Antitrust Laws and Competition Issues

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      U.S. Sues Apple, Accusing It of Maintaining an iPhone Monopoly

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      The lawsuit caps years of regulatory scrutiny of Apple’s wildly popular suite of devices and services, which have fueled its growth into a nearly $3 trillion public company.The Justice Department and 16 state attorneys general filed an antitrust lawsuit against Apple on Thursday, the federal government’s most significant challenge to the reach and influence of the company that has put iPhones in the hands of more than a billion people.The government argued that Apple violated antitrust laws by preventing other companies from offering applications that compete with Apple products like its digital wallets, which could diminish the value of the iPhone. Apple’s policies hurt consumers and smaller companies that compete with some of Apple’s services, according to excerpts from the lawsuit released by the government, which was filed in the U.S. District Court for the District of New Jersey.“Each step in Apple’s course of conduct built and reinforced the moat around its smartphone monopoly,” the government said in the lawsuit.The lawsuit caps years of regulatory scrutiny of Apple’s wildly popular suite of devices and services, which have fueled its growth into a nearly $2.75 trillion public company that was for years the most valuable on the planet. It takes direct aim at the iPhone, Apple’s most popular device and most powerful business, and attacks the way the company has turned the billions of smartphones it has sold since 2007 into the centerpiece of its empire.By tightly controlling the user experience on iPhones and other devices, Apple has created what critics call an uneven playing field, where it grants its own products and services access to core features that it denies rivals. Over the years, it has limited finance companies’ access to the phone’s payment chip and Bluetooth trackers from tapping into its location-service feature. It’s also easier for users to connect Apple products, like smartwatches and laptops, to the iPhone than to those made by other manufacturers.The company says this makes its iPhones more secure than other smartphones. But app developers and rival device makers say Apple uses its power to crush competition.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Read the Lawsuit Against Apple

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      Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 4 of 88 PageID: 4

      across many technologies, products, and services, including super apps, text messaging, smartwatches, and digital wallets, among many others.

      Apple’s conduct also stifles new paradigms that threaten Apple’s smartphone dominance, including the cloud, which could make it easier for users to enjoy high-end functionality on a lower priced smartphone- -or make users device-agnostic altogether. As one Apple manager recently observed, “Imagine buying a [expletive] Android for 25 bux at a garage sale and it works fine…. And you have a solid cloud computing device. Imagine how many cases like that there are.” Simply put, Apple feared the disintermediation of its iPhone platform and undertook a course of conduct that locked in users and developers while protecting its profits.

      Critically, Apple’s anticompetitive conduct not only limits competition in the smartphone market, but also reverberates through the industries that are affected by these restrictions, including financial services, fitness, gaming, social media, news media, entertainment, and more. Unless Apple’s anticompetitive and exclusionary conduct is stopped, it will likely extend and entrench its iPhone monopoly to other markets and parts of the economy. For example, Apple is rapidly expanding its influence and growing its power in the automotive, content creation and entertainment, and financial services industries-and often by doing so in exclusionary ways that further reinforce and deepen the competitive moat around the iPhone.

      This case is about freeing smartphone markets from Apple’s anticompetitive and exclusionary conduct and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future. The United States and the States of New Jersey, Arizona, California, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New York, North Dakota, Oklahoma, Oregon, Tennessee, Vermont, Wisconsin, and the District of Columbia, acting by and through their respective

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      Five Ways Buying and Selling a House Could Change

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      The National Association of Realtors has agreed to change its policies to settle several lawsuits brought by home sellers — a move that could reduce commissions.A settlement reached this week threatens to strike a blow to an established standard of residential real estate: the 6 percent sales commission. It also will change who pays it. The deal, reached after a yearslong court battle initially brought by a group of home sellers in Missouri, calls for the powerful National Association of Realtors, which has long regulated the way U.S. homes are sold, to amend its rules on how Realtors for sellers and buyers are compensated.In most real estate transactions in the United States, both the seller and buyer have an agent representing them. For decades, there’s been a standard for paying these agents: a commission of between 5 and 6 percent of the home’s sale price, covered by the seller and split between the two agents.Commission rates are significantly lower in many other countries. In Britain, they are just above 1 percent, while in Singapore, the Netherlands and Denmark, they hover between 2 and 3 percent, according to a study by the investment firm Keefe, Bruyette & Woods. The homeowners who sued in federal court in Missouri said that N.A.R., through its rules on agent compensation, conspired to artificially inflate the commissions paid to real estate agents.Now those rules are set to change as early as July, pending court approval of the settlement that includes N.A.R.’s agreement to pay $418 million in damages.There could be more room for negotiation.Real estate agents argue that commissions have long been negotiable, and the standard 5 to 6 percent is practice rather than precept.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      JetBlue and Spirit Call Off Their Merger

