As the Department of Justice moves ahead with its lawsuit against Apple, alleging that the company is violating antitrust laws by keeping Americans locked into purchasing iPhones and other Apple products, a peculiarity sticks out. Even though the State of New Jersey is a co-plaintiff, why was the suit filed in the Garden State and not in either California or D.C., Apple’s and the DOJ’s respective home turfs?
Venue is an important aspect of any lawsuit. By filing in New Jersey, the DOJ is hoping to find an agreeable federal judge. It remains to be seen whether that will be worth anything, as the DOJ’s case is missing something so vital that even the most favorable venue is unlikely to make up for: evidence of consumer harm. California attorney general Rob Bonta stated that one of the reasons why the DOJ chose to file its suit in New Jersey is the fact that Apple competitor Samsung has its U.S. headquarters in Ridgefield Park. This is not going to give the government an advantage. Samsung is present in New Jersey, but its influence is insignificant and unlikely to overcome the public’s overwhelming preference for Apple devices.
The lawsuit, filed by the Justice Department, New Jersey and 14 other states, and the District of Columbia, is pending before U.S. District Judge Julien Neals. The DOJ alleges that Apple has monopolized the smartphone market in violation of Section 2 of the Sherman Act, similar to the successful claims it made in the 2001 landmark case United States v. Microsoft. If the DOJ prevails, United States v. Apple will have a ripple effect on the technology industry, especially as other companies (namely Google, Amazon, and Meta) are simultaneously fighting a barrage of cases alleging monopolization and anticompetitive conduct.
Plaintiffs often choose a venue based on favorable precedent, which there is in the Third Circuit (which covers New Jersey). In a 2005 case, United States v. Dentsply, the DOJ sued an artificial-tooth manufacturer claiming that it used its crucial point in the distribution chain to control the market. According to the government, Dentsply blocked distribution points to the detriment of competition and consumers. This is similar to the DOJ’s claim that Apple imposes too much control over software developers through the imposition of contractual restrictions and the foreclosure of access points that would otherwise allow consumers to switch to other devices. The lower court ruled in favor of Dentsply, but the Third Circuit Court of Appeals reversed that decision because, in that case, there was significant evidence that consumers were being disadvantaged by the company’s practices.
But the DOJ’s case against Apple fails to show evidence of consumer harm.
There are crucial differences between a manufacturer in the relatively niche denture market, which blocks distribution points to leave consumers with fewer choices, and a company like Apple, which derives much of its success precisely because consumers choose its products over a host of others. The unforced consumer preference for Apple products, and its contribution to the tech giant’s success, appear to be entirely lost on the DOJ. Behind the veil of complex antitrust issues is the simple reality of public choice that the government seems set on avoiding. The DOJ believes that Apple has monopolized the market to the point that consumers cannot switch devices, whereas the actual reason that consumers have chosen iPhones (and stick with them) is much more likely that, well, they like them. The DOJ is contravening consumer interest by seeking legal remedies to force changes to popular products, all under the assumption that the government simply knows better about what the market should look like.
Apple is now filing a motion to dismiss on the grounds that its decision whether to grant third parties access to its platform is not an antitrust violation and that the court should “reject the invitation to forge a new theory of antitrust liability.” Judges tend to grant such motions less frequently in cases brought by the government, although Meta succeeded in securing such a motion from a D.C. federal judge because the FTC’s filings were “legally insufficient,” requiring the agency to file an amended complaint. In a related case concerning tech antitrust, Philadelphia Taxi Association v. Uber, the Third Circuit affirmed a motion to dismiss, finding that Uber did not, nor intended to, monopolize the taxicab market.
Ultimately, bringing the suit in New Jersey doesn’t disguise the fact that the DOJ has failed to show that Apple has harmed consumers. Whether or not the case is dismissed, the government’s bid to alter the smartphone market isn’t an example of the “economic justice” it claims to advance.