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The DOJ Goes To War Over Apple's 'Blue Bubble' Walled Garden
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Earlier today the Department of Justice filed an 88 page lawsuit alleging the Apple (NASDAQ: AAPL) flexed monopolistic muscles:
For many years, Apple has built a dominant iPhone platform and ecosystem that has driven the company’s astronomical valuation. At the same time, it has long understood that disruptive technologies and innovative apps, products, and services threatened that dominance by making users less reliant on the iPhone or making it easier to switch to a non-Apple smartphone. Rather than respond to competitive threats by offering lower smartphone prices to consumers or better monetization for developers, Apple would meet competitive threats by imposing a series of shapeshifting rules and restrictions in its App Store guidelines and developer agreements that would allow Apple to extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives. – DOJ lawsuit, pg 3
Ouch. The suit even goes directly after the notorious green vs blue bubble treatment in texting, stating that:
In addition to degrading the quality of third-party messaging apps, Apple affirmatively undermines the quality of rival smartphones. For example, if an iPhone user messages a non-iPhone user in Apple Messages—the default messaging app on an iPhone—then the text appears to the iPhone user as a green bubble and incorporates limited functionality: the conversation is not encrypted, videos are pixelated and grainy, and users cannot edit messages or see typing indicators- DOJ lawsuit, pg 38
This is not the only monopolistic claim Apple has had against it recently. Companies that have gone gloves off in the last few years and pointed to the tech giant’s behavior as stifling competition include:
I’m not sure whether green bubbles are any less secure than blue ones, and will leave that to smarter people to debate. Generating a monopoly in storage when Google and others give so much away for free seems far fetched. But the other claims by Spotify and Epic do seem to have merit. If Apple is required to provide alternate payment options and isn’t, and if they are de facto restricting their competition via a 15-30% tax on other apps and services, well that’s a pretty high wall for a competitor to climb.
Could the App Store, long credited as part of the incredible technology that has propelled the iPhone to earth’s greatest cash generating product, and Apple itself to a $2.6 trillion giant today, also end up being the company’s undoing?
It’s hard to say, but will be exciting to watch.
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