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      JetBlue said it would pay Spirit $69 million to terminate the $3.8 billion deal, which had been blocked by federal antitrust regulators.JetBlue Airways and Spirit Airlines announced on Monday that they would walk away from their planned $3.8 billion merger after federal antitrust regulators successfully challenged the deal in court. JetBlue said it would pay Spirit $69 million to exit the deal.A federal judge in Boston blocked the proposed merger on Jan. 16, siding with the Justice Department in determining that the merger would reduce competition in the industry and give airlines more leeway to raise ticket prices. The judge, William G. Young of the U.S. District Court for the District of Massachusetts, noted that Spirit played a vital role in the market as a low-cost carrier and that travelers would have fewer options if JetBlue absorbed it.“We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently,” JetBlue’s chief executive, Joanna Geraghty, said in a statement on Monday. “We wish the very best going forward to the entire Spirit team.”JetBlue and Spirit appealed Judge Young’s decision. JetBlue filed an appellate brief last week arguing that the deal should be allowed to go through.But in a regulatory filing on Jan. 26, JetBlue said it might terminate the deal. Spirit said in its own filing the same day that it believed “there is no basis for terminating” the agreement.The merger agreement, which expired on Jan. 28, could have been extended to July 24 if certain conditions were met. But JetBlue suggested in its filing in January that Spirit had not met some of its obligations under the agreement, giving JetBlue the ability to walk away.As part of the merger agreement, JetBlue agreed to pay Spirit and its shareholders $470 million in fees if the deal was blocked. Some legal experts said JetBlue was potentially positioning itself to dispute the remainder of those fees by terminating the agreement.Spirit is heavily indebted and last turned a profit before the Covid-19 pandemic. Investors see a merger as a lifeline for the company. Its stock price has lost more than half its value since the ruling blocking the merger.JetBlue’s stock nudged up on the same news, as investors see the end of the deal as a cost-saving measure.A merger of the airlines would have given the combined company a bigger share of the market, which is dominated by four carriers — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.Alaska Airlines has also announced plans to increase its size. In December, it said it wanted to acquire Hawaiian Airlines for $1.9 billion. That deal, too, is likely to attract the scrutiny of federal antitrust regulators. More

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      The F.T.C. Boosts Biden’s Fight Against Inflation

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      The regulator’s move to block Kroger’s $25 billion bid for Albertsons could win the president points with voters squeezed by rising prices.Kroger’s “low prices” promise has come under fire after the F.T.C. and a number of states sued to block the supermarket giant’s $25 billion bid to buy Albertsons.Rogelio V. Solis/Associated PressKroger, Albertsons and the politics of inflation A paradox at the heart of the U.S. economy is that consumers are feeling squeezed even as growth indicators look strong — and are taking it out on President Biden’s approval ratings.So the White House probably cheered a move by the F.T.C. and several states on Monday to block Kroger’s $25 billion bid to buy Albertsons, arguing that the biggest supermarket merger in U.S. history would raise prices and hit union workers’ bargaining power.The Biden administration has little influence over inflation, but it’s still getting heat. Consumers are spending the highest proportion of their income on food in 30 years, and an internal White House analysis found that grocery prices had the biggest impact on consumer sentiment.The Fed has jacked up interest rates to a 20-year-high in an effort to cool inflation, but progress on that has slowed in recent months.Biden is blaming big business. In a video released on Super Bowl Sunday, he went after “shrinkflation,” lashing out at companies for reducing packaging sizes and food portions without cutting prices. Biden is expected to reiterate that view in his State of the Union address next month.The president could point to the F.T.C.’s tough approach to M.&A. The agency operates independently, but Lina Khan, the F.T.C.’s chair, has taken the most aggressive and expansive antitrust enforcement stance in decades. That may help Biden’s message with voters that he’s fighting for their interests.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      How Washington May Approach the Capital One-Discover Deal

