Apple Files Motion to Dismiss U.S. Antitrust Lawsuit

Apple today filed a motion to dismiss the sweeping antitrust lawsuit brought against it by the U.S. Department of Justice (DOJ), 16 U.S. states, and the District of Columbia (DC).

“The Government asks this Court to endorse a theory of antitrust liability that no court has ever recognized and to sanction a judicial redesign of one of the most innovative and consumer-friendly products ever made: iPhone,” the filing begins. “Apple has invested billions of dollars to create a revolutionary, cutting-edge product and to distinguish iPhone in a fiercely competitive smartphone market through consumer-oriented features. This lawsuit is based on the false premise that iPhone’s success has come not through building a superior product that consumers trust and love, but through Apple’s intentional degradation of iPhone to block purported competitive threats. That outlandish claim bears no relation to reality. And the Government’s theory that Apple has somehow violated the antitrust laws by not giving third parties broader access to iPhone runs headlong into blackletter antitrust law protecting a firm’s right to design and control its own product.”

There’s so much misinformation in that statement alone, it’s difficult to know where to start. But it hits on a central theme in antitrust related to mutual exclusivity that’s widely misunderstood. That is, Apple could have engaged in two seemingly contrary activities—”investing billions of dollars to create a revolutionary, cutting-edge product” and “intentionally degrading the iPhone experience for customers to block competitive threats.” Having exhaustively examined the government’s original filing and understanding the history of this company and its products, it’s clear that Apple has done both. Unfortunately for Apple, engaging in the former doesn’t absolve it of being guilty of the latter.

Interestingly, one of Apple’s arguments in this filing is that it “is not Microsoft.” That’s true: Apple’s anticompetitive behaviors are far greater, and impact far bigger audiences, than anything that Microsoft did in the late 1990s. But the mutually exclusive parallels here are obvious: Microsoft bundling Internet Explorer in Windows was beneficial to consumers, as the software giant argued, but it was also anticompetitive, as the DOJ countered.

Regardless, Apple provides several reasons it believes this suit should be dismissed. It argues that it has not engaged in exclusionary conduct, claims the government doesn’t prove it undermines new competitive threats (super apps, cloud streaming apps, messaging apps, smartwatches, and digital wallets, claims it is not a monopolist, argues that the government has not made specific enough claims about Apple’s intent in the way it does business, and accuses the government of expanding its case by making cursory references to other Apple products and services in the original complaint.

These are mostly baseless arguments.

Most problematically for Apple, its exclusionary acts are both numerous and well-documented, as are the steps it’s taken to artificially limit potential competitive threats. And because the iPhone can easily be labeled a monopoly according to the U.S. legal definition of the term, Apple is likewise a monopolist.

I’ve written a very long piece that examines the U.S. government case against Apple, but I have yet to publish it. Given this new filing, I will update it to address Apple’s counterarguments and get it out there. But given how easy it is to dismiss Apple’s opening salvo, it’s fair to assume that Apple will not get the dismissal it seeks. This company has been harming competitors, consumers, and partners for years, and while random minor points in the original complaint are incorrect—the smartwatch section in the complaint is particularly specious—the government gets the most important points right. And that’s a big problem for Apple.

As I write in that as-yet unpublished analysis, “While many critics of this case have pedantically attacked very specific points, doing so misses the point. This isn’t all or nothing. If even one of these accusations holds up in court, Apple will be found guilty of violating U.S. antitrust laws and will be held accountable. At the very least, it will be forced by the federal court system to make behavioral changes that curtail its illegal activities.”

Apple’s lawyers obviously know that a dismissal is a long shot. But they’re wise to try and undermine this case, given the sweeping nature of the accusations. This would be an easier task if their client was a better company.