With Facebook facing a federal antitrust lawsuit, and a new administration headed for the White House, should Apple be worried about a crackdown on big tech?
While the specifics might be far different for the two companies, D.C.’s apparent thirst for regulation should get Tim Cook sweating.
The government vs. Facebook
It was easy to be jaded and cynical about this summer’s congressional antitrust hearing, which brought Cook, Facebook CEO Mark Zuckerberg and others to address lawmakers concerns. Whether you think tech has way too much monopoly power and needs to be regulated, or write off the congressional subcommittee’s investigation as a fuss over nothing, the hearing yielded few questions of substance. It also offered little hope that these senators are capable of doing something about whatever antitrust problems might exist.
But if tech giants thought they’d batted away the worst of the problems, they clearly need to think again. On Wednesday, federal regulators and upward of 45 state prosecutors sued Facebook. Their main beef with the social network is about how it stifled competition by acquiring rivals. In particular, they take issue with the fact that Facebook was allowed to buy Instagram and WhatsApp — deals that concluded years ago.
“The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” said Facebook general counsel Jennifer Newstead.
Facebook will, of course, battle this within an inch of its life. The company will argue that the deals were approved by regulators, and should not be undone. It will point out that there are other rivals in the social space, making Facebook far from a monopoly.
Nonetheless, this is news that’s sure to get tongues wagging (and legal pads scratching) in Cupertino. Especially since Apple’s been accused of monopolistic behavior before with the App Store.
Should Apple be worried?
Apple’s a very different company from Facebook. It doesn’t buy out big rivals, for instance. Instead, Apple typically chooses to acquire much smaller companies, shut them down, and bake their technology into its own products. Nor is it an obvious monopolist. Apple doesn’t lead the market in any one area it works in, with the arguable exception of Apple Watch and AirPods. In every other domain, Apple faces big, established rivals. iOS battles Android. Apple Music plays second fiddle to Spotify. iPhones compete with Samsung smartphones. Macs are vastly outnumbered by Windows PCs. And so on.
But there are very real reasons for Apple to be concerned. The company continues to face accusations that it exhibits total control over the App Store. The stock apps baked into iPhones, and the strength of the overall Apple ecosystem, have fueled antitrust complaints before.
Being forced to unbundle, say, the App Store from Apple’s overall business would have major ramifications. So too would rulings that Apple has to open up iOS and allow other app stores to compete. A recent lawsuit from third-party jailbreaking app store Cydia said that Apple’s locked-down approach essentially killed its business.
Apple’s ecosystem is one of the most tightly honed in tech history. Apple argues that controlling which apps can be put onto an iPhone results in a better user experience for customers. But regulators could disagree.
Apple’s already making changes
Apple is preemptively making moves to soften some of these criticisms. It lowers rankings of its own products in searches on its own platform. It slashed fees in half for many developers. It applies its own privacy measures to its own apps. And no doubt other changes will be made going forward. But these may not be enough. The really big ones — allowing alternatives to the App Store and offering different ways to make in-app purchases — are probably concessions that Apple doesn’t want to make. In fact, this is at the heart of the company’s current battles with Fortnite-maker Epic and alternative app store Cydia.
Apple, a company that has remained largely scandal-free over the years, seems like it should be the safest of the tech giants as we head into 2021. The criticisms Cupertino faces are certainly different than Facebook’s. And Apple does not dominate the way Amazon and Google do. But none of the tech giants may be safe right now — and it seems unlikely that the world’s most valuable tech giant will escape unscathed.
As change comes to Washington, it might be time for some sleepless nights in Cupertino.
