Department of Justice versus The Future

If our government is concerned about protecting and enhancing competitive behavior, why has it chosen to sue Apple for choosing to do everything for its customers?

I started writing this piece as an analysis of the Department of Justice’s suit charging Apple with anti-competitive behavior. “Apple’s Broad-Based, Exclusionary Conduct Makes It Harder for Americans to Switch Smartphones, Undermines Innovation for Apps, Products, and Services, and Imposes Extraordinary Costs on Developers, Businesses, and Consumers”.

I’ve read the Justice Department’s complaint. I’ve read a lot of analysis about the complaint. But, for the life of me, I can’t figure out what the Justice Department wants to accomplish. Apple is making it harder for Americans to switch smart phones by making better smartphones. The reason it is hard to switch smart phones is because the other smart phones don’t provide as much value. Does the Justice Department want Apple to stop making its products better?

One of DoJ’s complaints is: “Apple has made the quality of cross-platform messaging worse, less innovative, and less secure for users so that its customers have to keep buying iPhones.” Worse messaging? Less innovative? Less secure? Wow!

Remember that Apple introduced iMessage in 2011, almost 13 years ago, in IOS 5. When it did, it integrated it into the existing messaging app on the iPhone, which previously used the SMS standard for exchanging text messages. SMS is still the standard for sending text messages on smart phones that are not iPhones. At the time, most people didn’t know what Apple actually did: They built an end-to-end real-time service that allows user to exchange high quality photos and videos in addition to text, both simple and rich. They even allowed users to send those messages to anyone in their contacts program by name. All this is synchronized across the internet, in real time. It’s like magic.

So 13 years ago, Apple made cross-platform messaging worse? If not, at what point did Apple suddenly strong arm its users into using its less innovative and less secure(!) service? (Read this now-humorous history of iMessage, written in 2015, for some perspective.) It’s not Apple’s fault that other smart phones aren’t as smart as iPhones.

The integration of iMessage into all Apple devices is a serious technical and cost challenge. It’s basically the same effort required by WhatsApp and Facebook Messenger (both of which services Meta spends a lot of cash operating), but integrated into Apple’s ecosystem. Apple can deliver a rich, threaded, encrypted message through its own systems, even including “typing indicators” that show you that the recipient is replying immediately to the message you sent. (Imagine computers having to maintain state between two out of >1 billion users.) It took a long time for Apple to make iMessage work; frequently the devices would get out of sync, until the company used iCloud as the base service and storage layer, starting in 2017 with IOS 11 (the next version of IOS is 18 due this fall).

My wife and her daughter using iMessage to make a date to go to a movie.

This integration is precisely the advantage Apple has. Google has developed Google Message as an application that has many of the same features as iMessage, using a standard protocol called RCS (rich communications system) but adoption requires coordination between cellular carriers and device makers, which takes a lot of time. Google has made Google Message standard on its Pixel phones and Samsung followed suit, less than a year ago and only for its newest models. But that only covers a small slice of the premium smartphone market for Android-based devices. In other words, it’s complicated to innovate in mobile devices without controlling both the hardware and the operating system and the services delivery infrastructure. (Also, the carriers charge for transporting RCS messages, while Apple and Meta provide their messaging services for free.)

My son demonstrating what my message looks like on his Google Pixel phone. (He likes dark mode, which I don’t. (I guess I’m old fashioned?)

The DOJ suit covers a lot of ground, accusing Apple of monopolizing its own ecosystem in a variety of ways. But the suit is distinct from its complaints against Amazon, Google, and other Big Tech companies since Apple creates its own systems from the ground up (even designing its own processors for its devices). It seems patently obvious that Apple monopolizes systems that it develops with its own resources. Maybe 30% is a ridiculous tax for providing software developers a way to make independent apps available to iPhone users. Maybe 30% is also a ridiculous fee for selling features inside those apps. Maybe that’s a legitimate basis for accusing Apple of reducing competition for apps and services inside its ecosystem. (I think Tim Sweeney at Epic filed an independent suit about that?) I wouldn’t be writing this piece if that’s what the Department of Justice was trying to accomplish.

It is bad governance for the U.S. government to sue companies that legitimately create their own ecosystems for wanting to control them and push the envelope on the technology. As you can see in the screenshots above, Apple is beginning to feel the heat from Google’s patient effort to set RCS as an interoperable standard between ecosystems in the Android world. Apple announced that it will support RCS in its next version of IOS. The devil is in the details for what that support will look like. I’d guess that RCS messages will still be marked in a green on iPhones and will figure into the data plan your carrier provides. One cute feature of Google Message is that you can choose what color your messages sport!

That seems like how competition works: One company does it first and others try to catch up. Isn’t that what the Department of Justice is supposed to encourage?