Officials within the United States Department of Justice (DOJ) have signaled that breaking up Apple into smaller independent companies is on the table should it win its antitrust case against the company after it filed the sweeping lawsuit today (via CNBC).
While the option seems unlikely, it showcases the significance of the antitrust case where the US federal and several state governments are accusing Apple of harboring a monopolistic culture over many of its services and products. The breaking up, otherwise referred to as “structural relief,” could see Apple split into smaller companies that run independently from one another. For example, the App Store could be spun off as a separate company from Apple away from the control and leadership of CEO Tim Cook. This separate company could then be free to make its own decisions, such as opening up a storefront on Android or other platforms.
A breaking up of Apple is certainly possible under the Sherman Act, which allows the US federal government to break up companies deemed as “too big” to stimulate competition. The Sherman Act was last used to break up the Bell System in 1982, which spun out the corporation into smaller companies including today’s AT&T and Bell Labs. The Sherman Act was also used to dissolve and split Standard Oil in 1911 into 34 separate petroleum companies that today include ExxonMobil.
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The antitrust case filed today alleges that Apple’s rules and restrictions on the iPhone platform have stifled competitors and developers from fairly competing with the Cupertino company. Apple uses its influence over its products to “extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives,” the suit alleges.
The antitrust case claims some examples of how Apple is stifling iPhone competition. Apple is accused of making it harder to move away from the iPhone by preventing apps that endanger “iOS stickiness.” The company is also accused of artificially limiting other aspects including third-party cloud streaming services, as well as imposing restrictions that limit cross-compatibility of texting between iPhone and Android.
The results of this antitrust case and trial could have significant ramifications for the iPhone and Apple as a whole. While a breakup in the manner of Standard Oil and the Bell System seems unlikely, the company could nevertheless be forced to drastically alter some aspects of its platforms in the US similarly to what it did in Europe with the iOS 17.4 update. It could be years before the full effects of this trial and subsequent implications take place.
