Antitrust lawsuits in the Tech industry: battles for competition and innovation ⚖️

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The recent lawsuit filed by the United States against Apple for illegal monopoly on smartphones (which you can find out more about by clicking here) has generated a lot of reaction from Internet users. Some readers wanted to know if there had ever been similar lawsuits. The answer is yes, so let’s take a look back in history.

U.S. vs Microsoft, the great classic

We have to go back as far as 1998 to talk about one of the most important lawsuits involving a tech company: the United States v. Microsoft. While this may seem like a long time ago, it’s worth pointing out that the United States mentioned it in their recent lawsuit against Apple.

The U.S. government, along with several states, brought an antitrust suit against Microsoft. Microsoft was accused of abusing its dominant position in the operating system market to crush competition and maintain its monopoly.

After a 3-year legal battle (1998 – 2001), Microsoft was accused of tying its Internet Explorer browser to its Windows operating system, thereby hindering competition. In the end, Microsoft was found guilty of anti-competitive practices. However, after a series of appeals, a settlement agreement was reached in 2001. This agreement limited some of Microsoft’s business practices but avoided a break-up of the company.

Years later, in a 2013 interview, company founder Bill Gates admitted that Microsoft’s delay in the smartphone field was partly due to the company’s focus on the antitrust trial and other priorities at the time.

U.S. vs. Tech giants

Although Microsoft’s lawsuit is the first to come to mind, many others have followed.

In 2012, it was Apple’s turn to go to court. The U.S. Department of Justice and several states brought suit against Apple and five book publishers for colluding to fix e-book prices. The collusion was aimed at countering Amazon’s dominance of the digital book market. Although Apple maintained its innocence, the company finally agreed to settle the case by paying damages. It also agreed to modify its commercial practices regarding e-book pricing. The publishers involved also reached settlement agreements.

The European Union is also watching out

Five years later, in 2017, but this time on the other side of the Atlantic, it was Google’s turn to face the European Union. Following an in-depth investigation by the European Commission, the web giant was accused of abusing its dominant position on the search engine market. It was accused of favoring its own price comparison service, Google Shopping, in search results. In the end, Google was fined a record 2.42 billion euros for violating EU antitrust rules. In addition to the fine, Google was forced to modify its business practices to ensure fair competition in the marketplace.

In 2018, it was Qualcomm’s turn to suffer the wrath of the European Union. Qualcomm is a well-known company in the telecommunications sector. But it’s best known for its Snapdragon chips that power most Android smartphones. The European Commission has accused Qualcomm of abusing its dominant position in the 4G LTE modem chip market. The company offered financial incentives to Apple to use only Qualcomm chips in its iPhones and iPads. Qualcomm was fined 997 million euros for anti-competitive practices. The company was also required to cease these practices and comply with EU competition rules in the future.

While previous trials have come to an end, some are still ongoing.

Trials still ongoing

In 2020, the Federal Trade Commission (FTC) and a group of U.S. states filed an antitrust lawsuit against Facebook. The FTC is an independent agency of the U.S. government. Its main mission is to enforce consumer laws and control anti-competitive practices. The agency accused Facebook of using its market power to eliminate competition and acquire potential competitors, such as Instagram and WhatsApp. The trial is still ongoing, and its outcome is still uncertain.

Finally, this time we’re not looking at government versus business, but business versus business: Epic Games versus Apple. Epic Games, formerly Epic MegaGames, is an American video game development studio and distributor. It is notably the publisher of the games Fortnite and Rocket League. Epic Games has accused Apple of abusing its dominant position in the mobile applications market. The company charges a 30% commission on purchases made in the App Store. The lawsuit is still pending. A judge ruled in 2021 that Apple had violated antitrust law by not allowing developers to use alternative payment systems. Apple has appealed the decision.

Through these various lawsuits, the various governments and authorities wish to create environments favorable to competition. They also highlight growing concerns about the power of large technology companies and their impact on competition and innovation. Without healthy competition, the first losers are consumers. Indeed, some companies could take advantage of their monopoly to set high prices.