As Apple Inc. absorbs the regulatory body blow of a record $1.95 billion antitrust fine from the European Union on Monday, its legal team is bracing for yet another epochal action.
U.S. Department of Justice Investigation
The U.S. Department of Justice is in the final stages of a yearslong investigation into Apple AAPL, -3.13%, which could lead to a lawsuit as soon as this month.
Probe Focus
The probe — which reportedly focuses on everything from the seamless integration between the iPhone and Apple Watch, to the company’s digital-payments system and its use of green text bubbles to differentiate Android text messages from iMessage communications — is nothing short of an all-out assault on Apple’s $2.8 trillion “walled garden” to its core.
Escalating Crackdown on Big Tech
The immediacy of the Justice Department lawsuit on the heels of the EU fine underscores an escalating crackdown on Big Tech by government agencies, after numerous attempts to legislate the tech industry have floundered. Justice officials aren’t just preparing a case against Apple — they are charging ahead on blockbuster lawsuit against Alphabet Inc.’s GOOGL, -3.22% GOOG, -3.20% Google advertising business that will go to trial in early September.
Additional Legal Actions
At the same time, the Federal Trade Commission and 17 state attorneys general in September sued Amazon.com Inc. AMZN, -0.07%, alleging the company is a “monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.”
Compliance with EU's Digital Markets Act
To complicate matters even further, tech companies must comply with the EU’s Digital Markets Act, which makes large players in ad tech accountable for user data they collect and use in the European Union. The DMA goes into effect March 6.
"The decision from the EU today is just the latest example of their blatant targeting of American tech firms," James Czerniawski, tech-policy expert at Americans for Prosperity, said in an interview.
Antitrust Scrutiny Impact on American Economy
According to Czerniawski, the increased scrutiny by U.S. antitrust enforcers poses a significant risk as it extends into various sectors of the American economy. Recent events, such as the JetBlue and Spirit Airlines merger collapse, Nvidia and Arm merger abandonment, and the challenged Albertsons and Kroger merger, have raised concerns about the long-term economic prospects of the country.
EU's Heavy Fine on Apple
The European Union imposed a massive fine on Apple for exploiting its market dominance in the distribution of music-streaming apps. This landmark decision marked the EU's first major penalty against the tech giant, causing Apple shares to drop by 3%.
Spotify's Response
Spotify, a key player in the music-streaming industry, which initially filed a complaint against Apple leading to the investigation, hailed the fine as a crucial step towards creating a more open internet for consumers. However, Apple argued that Spotify has benefited substantially from Apple's services without paying for them, leveraging their App Store for success.
Apple's Antitrust Track Record
While Apple has largely evaded antitrust actions, a recent case involving Epic Games Inc. challenging App Store policies resulted in a victory for Apple. Despite losing on most counts, Epic Games managed to secure a ruling to suspend a rule regarding emailing app customers, which is currently under appeal to the U.S. Supreme Court.
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