In an effort to leave no one out, Joe Biden’s antitrust enforcers have sued yet another American technology giant: Apple.
The DOJ’s suit could significantly expand antitrust enforcement in economic regulation.
T he Department of Justice (DOJ) and the Federal Trade Commission (FTC) regulators are in anti-monopoly litigation against Meta, Google, and Amazon. In an effort to leave no one out, Joe Biden’s antitrust enforcers have sued yet another American technology giant: Apple.
The DOJ has put together an 88-page complaint, but quantity is not the same as quality. Commentators have already noted flaws in the DOJ’s reasoning, including the expected market-definition gamesmanship. The DOJ alleges that Apple disadvantaged competitors’ products — particularly with respect to super apps, cloud-streaming apps, messaging apps, smart watches, and digital wallets — to insulate its own market share. The company asserts that its practices benefit consumers, such as by strengthening cybersecurity.
Taken as a whole, the DOJ’s suit could significantly expand antitrust enforcement in economic regulation. At its inception in the late 19th and early 20th centuries, antitrust was intended to provide regulators a tool to corral clearly anti-competitive behaviors such as price-fixing. However, the DOJ goes further. It seeks to micromanage Apple, dictating with whom it must do business, to whom it must make its digital infrastructure available, and the minutiae of how it may design its own products. This would inject bureaucrats and judges into highly technical and subjective private-sector decisions. This is precisely the type of decision-making at which central planners invariably fail.
Wiser minds have long recognized these pitfalls. In Verizon v. Trinko (2003), Supreme Court Justice Antonin Scalia cautioned against enforcing antitrust law in a manner that “requires antitrust courts to act as central planners, identifying the proper price, quantity, and other terms of dealing — a role for which they are ill suited.”
Scalia’s opinion notes significant constraints on antitrust enforcement. Absent actual anti-competitive conduct, neither being a monopolist nor charging high prices violates the law, he writes. Moreover, a monopolist should not have to grant competitors access to its property (with certain exceptions). “Firms may acquire monopoly power by establishing an infrastructure that renders them uniquely suited to serve their customers,” Scalia states. “Compelling such firms to share the source of their advantage is in some tension with the underlying purpose of antitrust law, since it may lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial facilities.”
In fact, Scalia continues, doing so “may facilitate the supreme evil of antitrust: collusion.”
Trinko will likely loom large as the DOJ’s complaint proceeds. According to the complaint’s logic, a judge could impose on Apple — and, through future litigation, other successful businesses — an obligation to provide its competition with the sort of state-compelled assistance the unanimous Trinko decision condemned. Also, it is important to note that Apple’s supposed sin (declining, in some instances, to facilitate non-Apple products and services) is a common practice throughout many economic sectors — from traditional retail to digital services.
Moreover, the patchwork economic narrative the DOJ’s complaint stitches together seems dubious at best. “Despite major technological changes over the years, Apple’s power to control app creation and distribution and extract fees from developers has remained largely the same, unconstrained by competitive pressures or market forces,” the DOJ alleges. Au contraire, Apple is constantly challenged by such pressures and forces, but it has overcome them through decades of innovation. Free markets and consumer choice elevate companies that best fulfill consumer demands — not those favored by Washington bureaucrats.
Consider the record. Since releasing the iPhone in 2007, Apple has launched hundreds of new products and services, including the new Vision Pro, an innovative virtual-reality headset unlike anything else currently on the market. And it is not a company that rests on its laurels. The iPhone itself (the center of the DOJ’s complaint) came to the market without an app store, yet continues to add and accommodate new features.
The DOJ deplores Apple’s so-called walled garden — its self-contained ecosystem of phones, computers, accessories, and software — where Apple dictates who may enter and on what terms. But the department, President Biden, the FTC, and congressional technocrats want a walled garden of their own, in which the government can direct innovation and competition of the entire U.S. tech sector. Bureaucrats choose winners among market actors. They prescribe and proscribe various modes of competition according to personal taste without considering consumer preferences.
Helped by the lack of heavy-handed regulation, American technology companies have dominated global markets, providing consumers with revolutionary and ever-improving products. Regulators should not regard this productivity as an unshakable given — they can easily squelch it with foolish economic interventions because, of course, they know best. Or so they think.