Randy Picker Writes About DOJ’s Suit Against Apple

The DOJ Seeks To Unbundle Apple’s Core

The Department of Justice’s new antitrust suit against Apple attacks the heart of how Apple operates its iPhone platform. For better or worse, Apple has consistently believed that hardware and software should be fused together. Customers who didn’t share that view could take their business elsewhere and did exactly that for decades when the Apple Macintosh sat with a single-digit market share. But the iPhone, of course, changed all of that and now the United States government wants to open up the iPhone platform to more competition. That will not be an easy case to win, though I suspect that the DOJ knows that, but we also shouldn’t expect easy cases to get litigated. Those cases typically settle. The cases that go to the mat are tricky situations where the government knows that it is trying to make new law and where the target of the lawsuit sees the government as trying to destroy the soul of the firm. This seems to match the new lawsuit against Apple exactly.

When Apple launches a new product—say the next iPhone—it routinely emphasizes the tight integration of Apple’s hardware and software. That approach hasn’t always served Apple well. Apple took that approach when it launched the Macintosh in 1984. The Mac heralded a revolution in how we used our personal computers with its new graphical user interface. Microsoft tried to leave its old operating system, MS-DOS, behind when it released Windows 1.0 in 1985. Windows took time to gain traction—the product didn’t really take off until Windows 3.1 in 1992—but Microsoft achieved a dominant position in computer operating systems as new firms emerged to make clones of the IBM PC. All of those companies needed to license operating system software and they knew where to go to get it: Microsoft. As Windows rose with each new PC maker and the Mac stagnated in its Apple walled garden, a critical conceptual takeaway from the Mac v. Windows competition became clear: Open beats closed.

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