DOJ lays siege to Apple’s walled garden

The U.S. Department of Justice announced today it is suing Apple for illegally monopolizing the smartphone market to the detriment of consumers, competitors, developers and others. The suit focuses on Apple’s resistance to cross-platform messaging, the lack of compatibility between iPhones and non-Apple smartwatches, barring developers from connecting the tap-to-pay feature with alternative digital wallets and making it difficult for customers to switch to alternative smart phones.

The full lawsuit can be read here.

Taking the walled garden to the next level. The DOJ — and the 15 states and District of Columbia that joined the suit — accuses Apple of responding to the threat that cheaper smartphones might “disintermediate” the iPhone, not by offering competitive prices but by making it difficult and expensive to quit the iPhone ecosystem.

In effect, unlike other so-called walled gardens such as Meta and Google, Apple’s ecosystem is not device-agnostic. It’s possible to interact with Facebook or Instagram using any connected device, but it’s typical of Apple’s features and services that the user has to be within the iOS ecosystem to access them.

Apple, Google and Meta are also facing scrutiny for possible antitrust violations under the E.U.’s Digital Markets Act.

Apple says. In a statement, Apple said the lawsuit would lead to government overreach that would restrict the company’s freedom to design its technology. “This lawsuit threatens 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, and services intersect.”

As expected, Apple also said, “We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”

Why we care. There is a quiet war being fought between the walled gardens and the open internet. The DOJ might not have a dog in that fight, but this lawsuit sends a clear warning that you can build the walls around your garden but that you can’t put a roof on it too.

It has to be said, though, that there is one odd thing about this lawsuit. While the pleading quotes prima facie problematic statements from Apple executives that appear to show an intent to create a monopoly, one can ask how successful the strategy has been. Android has a worldwide market share above 70%, doubtless due to kinder pricing. In the U.S., the iPhone is in the lead with just over 60% of the market, but that leaves a healthy 40% for its competitors (or competitor).