“The Innovator Apple Rejected by its Roots: US Government Files Lawsuit Against Closed Ecosystem”

On the 21st (local time), US Attorney General Merrick Garland announced that he had filed an antitrust lawsuit against Apple./AFP Union

The ecosystem that Apple, synonymous with innovation, had built over 20 years was shaken. After the European Union (EU) ended the monopoly practices of the App Store market, the US Department of Justice filed a lawsuit, questioning the closed nature of the ecosystem itself, which fundamentally prevents competitors from entering the market. In the Silicon Valley tech industry, there was an assessment that “despite lagging far behind other big tech companies in artificial intelligence (AI) innovation, our previously built legacy has also crumbled.” Due to a series of bad news, Apple's stock price closed at $171.37 on the 21st (local time), down 4.09% from the previous day.

Today, the US Department of Justice announced that it, along with the attorneys general of 16 states, filed a lawsuit against Apple for violating antitrust laws. As the US government pursues a sweeping lawsuit targeting Google's monopoly on search and advertising, it has once again targeted Big Tech's bad habits.

After a five-year investigation, the Justice Department alleged that Apple hindered market competition by making it difficult to integrate competitors' services with Apple devices such as the iPhone and iPad and raised prices for consumers. Attorney General Merrick Garland said at a press conference that day. “Apple maintains power today not because of its superiority (in terms of technology and services), but because of illegal exclusion practices.”

◇ Justice Department Targets Apple's 'Secret of Success'

Apple logo./EPA Yonhap News

This ruling by the Department of Justice undermines the basis of Apple's business model and is certainly fatal for Apple. Apple runs its own operating system (OS) called iOS and has deliberately built its own ecosystem that is incompatible with other companies. All services are compatible and seamlessly connected between Apple devices, but it's designed to be virtually unrelated to competing OSes, such as Google's Android-based mobile devices or Microsoft's (MS) Windows based PCs.

Because of these characteristics, when customers start using Apple devices, they become trapped in the Apple ecosystem and rarely buy products from other companies. By creating a closed environment, Apple has become a “force” against software developers. They were able to continue the practice of allowing all iPhone and Mac applications to be distributed only through the Apple App Store and charging large fees as royalties. In the tech industry, Apple's closed ecosystem is called a “walled garden” and is considered the most successful business model that helped Apple grow to where it is today.

However, the Justice Department pointed out one by one that to tie users down, it reduced compatibility, made it difficult for users to use third-party products such as Android, and prevented other competitors from using innovative digital wallet services. than a proprietary “wallet” on Apple devices. He argued that Apple's ecosystem is an antitrust act.

Apple, whose business foundation had been shaken, immediately protested. “This lawsuit threatens not only Apple's identity, but the principles that differentiate Apple products in a highly competitive market,” an Apple spokesperson said. “If the lawsuit succeeds, it will undermine our ability to create the technology that people expect from Apple. “It will happen,” he countered.

◇ Apple targeted for first European DMA probe

Before the US government's lawsuit, Apple decided to open its App Store in Europe, which has already implemented tough regulations on Big Tech's antitrust practices. This is a huge humiliation for Apple, which has consistently argued that a closed ecosystem is beneficial for technological innovation and data security. Despite this unprecedented policy of opening up the App Store, Apple was fined for hindering competition in the European music streaming market.

However, Apple's troubles in Europe do not seem to be over. On the 21st, Bloomberg News reported that the European Commission plans to soon announce investigations into violations of the Digital Markets Act (DMA) against Apple and Google. The plan is to examine whether the new fee policies that Apple and Google began charging developers in their respective app markets were in compliance with DMA regulations. EU authorities plan to complete the investigation by November, and if the investigation finds that Apple violated the DMA, Apple could be legally required to pay a fine of up to 10% of its global sales.

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