Attorney General Merrick Garland made a bold statement last week when he announced a new antitrust lawsuit against Apple (AAPL): "The United States normally wins the cases that it brings."
But not all legal experts agree that federal prosecutors hold the upper hand in a legal battle that aims to dismantle the architecture of Apple’s marquee product, the iPhone.
"My guess is [Apple] will win," University of Chicago law professor Randy Picker told Yahoo Finance Live.
Even if Apple does not prevail in the New Jersey federal court where the case was filed, Picker expects the tech giant to succeed on appeals, possibly to the Supreme Court.
"Yes, I think that Apple will prevail in the end."
The lawsuit is the latest of several confrontations between the US government and a Silicon Valley icon as the Biden administration tries to rein in Big Tech's power.
The Justice Department is also suing Google (GOOG, GOOGL) over antitrust allegations, while the Federal Trade Commission is suing Amazon (AMZN) and Facebook (META) — alleging they also violate antitrust laws.
The case against Apple is the widest-ranging of these tech antitrust suits. The Justice Department alleges that the maker of the iPhone illegally maintains its dominance over the smartphone market by boxing out competing apps and devices.
The tech giant last week called the suit a threat to the very principles that set the company apart from its rivals and characterized the government’s legal theory as a dubious one with legal claims that were wrong on the facts and the law.
In broad terms, the government alleges Apple must open up the iPhone operating system so that it becomes easier for non-Apple businesses to add and run their own products — including digital wallets, smartwatches, messaging apps, super apps, and cloud streaming apps — on the iPhone.
Apple said forcing it to open up the iPhone’s ecosystem would ultimately harm consumers by hampering its ability to design "the kind of technology people expect from Apple — where hardware, software, and services intersect."
Central to that design, the company said, are privacy, security, and safety features that give users high levels of personal and financial data protection.
Harvard Kennedy School adjunct cybersecurity policy lecturer Bruce Schneier said that if Apple does a good job of making the security argument, "I think they win."
But there is a potential weakness to that argument. The iPhone's security protection, he said, is attributable to the company’s business model and not to the phone's design.
"Apple does have more security because they don't spy on people for a living," Schneier said. "They make the money on devices and electronics."
What's more, the iPhone and a rival smartphone like Google's (GOOG, GOOGL) Pixel offer similar security features, according to Schneier.
"Don’t be confused in thinking that security is an end in itself. It furthers the goal of profits."
The hurdles DOJ must overcome
Some argue the government has a strong case.
"I think it’s very well pleaded," said New York University School of Law professor Eleanor Fox, who pointed out that the DOJ claims to have evidence of Apple’s deliberate steps to block competition and cut out options for consumers.
There is no doubt, however, that the government has some challenges to overcome.
One is that judges are typically restrained from ordering companies to change the way they run their business, according to Boston College of Law antitrust professor David Olson.
To overcome those limits, Olson said, the government is alleging that the iPhone falls into a category of products so essential to life that they get special treatment under antitrust law.
Unless the government proves the iPhone is an "essential facility," Olson explained, Apple has autonomy to make their products how they want.
Another challenge for the US government is that it must adequately identify Apple as a monopolist in a particular market.
The market of choice in this case is the smartphone market; Apple holds roughly 70% of the US smartphone market and 20% of the global market.
Then it must address a critical question: "What have you done with your monopoly that’s problematic?” Picker said.
The government’s answer is that Apple’s design of the iPhone is illegal because it works most optimally with its own apps and products — like iWatch, iMessage, Wallet, and the App Store. That, in turn, makes it difficult for customers to switch to a non-Apple device.
A 'pretty hard case'
One potential advantage for Apple is that it has successfully argued in other court cases that it maintains tight control over its ecosystem to protect consumers rather than harm them.
In fact, the arguments Apple surfaced last week echoed those it made in a private antitrust case brought in 2020 by the developer of the mega-popular gaming app “Fortnite,” Epic Games.
It was a case that Apple mostly won.
A federal district court judge in California and a three-judge appellate court panel in San Francisco ruled that Epic failed to show Apple held a monopoly in either of the disputed markets at issue: the mobile-game transactions market or the markets for iOS app distribution and in-app payment solutions.
The Justice Department has made some compelling claims in its new suit against Apple, Olson said, but he doubts that under scrutiny they will hold up as antitrust law violations.
"It gives us a litany of practices that DOJ argues make consumers and developers worse off," Olson said, but the harder question is whether those practices are merely a list of what Apple could do to make things better for developers or customers.
"It's usually a pretty hard case to say that someone has to, because of antitrust law, change the way they are running their company."
Correction: A previous version of this article misspelled the names of Bruce Schneier and David Olson. We regret the errors.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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