October 26, 2021

Why is everyone suing Apple?

Over the past year, Apple has been hit with lawsuit after lawsuit as companies, countries, and trading blocs all take a second look at the tech conglomerate. Apple has been in hot water for the last few years over tactics that have been viewed as anti-competitive or unnecessarily environmentally harmful.

However, the number of lawsuits has increased exponentially over just the last 18 months. Has the behavior of one of the world’s biggest tech companies changed, or are civil societies starting to demand more from corporations? We will try to dig into this question and learn more about why Apple is increasingly attracting the attention of regulators.

Apple versus Epic Games 

As you will have likely seen in the news, Epic Games, the maker of the endlessly popular massively multiplayer online game Fortnite, sued Apple for its anti-competitive tactics, and the long-awaited judgment was handed down last month. Tim Sweeney, the CEO of Epic Games, has been highly critical of Apple and what he views as its anti-competitive practices regarding the App Store.

Sweeney was especially aggrieved by the additional fees and charges that Apple applies to apps purchased through the App Store. He has been incredibly vocal about his dislike for these charges, but he went a step further this year when he invited potential users of the Fortnite app to download the game for the same price via the Fortnite website rather than the App Store and thereby save Epic Games a 30% fee from the App Store. Sweeney’s legal team argued in court that these practices were anti-competitive and unfair for game developers with limited hosting options for their games.

Both sides of the lawsuit, Apple and Epic Games, came out of the judgment feeling disappointed and simultaneously somewhat vindicated – surely the sign of a good judgment. The court has allowed the 30% fees from the App Store, not recognizing them as anti-competitive. However, Apple will now no longer be able to ban developers from emailing users and encouraging them to pay directly, thus enabling the developers to avoid the 30% fees.

Although Apple has been allowed to maintain its 30% download fee on the App Store, the case with Fortnite is a sign that smaller companies and developers are feeling more empowered than ever before to stand up against gigantic tech companies. It is possible that in the coming months, hundreds of game developers, online casinos, and shopping apps will all start introducing measures to redirect consumers to their sites for download. While this may seem like a fairly small, insignificant affair, it demonstrates the growing push for a more fragmented, healthy, and competitive landscape in the tech industry.

Apple versus the EU 

The EU’s antitrust chief Margrethe Vestager has been targeting massive tech conglomerates for the last few years, and she set her sights on Apple in June 2020 when she launched her investigation into the potentially monopolistic characteristics of Apple Pay.

One of the chief concerns that Vestager highlighted is how Apple has refused to allow its competitors to access the payment system that the company developed for NFC chips. On top of that, Vestager is also concerned about how the NFC chip enables tap-and-go payments on iPhones alone and how the NFC terms and conditions stipulate how Apple Pay should be used in the apps and websites of eCommerce platforms and merchants.

Rather than focusing on Apple Pay, the European Commission (EC) has instead decided to focus on just the NFC chip technology, in part because NFC chip technology can only be accessed by Apple Pay.

The EC is currently preparing a detailed list of fines called a statement of objections. This list of charges and objections will lay out the practices that Apple has instituted that the EC views as anti-competitive. The document could potentially be sent to Apple as early as next year.

Apple versus consumer rights groups 

Apple has been hit by a wave of class-action lawsuits in Europe over what has been called the “planned obsolescence” of its products – specifically a number of its iPhones. Many people have noticed that, following an update of an iPhone, it suddenly stops working quite as well and is much slower, thus encouraging the user to replace their iPhone with the newest one on the market.

Planned obsolescence has increasingly been in the news because of the devastating environmental impact of products having extremely short lifecycles. Products such as iPhones are incredibly difficult to recycle and very resource-intensive to create. Environmentalists and consumer rights activists alike are becoming more and more concerned with how companies such as Apple build their products to fail. This is just one of many different forces that have encouraged Apple to improve its environmental record.

Are we already seeing the impact on Apple? 

Apple performed slightly worse this week on international stock markets after news of the potential fine broke. Apple shares were down 1% at $139.6 on the morning that the EC investigation was announced. This dip has frightened some investors, but most see Apple as an incredibly safe, secure place for their money. The EC has not been entirely successful in its investigations and prosecutions of large tech companies and, as a result, Apple may not feel particularly concerned about the recent suggestion of a fine.

However, when viewed from a larger perspective, the increasing number of lawsuits filed against Apple could spell bad news for one of the world’s biggest and most profitable tech companies. Dialogue regarding monopolies and anti-competitive practices was brought into the mainstream consciousness in the US during the 2020 election thanks to figures such as Bernie Sanders and Elizabeth Warren.

Increasingly, consumers are learning about their rights around the world – and demanding more from companies. More than ever before, consumers are showing clear preferences for companies that prioritize environmental protection during the manufacturing process and employee wellbeing during every stage of the value chain. The next few years will undoubtedly be a test for Apple. Let’s hope that it can adapt successfully to the changing consumer demands of this next era.

About the author 

Peter Hatch

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