The Wrongheaded Antitrust Action against Apple

T he Department of Justice’s lawsuit against Apple is weak, it seeks to substitute central planning for consumer preference, and it will threaten innovation.

At the heart of this issue lies a clash between traditional principles of free-market innovation and what can be described as a “populist antitrust” ideology. While proponents of the latter advocate government intervention to dictate consumer choices, the essence of American innovation has always been rooted in the power of consumers to drive market preferences. Individuals have better knowledge of what they want than any central planner does. By disregarding this fundamental tenet, the administration risks stifling the dynamism and creativity that have defined our tech sector for decades.

The best way to understand the flaws in the lawsuit against Apple is to read it. I dealt with tech and antitrust law in Congress, but you don’t need to be a policy-maker or even a lawyer to read the filing and recognize the substantial problems with the administration’s lawsuit against Apple.

First, no matter how the administration describes the case, the real “crime” that Apple is guilty of is creating a product that many smartphone users like. When trying to describe a “monopoly,” the complaint says, “As developers created more and better products, content, apps, and services, more people bought iPhones, which incentivized even more third parties to develop apps for the iPhone.” In other words, the Apple system worked, which caused more developers to want to make apps for Apple. Why is that a problem? Having a desirable product that gains market share is not — and must not become — the standard for bringing the full force of the state against a company. If success becomes an antitrust violation, then the government’s real target is not any specific company but the free market itself.

Second, the complaint relies on the implausible argument that Apple’s actions have “suppress[ed]” innovation or resulted in “less” of it. The entire complaint is filled with examples of how Apple’s decisions supposedly caused developers to fail to innovate or resulted in Apple bringing worse products to the market.

This doesn’t pass the laugh test. The notion that the smartphone industry has not been innovative is preposterous to anyone who has owned a smartphone, i.e., 90 percent of Americans. Whether you use a phone from Apple, Google, Samsung, LG, or any other maker, these devices have massively improved over the years.

And if the Biden administration truly believes that the smartphone industry is not innovative, I would ask, compared with what? Compared with government bureaucracies?

But the best evidence that Apple has been highly innovative is the fact that Apple has been successful and has a large market share. If Apple were failing to improve its products and services, people would stop buying Apple products. This fundamental truth is how free markets work — something the Biden administration fails to grasp.

Finally, the complaint essentially argues that Apple should be required to help its competitors, a concept that does not exist in antitrust law. The complaint reads:

By suppressing key functions of third-party smartwatches — including the ability to respond to notifications and messages and to maintain consistent connections with the iPhone — Apple has denied users access to high performing smartwatches with preferred styling, better user interfaces and services, or better batteries, and it has harmed smartwatch developers by decreasing their ability to innovate and sell products.

Apple will probably argue that it has technological and data-security reasons for limiting third-party smartwatches, but even if it didn’t, there’s no antitrust principle that requires companies to design devices to help their competitors.

These flaws show that this suit is about the administration thinking that it knows better than consumers what they want and need. It’s telling that there are no consumer “victims” in the complaint.

But beyond the specific flaws of this lawsuit, there’s a bigger problem. The Department of Justice’s lawsuit against Apple will threaten innovation and harm consumers. This legal maneuver is not an isolated incident but rather a symptom of a broader trend that risks undermining the very foundations that have long propelled our economy forward and delivered transformative benefits to consumers.

This lawsuit against Apple is just one manifestation of a broader assault on American tech companies that has been ongoing for years. Through litigation, regulatory measures, and advocacy both domestically and abroad, federal agencies have sought to curtail the success of our most innovative businesses — even though these federal actions will harm consumers. The unfortunate reality is that these efforts have not only failed to achieve their intended goals; they have also emboldened foreign regulators to target American companies with increasing vigor.

Even agencies such as the Office of the U.S. Trade Representative, tasked with safeguarding American interests in the global marketplace, have veered off course. These agencies have partnered with foreign regulators to target American companies, and by doing so they risk ceding ground to our adversaries in critical arenas of digital trade and innovation.

This departure from the agencies’ core mission undermines the competitive advantage that American businesses have long enjoyed on the world stage. In essence, the Biden administration’s approach is a departure from the principles that have historically underpinned America’s leadership in innovation.

Instead of fostering an environment conducive to entrepreneurial spirit and technological advancement, federal agencies seem fixated on penalizing success and stifling growth. This jeopardizes the future of American innovation and also risks surrendering our global leadership to competitors who may be less committed to the principles of free-market innovation.

Rather than succumbing to the allure of populist rhetoric or a deeply flawed antitrust suit, we must uphold the principles that have long fueled our economic success. Only by doing so can we ensure that American innovation continues to thrive, benefiting consumers at home and abroad.