From 06d7eda8edc039e075fc15539b805097b6d4c1cb Mon Sep 17 00:00:00 2001 From: Noah Date: Tue, 9 Apr 2024 14:24:12 -0400 Subject: [PATCH] Create Apple.md --- posts/Apple.md | 63 ++++++++++++++++++++++++++++++++++++++++++++++++++ 1 file changed, 63 insertions(+) create mode 100644 posts/Apple.md diff --git a/posts/Apple.md b/posts/Apple.md new file mode 100644 index 0000000..d18152d --- /dev/null +++ b/posts/Apple.md @@ -0,0 +1,63 @@ +{ +"title": "United States v. Apple Inc.", +"description": "The lawsuit against Apple", +"tags": ["Legal", "Apple"], +"author": "Noah", +"date": "4/19/2024", +"showTitle": true, +"indexed": false, +"disableHighlighting": true, +"pinned": true +} + +> "**Apple’s Use of Monopolistic and Malicious Business Practices**" was my senior thesis for ELA 12. +> +> Here it is, converted into Markdown format. + +Within just the first fiscal quarter of 2024, Apple reported an astronomical amount of revenue for the company — slightly over 119 billion dollars. It is well-known that the majority of this profit comes from sales of their prominent mobile computing device and smartphone, the iPhone. Recently, Apple has come under fire from the United States Department of Justice and the European Union for their use of deliberate, monopolistic business practices that violate U.S. antitrust laws and break European consumer protection laws. An ongoing lawsuit filed by the Department of Justice demonstrates how Apple practically forces consumers to use their products by taking advantage of their high market share. + +### Ecosystem “Lock-in” + +Ultimately, Apple’s “ecosystem” is referring to the many products that Apple produces that have strong interoperability with one another. For example, a person can purchase an Apple Watch and receive notifications from their iPhone on the watch. There is nothing inherently wrong with this; companies have been building interoperable products for years. The problem is brought to light when a person decides to buy a different smartphone. Apple has strategically only made their Watch series compatible with their iPhones, and the Watch requires a connected iPhone to deliver even basic functionality. By purchasing a smartphone that is not made by Apple, the customer would be effectively forced to buy another smartwatch as well. This is known by many consumers as Apple’s “lock-in effect”. A small, yet contributing factor to this is the fact that Apple’s products are usually more expensive relative to the competition, and are seen by some people as “luxury” devices. Because of the already expensive investment of purchasing an iPhone, customers are less likely to take the risk of purchasing a competitor’s smartphone — especially if they own other Apple products that interoperate only with an iPhone. +This interoperability problem extends to other products developed by Apple — most notably, their AirPods line of wireless headphones. As seen by many users of non-Apple smartphones, Apple deliberately disables crucial features such as Active Noise Cancellation when the AirPods are connected to a non-Apple device, preventing non-Apple customers from using the headphones to their full potential (Katz). + +### Apple Messages + +Arguably the strongest selling point for an iPhone — and the feature that Apple leverages most to keep customers buying iPhones — is Apple’s proprietary text messaging application, Messages. Apple Messages was created to solve a developing problem with early smartphones: text messaging was not a great experience. Text messaging on early smartphones utilized the Short Message Service (SMS) standard, meaning that text messages were limited to a certain length, messages were insecure and unencrypted, and media such as videos and other files could not be sent. +Messages solved these problems early-on by introducing secure, encrypted messaging that also added extra features. Apple added the ability to send pictures and videos, and also added more functionality such as typing indicators and the ability to see when a recipient has read a message (known universally as “read receipts”). An important feature of Messages is its ability to use SMS to message users on non-Apple devices without support for Apple Messages. +Of course, Apple is not alone when it comes to innovating, and since SMS was introduced, newer standards have been developed that solve all of the problems that Apple initially solved with Messages. Multimedia Messaging Service (MMS) was introduced as a way for SMS users to send pictures and videos, and Rich Communications Service (RCS) aims to replace SMS/MMS entirely by providing a new standard for text messaging. RCS supports nearly every feature of Apple Messages, and even more on top of that. It provides non-Apple users with encrypted messaging, multimedia support, read receipts, and message reactions. As of today, RCS is supported by nearly every non-Apple smartphone. In 2017, Google released a statement saying that RCS was supported by twenty-seven carriers at that point, representing a total of around one billion customers (Sarhangi). +The problem here is Apple. Ever since Apple released Messages to the public, they have deliberately refused to update the SMS support for messaging users on