The Antitrust Case Against Apple

Abstract

This article explores several potential antitrust claims against Apple - namely tying, essential facilities, refusal to deal and monopoly leveraging. We argue that the Apple ecosystem's large revenue share in terms of app transactions, lock-in effects and consumers' behavioral bias in online markets give the iPhone maker monopoly power as a mobile platform. Apple has exploited its market power to illegally tie the distribution of digital goods to its proprietary in-app purchase system to impose a 30% tax and extract supracompetitive profits, leading to higher app prices and reduced innovation. Moreover, Apple has excluded rivals and favored its own apps by downgrading competitors' discovery and promotions, blocking certain rivals entirely from the App Store, and limiting others' access to key APIs, in some cases right after copying their apps. In conjunction with the discriminatory application of the 30% tax, Apple's conduct towards major multi-homing apps such as Spotify reduces cross-platform competition with Android. These anticompetitive practices prolong and expand Apple's monopoly at the expense of competition.

Keywords: Apple, digital platforms, App Store, IAP, tying, essential facilities, monopoly leveraging, self-preferencing, US antitrust law

JEL Classification: D42, K21, L12, L40, L86