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Posts tagged with "antitrust"

Automattic Acquires Messaging Integrator Beeper

Mark Gurman, writing for Bloomberg, reports that Beeper, the messaging app that ultimately lost its fight to bring blue bubbles to Android, has been acquired by Automattic, for $125 million according to his sources.

You may recall that Automattic, the company behind WordPress, Tumblr, Day One, Pocket Casts, and other endeavors, acquired a company called Texts last fall. Roughly two months later, Beeper took advantage of a loophole in iMessage’s architecture to offer iMessage natively on Android. After some back and forth, Apple ultimately blocked the technique Beeper was using.

According to Gurman, Automattic is acquiring Beeper’s team of 27 employees, its app, which integrates services like Signal, Facebook Messenger, and Slack, and about 100,000 customers. Of those things, I suspect the people and the customers were most important to Automattic because, as I explained in my story about the company’s purchase of Texts, the two services run on different technology stacks. Regardless of Automattic’s underlying motivations, it’s more apparent than ever that the company is betting that consumer demand, government regulation, and antitrust lawsuits will open up messaging platforms for companies ready to integrate them.


AppStories, Episode 377 – Why the DOJ Claims Apple Is a Monopoly

This week on AppStories, we explain what’s going on with the US Department of Justice’s lawsuit against Apple that claims the iPhone-maker is monopolizing the smartphone market.

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The US Department of Justice’s Antitrust Complaint Against Apple

On AppStories+, I explain the research and writing workflow I developed for big projects like covering the DOJ’s lawsuit against Apple.

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Understanding the DOJ’s Antitrust Complaint Against Apple

Last week, the U.S. Department of Justice, 15 states, and the District of Columbia sued Apple for alleged federal and state antitrust violations. Apple issued an immediate response, and before anyone had time to read the DOJ’s 88-page complaint, the Internet was overrun with hot takes.

However, the thing about lawsuits – and especially big, sprawling, high-stakes ones like the DOJ’s – is that they’re the proverbial tortoise to the Internet’s hare. Barring a settlement among the parties, the case against Apple isn’t likely to go to trial anytime soon. Add to that appeals, and this process is going to take years, not months.

So, since we have plenty of time, I thought I’d kick off our coverage at MacStories with a look at the DOJ’s complaint and its legal underpinnings, along with some observations on what’s going on and what you can expect to happen next.

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Demystifying Digital Wallets and Apple Pay

One of the many allegations in the Department of Justice’s antitrust complaint against Apple is that Apple stifles competition by:

effectively block[ing] third-party developers from creating digital wallets on the iPhone with tap-to-pay functionality, which is an important feature of a digital wallet for smartphones. As a result, Apple maintains complete control over how users make tap-to-pay payments with their iPhone. Apple also deprives users of the benefits and innovations third-party wallets would provide so that it can protect “Apple’s most important and successful business, iPhone.”

(DOJ Complaint at ¶ 104).

In a post a couple of days ago, John Gruber suggested that the DOJ is off-base because he doubted banks or other credit card companies would obfuscate credit card numbers the way Apple does. In fact, as Matt Birchler, who works in the payments industry, explains, many U.S. banks and other companies do (or did) the same thing, using something called a DPAN:

It’s notable that it’s called a DPAN and not “the Apple Pay number” – it’s a generic term, and that’s because this is a standard feature of digital wallets everywhere, not just Apple Pay. Google Pay and Samsung Pay are the biggest other digital wallets in the U.S. and they both do exactly the same thing. While it’s not technically using a DPAN since the payment runs through different companies, Amazon Pay and Shop Pay buttons also obscure the actual FPAN (full card number) from merchants.

And it’s not just tech companies using DPANs – U.S. banks do too:

Numerous banks from Walls Fargo to Chase to Bank of America have (or had) digital wallets, all of which used DPANs to protect your plain text account number. Paze is what a few big U.S. banks use today and it of course uses DPANs as well.

It’s not surprising that there is confusion about Apple Pay. Apple doesn’t tell customers about DPANs. Instead, the company uses its unique mix of hardware, software, and excellent marketing to make its payment system feel like magic.

In addition to DPANs, Birchler covers:

  • The differences between FPANs and DPANs
  • The extent to which you can be tracked using your Apple Pay purchase history
  • How much personal data Apple Pay transmits to merchants

The post is an excellent read that dispels common myths and confusion about Apple Pay clearly and concisely. It’s the exact kind of explanation of the industries Apple is accused of monopolizing that I hope we see more of as the DOJ’s lawsuit proceeds.


US Department of Justice and States Sue Apple Under Federal and State Antitrust Laws

The US Department of Justice and 16 states have sued Apple for antitrust violations in an 88-page complaint filed in New Jersey federal court. At the time of publication, the DOJ’s press release, which has been shared with some media outlets, has not been published on the DOJ website, although I expect it will be before long. In response, Apple says:

At Apple, we innovate every day to make technology people love—designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users. This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.