non-Apple products for one simple reason: it’s good for business. When messaging a non-Apple user on Apple Messages, Messages uses the unencrypted, low-quality SMS connection standard from the early 2000s. This is done intentionally to mislead Apple customers into thinking that the non-Apple smartphone is lower quality, when Messages itself is actually the cause of the degraded user experience. In 2013, internal emails from Apple’s Senior Vice President of Software Engineering bluntly exclaimed that supporting newer messaging standards “would simply serve to remove [an] obstacle to iPhone families giving their kids Android phones.” The Department of Justice is arguing that this business practice is anti-competitive and violates United States antitrust laws. Apple has made public statements saying that they have refused to update SMS in order to “protect the privacy of consumers”, when in reality, updating to a more modern messaging standard would actually make Messages more secure and private. + +### Apps for an iPhone + +Apple knew early on that creating and controlling their own platform for application (“App”) distribution would be important. Apple’s platform for App distribution, the App Store, is a large source of income for Apple. The way that Apple makes money from the App Store is by applying egregious fees and unnecessary payments for App developers to make. First of all, to even begin developing an application for an Apple product, an Apple computer is required. This is not a small investment; a base model Apple laptop capable of running and developing applications for the iPhone can cost upwards of $2500. Apple also requires developers to pay a $100 per-year subscription to access and use development utilities for iPhone Apps. Another upfront fee is required to have an App reviewed by Apple and published on the App Store. Finally, after all of that, Apple still takes a 30 percent share of revenue from all App sales and in-App purchases made on their devices. It’s worth noting that while the 30 percent revenue share exists on other platforms, such as the Google Play Store for non-Apple smartphones, developing and publishing Apps is completely free, and can be accomplished on almost any computer. +All of these fees are essentially required if developers want to create an application for the largest market of smartphone users. Recent surveys have shown that over 87 percent of U.S. teens either already own or expect to purchase an iPhone in the future (Owen). The European Union is arguing that Apple is violating consumer protection laws by disallowing third-party app store services on their smartphones, forcing consumers to purchase Apps through Apple’s own App Store and forcing developers to pay Apple’s fees. When the EU announced that they would mandate third-party app stores as a requirement on all devices as part of the Digital Markets Act, Apple initially attempted to find a loophole. Apple updated their European developer documentation to add a “Core Technology Fee” which would allow third-party app stores to exist, but they would be required to pay Apple royalties to the tune of 50 cents per app install. Although this does not seem like a lot of money, it would completely prevent any free Apps from being able to exist on third-party app stores, such as most social media and entertainment Apps. Apple also added more arbitrary requirements for third-party app store developers, such as the requirement of already owning an Apple Developer account (with a European address) for at least two years, and the requirement of the developer already having at least one million App installs on Apple’s own App Store. These fees and requirements would essentially prevent any third-party App distribution platform from existing, and Apple was heavily fined by the EU as a result of this. + +### App Limitations + +As Apple maintains so much control over the Apps on the App Store, they are able to enforce agreements that give themselves an advantage over third-party apps. One example of this is the fact that third-party banking Apps are disallowed from using the Near-Field Communication (NFC) radio on the iPhone — the wireless communication component in tap-to-pay interactions in Apple Pay. By doing this, Apple is making their own applications, namely Apple Wallet and Apple Pay, more appealing to consumers. Third-party applications are disallowed from using this tap-to-pay system by Apple solely, not because of a limitation of the device. Additionally, Apple charges fees to banks who wish to integrate functionality within Apple Pay — not dissimilar to what is already done with the App Store. Apple is creating a problem, and then selling the solution. +This is merely one example of Apple limiting the APIs (essentially features) that third-party applications can use. Another example of this is the fact that third-party Apps are disallowed from using the SMS service to send and receive text messages. They can use Apple Messages perfectly fine, but they still cannot send messages to non-iPhone users of course. In short, Apple artificially limits what third-party Apps are allowed to do on the iPhone to make their own first-party Apps more appealing to consumers. + +### The