So the news dropped yesterday that Apple that company famous for the iPhone in the iPad and the gadget everything is going to be facing its own antitrust loss just like AT&T before it. The story was confirmed today with the Department of Justice officially filing the lawsuit. Apple apparently got on somebody’s radar that somehow it’s too big or too dominating or two something and it’s time to break them up.
Anti-Trust What?
The concept of antitrust goes back to the Sherman Anti-Trust Act which was passed in the 1890s. Back then, monopolies were referred to as "trusts," mainly because of how they operated. Standard Oil was a great example. All the assets of each of its company parts were put under a board of trustees. They operated different parts, even maybe different company names, but they were all one organization and trust, a monopoly that controlled market prices in an industry. A modern version could be compared to the international oil organization, OPEC as a cartel.
The Sherman Anti-Trust Act essentially was a response to the huge oligarchy or monopolies that had, up to that point, dominated American business, particularly with the railroad, tobacco, oil, and the shipping industry. Names like Rockefeller and Carnegie were the biggest companies, owning just about everything in their industry. It was both vertical and horizontal domination of their markets. The result was near-empire style control of price points and market values, and anyone who didn’t cooperate pretty much was left out in the cold.
The Change of the 20th Century
After the 1900s, the US federal government decided enough was enough and the Sherman Act as well as the Clayton Act, added laws, were used break-up monopolies and bring back what was intended as competitive markets. Since that time, the Sherman Act and its legal descendents have been exercised periodically on American companies where they’ve basically just gotten too big for their own good. AT&T was one of the most famous in the 1980s that also went under the anti-trust hatchet in 1982. That company, a utility prior to the lawsuit, pretty much controlled the telephone in the United States. "Ma Bell" was literally the mother of all telephones as known in the 20th century. It was the same company that laid the transcontinental cable and provided the phone internationally to just about everybody else. It’s also the same company named after Edison Bell.
When AT&T was broken up, it was fragmented by the US government into its divisions, which were then designed to operate as individual separate companies. So, for instance, on the West Coast where I live, Pacific Bell was the western region of AT&T. It became Pacific Bell and then eventually something else (Pacific Telesis or PacTel?), but it was fundamentally the breakup of a company that the government decided was dominating an entire industry, so fast forward.
There’s been lots of talk of companies that should be under the microscope again, especially in the tech industry. Microsoft was handed it's turn in the 1990s, and Facebook got the raking over the coals in the 2020. Google is definitely on the radar, and Amazon could arguably be another in the e-commerce arena, but for whatever reason Apple got the federal government upset enough that it is now in the DOJ crosshairs. Steve Jobs might be rolling over in his grave.
Apple's Worm
There’s a couple reasons of why Apple might have gotten people in regulation irked enough to go to litigation. One of the big reasons may very well be the domination of Apple with regards to its app market (dubbed the "Apple iPhone ecosystem"). Literally nothing can be sold in the Apple Store unless you cater to Apple's terms, which also includes giving them a cut of any revenue involved as well as controlling how your app works, who reaches what it does, and whether it meets their terms of service.
Alternatively, the anti-trust may be focusing on the nature of Apple's device technology in that the whole idea of touch phones in the window design that it uses is so generic now, Apple shouldn’t be the one trying to control the software anymore. In theory, it’s taking away from Apple what is technically an app design, but when something gets to the point where it literally becomes part of everyday life for everybody, that does tend to be vulnerable to the federal government coming in and saying,
"Now we’re going to make it generic for the free market." But, then again, the U.S. business arena has never been free market. It hasn’t been that way for decades, and it sure isn’t about to start right now.
Apple is not in a Strong Position, Politically
What is given is Apple's financial reserves, the fact that it’s an election year, and it’s very unlikely Apple is just going to roll over and settle right away to the federal government. However, it is a bit of an interesting pickle. Apple has been associated with the liberal side of the political aisle and, depending how the election turns out in 2024, it’ll be a big question as to whether they have any friends on either side of politics. On the one hand again they got everybody upset in a liberal presidential administration with their price market control, which is what triggered the move to the litigation. On the other hand, Apple hasn’t really been making friends on the conservative side and isn’t necessarily on their fan list, especially after the 2015 terrorist incident that happened down in San Bernardino, CA were Apple was non-cooperative with law-enforcement when they wanted to crack one of the suspects' apple phones. So, if it’s a wait-and-see game to see who the next president is, that doesn’t necessarily mean it’s gonna work in Apple‘s favor.
It is interesting that the anti-trust is coming from the US at this moment. Typically, it would have been the European Union that would be going after a big company first, like they did with Google. Again, it comes down to who did Apple piss off and why.
More details to come, maybe...
