U.S. Steps Up Apple Investigation, Seeking to Involve Antitrust Chief

Kanter's potential position in the Justice Department's probe is being examined as it hires additional litigators, gathers more information, and

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According to some with knowledge of the situation, the Justice Department has intensified efforts in recent months to draft a potential antitrust complaint against Apple Inc.

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The inquiry into whether Apple exploits its monopoly power started in 2019, but enforcers have increased their efforts recently, according to the persons, adding more litigators to the case and making new requests for papers and discussions with the companies involved.

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The subject of much of the criticism directed at Apple's business practices is its regulations regarding mobile third-party software on its devices, which are the subject of the Justice Department's inquiry. The agency is also investigating whether iOS, Apple's mobile operating system, favors its own goods over those of independent developers in a way that is anti-competitive, according to the sources.

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A representative at Apple declined to comment. Apple has claimed in the past that its business practices do not harm developers. According to its statements, it welcomes competition on the App Store, even when apps directly compete with Apple's own goods. A representative for the Justice Department declined to comment.

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The involvement of Jonathan Kanter, the department's senior antitrust official, in the Apple inquiry has raised some doubts. Because Mr. Kanter had previously represented clients who had accused Apple of engaging in anticompetitive behavior, the government initially disqualified him from managing the Apple case. He was confirmed in November 2021 as assistant attorney general for the antitrust division.

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According to the persons, the agency has since looked into the possibility of allowing Mr. Kanter to direct the inquiry and any potential legal action against Apple. It was unable to learn the status of that process, but the sources claimed that he would probably be involved in any legal action taken against Apple.

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Trade Algo reported in mid-January that Mr. Kanter had lately been given permission to embark on another significant tech enforcement case involving Google. The Alphabet Inc. division had argued that Mr. Kanter couldn't be impartial because he had represented clients who had filed antitrust cases against Google. Mr. Kanter assisted in the department's late-last-month lawsuit against the search leader, which claimed that it had misused its dominating position in the market for digital ads. The government disputed the notion, and Mr. Kanter helped lead the litigation. The agency's actions, according to Google, would stifle innovation and increase advertising costs, they claimed in a denial of the claims.

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According to publicly available financial reports, Mr. Kanter worked with several Apple skeptics who were his clients at Paul Weiss Rifkind Wharton & Garrison LLP before joining the Justice Department and at his own law company, Kanter Legal Group, after he left there in 2020. Among them are the lobbying organization Coalition for App Fairness, the object tracker Tile Inc., the messaging service Blix Inc., and the music streaming company Spotify Inc. A spokeswoman for Paul Weiss declined to comment. A client of Mr. Kanter testified in a trial over a competition complaint brought against Apple by Epic Games Inc., the company behind "Fortnite."

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The department's current course of action would enable a lawsuit to be filed as early as the spring, but the procedure may be postponed or the government might yet choose not to launch a legal challenge, the sources claimed.

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Critics and government authorities from all over the world have targeted Apple's App Store regulations, questioning whether its control over the pricing and distribution of third-party software on its smartphones hurts competition. The Justice Department is looking into whether Apple has manipulated its operating system to favor its own items, including hardware, but the probe goes beyond the App Store, according to sources familiar with the matter. Apple increases the iPhone's stickiness and deters users from switching to Android smartphones by restricting access to iOS.

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People with knowledge of the situation stated that one area of investigation relates to Tile Inc., which sells consumer tracking devices. Apple modified its tracking tool Find My in an iOS update that was released in 2019, putting the business more in rivalry with Tile.

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Apple started asking users if they wanted to allow Tile's devices to track them as part of its upgrade. The Find My app from Apple comes preinstalled on iPhones and doesn't nag users for permission to track them all the time. And in 2021, Apple unveiled a product named an AirTag, a tiny tracker that works with the company's Find My app and is comparable to those marketed by Tile.

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In testimony to a House subcommittee in 2020, Kirsten Daru, the general counsel for Tile at the time, stated that "the practical fact is that this is a prime example of Apple utilizing customer privacy as a shield to position third-party apps at a competitive disadvantage."

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Between Apple's Find My service and Tile's service, according to Apple, there are privacy differences. According to Kyle Andeer, a vice president of Apple's legal staff, consumers can benefit from increased security and privacy because Apple's location data is saved locally on the iPhone rather than being automatically shared to the cloud.

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In a way that its rivals do not, a number of Apple devices are linked with its operating system. They include AirPods, the company's headphones that have special pop-ups and other advantages that make them easier to use, and iMessage, which Android users are unable to use.

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According to some rivals, the integration results in an unfair advantage. Apple claims that the tight integration of its devices' software and hardware is a distinctive quality that improves them for users.

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According to persons familiar with the probe, Justice Dept investigators are requesting internal sales and market data from corporations. According to the sources, the department has started requesting information on a compressed timeline.

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According to persons aware, the majority of the inquiry is being conducted by the Justice Department's San Francisco division.

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According to a previous report from Politico, Apple is the target of an antitrust investigation by the Justice Department's legal team.

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Around the world, Apple is dealing with a number of litigation and enforcement actions that threaten its market dominance. The creator of "Fortnite," Epic, recently endured a two-year court struggle in the US over Apple's requirement that all of its apps be distributed through the App Store. A U.S. district judge agreed primarily with Apple in 2021, but both parties are appealing.

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The Justice Department entered the Epic lawsuit last year, stating in a brief that the district court's decision had a too-limited interpretation of the Sherman Act, which forbids actions that stifle market competition. The district judge's decision might establish a precedent for approving anticompetitive behavior, the Justice Department warned.

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The Digital Marketplaces Act, a recent law in the European Union, aims to prevent IT giants like Apple from profiting from their existence in digital markets like the App Store for the iPhone and iPad.

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Apple has started to take action in response to the new European regulation, which will come into effect in 2024. Trade Algo has reported that Apple has begun internally researching how to permit rival app stores and third-party software to be sideloaded into the iPhone and iPad.