps like AOL Instant Messenger (AIM) and Trillian.

A Super App for babies (01:18:16)

• Allison highlighted Sago Mini, a comprehensive app for babies that offers a variety of games and activities, simplifying parents' search for age-appropriate content.
• Concerns have been raised regarding the safety of YouTube Kids due to the presence of inappropriate content, including AI-generated videos that may disturb children.
• Parents are seeking guidance on managing their children's screen time and ensuring their safety while using devices and the internet.
• There is a scarcity of high-quality, low-stakes, and entertaining content for children, making it difficult for parents to find suitable entertainment options.
• Dieter Bohn, the host of Vergecast, tested the Humane AI Pin, a new gadget that projects information onto the user's hand, and was impressed with its functionality and design.
• Bohn believes that the AI Pin and other upcoming AI gadgets will prompt discussions about the role of smartphones in our lives.
• Apple is facing an antitrust lawsuit, and significant developments are expected in the coming days as reactions and more reporting emerge.
• The Verge website provides comprehensive coverage of the antitrust case, including the press conference, complaint, and other relevant information.