We’ll have a more detailed breakdown of the plaintiffs’ allegations against Apple soon, but the allegations are broad, claiming that:

  • Apple has monopolized or attempted to monopolize the smartphone market under the federal Sherman Act;
  • Apple has monopolized or attempted to monopolize the performance smartphone market under the federal Sherman Act and Wisconsin and New Jersey antitrust laws

(emphasis added).

The DOJ and states argue that Apple’s alleged anticompetitive behavior extends beyond its effect on users and developers to touch a wide swath of the economy:

Critically, Apple’s anticompetitive conduct not only limits competition in the smartphone market, but also reverberates through the industries that are affected by these restrictions, including financial services, fitness, gaming, social media, news media, entertainment, and more. Unless Apple’s anticompetitive and exclusionary conduct is stopped, it will likely extend and entrench its iPhone monopoly to other markets and parts of the economy. For example, Apple is rapidly expanding its influence and growing its power in the automotive, content creation and entertainment, and financial services industries–and often by doing so in exclusionary ways that further reinforce and deepen the competitive moat around the iPhone.

The DOJ and states seek a number of different remedies, including:

a. preventing Apple from using its control of app distribution to undermine cross-platform technologies such as super apps and cloud streaming apps, among others;

b. preventing Apple from using private APIs to undermine cross- platform technologies like messaging, smartwatches, and digital wallets, among others; and

c. preventing Apple from using the terms and conditions of its contracts with developers, accessory makers, consumers, or others to obtain, maintain, extend, or entrench a monopoly.

There’s a lot to digest in the complaint, which you can read for yourself here. I highly recommend reading at least the introduction to get a better sense of what Apple is being accused of. Keep in mind that this is just one side of the story, but Apple will tell its side in more detail soon enough. And, of course, I will be back soon with a more detailed look at what this lawsuit is all about and what’s at stake.

What’s Next for Apple and Epic’s Legal Disputes?

Yesterday, the US Supreme Court told Epic Games and Apple, “No, thank you,” and Apple served up an ugly alert to developers who can now offer payment options outside the App Store. If you’re thinking, “Wait, didn’t this all get resolved ages ago?” I feel you. The legal system moves at its own pace, which is an order of magnitude slower than technology. However, what might feel like a lifetime ago to many MacStories readers is pretty typical. It also means that it’s time to put on my ‘former lawyer’ hat for a moment to revisit where things stand with Epic and Apple and consider what’s next.

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What Does It All Mean?: A Look at Judge Gonzalez Rogers’ Decision in the Epic Versus Apple Trial

Yesterday, US District Judge Yvonne Gonzalez Rogers decided Epic Games’ antitrust lawsuit against Apple, delivering a ruling in favor of Apple that comes with significant caveats. Although the Judge found that Apple‘s operation of the App Store isn’t an exercise of monopolistic power, she concluded that App Review Guidelines and related provisions of its agreements with developers foster a lack of pricing transparency store-wide that undermines competition under California law. So, while the decision is undeniably a win for Apple in many respects, it’s also a decidedly mixed bag. I’ve taken the time to read Judge Gonzalez Rogers’ 185-page decision and having written an in-depth look at the issues going into the trial, I thought I’d follow up with what the Court’s ruling is likely to mean for Epic and Apple as well as all developers and consumers.

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Epic Versus Apple: The MacStories Overview

Later today, Epic Games and Apple will square off in a high-stakes trial in US federal district court that’s nominally about money. However, if that were all that was at stake, the claims each company has made against the other would likely have been resolved by now. Companies the size of Apple and Epic settle because it’s rarely in their interest to have a judge make decisions for them. However, this trial is different.

There’s more to these disputes than Epic’s allegation that Apple violated antitrust laws and Apple’s claims that Epic violated its developer agreement. Underlying it all is the way the dispute was precipitated by Epic. The Fortnite creator’s actions don’t necessarily absolve Apple of antitrust violations, but Epic’s calculated orchestration of events leading to the dispute have not gone unnoticed by the judge presiding over the case and may influence the trial’s outcome. Coupled with Epic’s efforts to get regulators around the world to take up its cause and its very public crusade against the way Apple operates the App Store, it’s not surprising that the claims haven’t settled. Instead, the parties will begin today with opening arguments in front of US District Judge Yvonne Gonzalez Rogers, who the parties have agreed will decide the dispute instead of a jury.

Regardless of your opinion of the way Apple runs the App Store or Epic’s litigation tactics, the thing to keep in mind as the trial starts is that the judge is being asked to settle a legal dispute, not set policy. Both companies have made specific claims against the other, which by definition means the judge’s ruling will likely be narrower in scope than it would be in an antitrust case brought by the US government. Nor is any remedy imposed by the judge likely to be as broad as government regulation of the App Store might be someday.

Still, that doesn’t mean the stakes aren’t high; they are. An adverse ruling against Apple could significantly change the way the company operates the App Store and would likely trigger more antitrust lawsuits and regulatory scrutiny in the future. As a result, I thought it would be useful to dig in and take a closer look at some of the parties’ arguments and the context in which this dispute arose to provide a better sense of what to expect from the trial, which is expected to run about three weeks, and what the outcome might be.

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