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      Regulators have been tough on big financial mergers, though there are nuances in Capital One’s $35.3 billion takeover bid for Discover.Capital One’s $35.3 billion bid for Discover is a bet that the movement to go cashless will continue to grow.Rogelio V. Solis/Associated PressChallenges, and opportunities, for a financial megadealCapital One’s $35.3 billion takeover to buy Discover Financial Services will create a colossus in the fast-growing credit card industry and a more powerful force in the payment networks that underpin the consumer economy.That will almost surely invite tough scrutiny from a Washington that is increasingly skeptical of big financial mergers. But continuing scrutiny of the two biggest payment networks in the U.S., Visa and Mastercard, may complicate the regulatory math.The deal: Capital One agreed to pay 1.0192 of its shares for each share of Discover, a roughly 26 percent premium to Friday’s trading prices. Discover’s shares were up more than 13 percent in premarket trading on Tuesday.If completed, the transaction would become a giant among credit card lenders, with Bloomberg estimating that the combined company would outstrip JPMorgan Chase and Citigroup in U.S. card loan volume. (That could ratchet up examinations over shrinking competition, and what that means for consumers.)Perhaps more important is the potential supercharging of Discover’s payment network, which has long lagged Visa, Mastercard and American Express. The Wall Street Journal reported that Capital One plans to switch some of its credit cards to the Discover network.The contrarian argument: This is good for Visa and Mastercard. The longtime giants of the payment network business have long been criticized for their fees, with Visa being investigated by the Justice Department. Monday’s deal could give them the opportunity to argue that they would face a newer, bigger competitor.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      On the Ground of Biden’s Antitrust Agenda

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      Doha Mekki, one of President Biden’s key antitrust enforcers, talks about the Justice Department’s big wins and losses, and what could be in store if President Biden gets another four years.Big deals are waiting on the tarmac as Wall Street and the business world anticipate how the presidential election will change antitrust enforcement.President Biden has taken an aggressive approach to policing deals that some have called overreaching and others have lauded as a necessary return to scrutiny on the power wielded by big business. Dealmakers say they are holding some deals back in hope of a more lenient approach in the next administration.Doha Mekki is on the ground executing the strategy. She’s worked at the Justice Department under three administrations: as a trial attorney during the Obama presidency, in the front office during the Trump presidency and now as the principal deputy assistant attorney general under Jonathan Kanter.In a recent interview at the Penn Carey Law Antitrust Association’s annual symposium, DealBook talked with Mekki about the department’s big wins and losses, and what could be in store if Biden gets another four years. This interview has been edited and condensed for clarity.You led the lawsuit that successfully blocked JetBlue’s acquisition of Spirit Airlines (the decision is under appeal). In a case like that, how do you weigh the risk that a company will fail because it’s too weak on its own against the risk of a more consolidated industry?There’s a whole doctrine in antitrust that deals specifically with firms that are financially not viable. And it bears noting — and certainly the court noted — that the company did not make that argument. In fact, what Spirit, I think, projected to its shareholders for a long time was that they still intended to grow.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Amazon Scraps Deal to Buy Maker of Roomba Amid Regulatory Scrutiny

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      Amazon walked away from the $1.7 billion acquisition of iRobot as it faces questions from regulators in the European Union and United States.Amazon said on Monday that it was abandoning plans to buy iRobot, the maker of the self-driving Roomba vacuum, after regulators raised concerns the deal would hurt competition.The announcement is a rare admission of defeat by Amazon, which has in recent years acquired an eclectic mix of companies such as Whole Foods and MGM Studios, and is a sign of how the world’s largest tech companies are being forced to adjust their business practices, products and policies as a result of stiffening regulatory scrutiny globally, particularly in the European Union.In November, E.U. antitrust regulators warned Amazon that they might try to block the deal because it could restrict competition in the market for robot vacuum cleaners. The Federal Trade Commission was also scrutinizing the deal.Amazon, which will pay iRobot a $94 million termination fee, said in a statement that “disproportionate regulatory hurdles” caused it to step away from the deal, which was first announced in 2022. IRobot’s products, which also include robotic mops and air purifiers, were to join a growing list of connected home products made by Amazon, including Ring home security systems and Echo smart speakers.Amazon said that rather than restrict competition, the deal would have given iRobot more resources to compete with other robotics companies.“This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable,” David Zapolsky, Amazon senior vice president and general counsel, said in the statement.Amazon is not the only company facing hurdles completing acquisitions. In December, Adobe, the maker of Photoshop and Illustrator, scrapped a $20 billion takeover of Figma, a maker of design collaboration tools, after it was questioned by regulators in the United States, the European Union and Britain.In the European Union, oversight of the tech sector is expected to intensify in the coming months as a new law, the Digital Markets Act, takes full effect with the aim of increasing competition in the digital economy. Last week, Apple announced a slew of changes to comply with the law, including allowing customers to use alternatives to the App Store for the first time.IRobot, a publicly traded company grappling with declining sales and mounting losses, must regroup without the financial backing of Amazon. The company’s stock price has fallen more than 60 percent in the past month as the fate of the deal with Amazon was thrown into doubt.On Monday, iRobot said it would cut approximately 350 jobs, or about 30 percent of its work force, as well as reshuffle its management ranks.“The termination of the agreement with Amazon is disappointing, but iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations,” Colin Angle, the company’s founder, who is stepping down as chief executive, said in a statement.Glen Weinstein, iRobot’s executive vice president and chief legal officer, was appointed interim chief executive. More