Charging Port + +In late 2022, the European Union announced that all smartphones produced would be required to use the standard USB Type C (“USB-C”) port for charging the device and accessing data. This was done to prevent all smartphone manufacturers — not just Apple — from requiring consumers to use the companies’ own proprietary charging connectors. Apple was one of the first companies to develop their own charging connector: the Lightning port. Lightning was Apple’s proprietary implementation of the USB 2.0 standard, which could only be used by iPhones and a selection of other Apple products. As their first-party cable was notoriously fragile and broke easily, many consumers turned to third-party charging cables that claimed to be more durable. As a result, Apple took legal action against third-party sellers of Lightning charging cables, requiring them to purchase official hardware licenses from Apple to produce the charging cable legally. This meant that Apple could sell their own charging cables at a higher price, and they also made money from third-party Lightning cable sellers through licensing agreements. +In 2023, it was revealed that the iPhone 15 would release with a USB-C port to comply with the EU mandate, but something was wrong. It was later revealed that although the base model iPhone 15 used the USB-C connector, it has a slower connection speed than traditional USB-C. Inside the phone, the USB-C port is still using the older USB 2.0 controller microchip, meaning that it is severely limited in its capabilities compared to other phones using USB-C. When transferring files and data to and from the phone, the connection is limited to sixty megabytes per second. With traditional USB-C on some phones, transferring data happens at up to eight gigabytes per second — that’s two hundred times faster than the newest iPhone. What this means is that Apple is severely limiting the capabilities of the USB-C connector, likely to upsell the “Pro” versions of the iPhone which use the faster USB 3.0 connection speed. This may have been done to intentionally mislead consumers into thinking that they are getting the full connection speed of the USB-C standard, when in reality, Apple is saving pennies by using a cheaper microchip that still utilizes USB 2.0. + +### eSIM Cards + +Subscriber Identity Module (SIM) microchips are distributed by cell service providers as a way to manage and identify users of the cell service. A SIM card is responsible for keeping a consumer’s phone number and other contact information secure. Traditionally, it has been relatively easy for consumers to switch to a different smartphone or smartphone brand while keeping the same phone number — it’s as easy as moving the SIM card to the new phone. +Apple has been the driving force behind a new “revolution” in SIM technology — the electronic SIM (or eSIM). With eSIM, the SIM is no longer a physical card that can be moved between phones; the SIM is digital, stored on the phone’s software, and is completely managed by the cell service provider as well as the manufacturer of the smartphone. Although this technically makes it harder for somebody to steal a SIM card and use the phone number on that card, it also makes it incredibly difficult for consumers to switch phones. With SIM card trays no longer being included on new Apple products, consumers are forced to use eSIM. This makes it much harder to change smartphones, and greatly incentivises staying with a single cell service carrier instead of switching. Ultimately, eSIM means that the phone is digitally locked to the cell service provider, while the two elements were completely separate before. + +### Conclusion + +Apple leverages their worldwide market share and malicious business practices to benefit them financially. They offer a collection of products that work well together, but that deliberately don’t work well with other companies’ products. They maintain dictatorship-like control over their App Store, and force developers to play by their rules. Apple has been observed using proprietary hardware and software that is designed to maintain control over their products and to prevent consumers from using third-party products. By doing all of these things, Apple is deliberately and grossly violating United States antitrust laws and European consumer protection laws. + +### Works Cited (MLA) + Katz, Lily. “How to turn your AirPods noise canceling on or off.” Android Authority, 27 February 2024, https://www.androidauthority.com/how-to-turn-your-airpods-noise-cancelling-on-or-off-3190666/. Accessed 9 April 2024. + + Owen, Malcolm. “Teenagers still overwhelmingly want iPhone and Apple Watch more than any other brand.” Apple Insider, 9 April 2024, https://appleinsider.com/articles/24/04/09/teenagers-still-overwhelmingly-want-iphone-and-apple-watch-more-than-any-other-brand. Accessed 9 April 2024. + + Sarhangi, Amir. “Delivering RCS messaging to Android users worldwide.” Google Blog, 24 February 2017, https://blog.google/products/rcs/delivering-rcs-messaging-android-users-worldwide/. Accessed 9 April 2024. + + United States District Court for the District of New Jersey. United States of America v. Apple + Inc. 2:24-cv-04055. 2024.