AG Garland: ‘Monopolies Like Apple’s Threaten the Free and Fair Markets Upon Which Our Economy Is Based’

RUSH TRANSCRIPT General Earlier ░░░░░░░░ the Department of Justice ░░░░░░░░ by 15 states and ░░░░░░░░ district of Columbia sued ░░░░░░░░ in the U S ░░░░░░░░ court for the district ░░░░░░░░ New Jersey for violating ░░░░░░░░ 2 of the sherman ░░░░░░░░ act Over the last ░░░░░░░░ decades apple has become ░░░░░░░░ of the most valuable ░░░░░░░░ companies in the world ░░░░░░░░ its net income exceeds ░░░░░░░░ individual gross domestic product ░░░░░░░░ more than 100 countries ░░░░░░░░ is in large part ░░░░░░░░ to the success of ░░░░░░░░ iphone Apple s signature ░░░░░░░░ product For over a ░░░░░░░░ iphone sales have made ░░░░░░░░ a majority of apple ░░░░░░░░ annual revenue Today apple ░░░░░░░░ share of the U ░░░░░░░░ Performance smartphone market exceeds ░░░░░░░░ And its share of ░░░░░░░░ entire U S Smartphone ░░░░░░░░ exceeds 65 Apple charges ░░░░░░░░ much as nearly 1600 ░░░░░░░░ an iphone But as ░░░░░░░░ complaint alleges Apple has ░░░░░░░░ monopoly power in the ░░░░░░░░ market not simply by ░░░░░░░░ ahead of the competition ░░░░░░░░ the merits but by ░░░░░░░░ federal antitrust law Consumers ░░░░░░░░ not have to pay ░░░░░░░░ prices because companies break ░░░░░░░░ law We allege that ░░░░░░░░ has employed a strategy ░░░░░░░░ relies on exclusionary anticompetitive ░░░░░░░░ that hurts both consumers ░░░░░░░░ developers For consumers that ░░░░░░░░ meant fewer choices higher ░░░░░░░░ and fees lower quality ░░░░░░░░ apps and accessories and ░░░░░░░░ innovation from apple and ░░░░░░░░ competitors For developers that ░░░░░░░░ meant being forced to ░░░░░░░░ by rules that insulate ░░░░░░░░ from competition And as ░░░░░░░░ in our complaint we ░░░░░░░░ that apple has consolidated ░░░░░░░░ monopoly power not by ░░░░░░░░ its own products better ░░░░░░░░ by making other products ░░░░░░░░ Apple carries out its ░░░░░░░░ anticompetitive conduct in two ░░░░░░░░ ways First apple imposes ░░░░░░░░ restrictions and fees that ░░░░░░░░ the features and functionality ░░░░░░░░ developers can offer iphone ░░░░░░░░ Second apple selectively restricts ░░░░░░░░ foints spoints connection with ░░░░░░░░ party apps and the ░░░░░░░░ s operating system degrading ░░░░░░░░ functionality of nonapple apps ░░░░░░░░ accessories As a result ░░░░░░░░ most of the past ░░░░░░░░ years apple collected a ░░░░░░░░ in the form of ░░░░░░░░ 30 commission on the ░░░░░░░░ of any app downloaded ░░░░░░░░ the app store as ░░░░░░░░ as on in app ░░░░░░░░ Apple is able to ░░░░░░░░ these fees from companies ░░░░░░░░ all sizes Apple has ░░░░░░░░ suppressed the emergence of ░░░░░░░░ like cloud streaming apps ░░░░░░░░ gaming apps as well ░░░░░░░░ super apps that could ░░░░░░░░ user dependence on apple ░░░░░░░░ own operating system and ░░░░░░░░ hardware And as any ░░░░░░░░ user who has ever ░░░░░░░░ a green text message ░░░░░░░░ received a tiny grainy ░░░░░░░░ can attest apple s ░░░░░░░░ conduct also includes making ░░░░░░░░ more difficult for iphone ░░░░░░░░ to message with users ░░░░░░░░ nonapple products It does ░░░░░░░░ by diminishing the functionality ░░░░░░░░ its own messaging app ░░░░░░░░ by diminishing the functionality ░░░░░░░░ third party messaging apps ░░░░░░░░ doing so apple knowingly ░░░░░░░░ deliberately degrades quality privacy ░░░░░░░░ security for its users ░░░░░░░░ example if an iphone ░░░░░░░░ messages a noniphone user ░░░░░░░░ apple messages the text ░░░░░░░░ not only as a ░░░░░░░░ bubble but incorporates limited ░░░░░░░░ The conversation is not ░░░░░░░░ videos are pixilated and ░░░░░░░░ and users cannot edit ░░░░░░░░ or see typing indicators ░░░░░░░░ a result iphone users ░░░░░░░░ rival smartphones as being ░░░░░░░░ quality because the experience ░░░░░░░░ messaging friends and family ░░░░░░░░ do not own iphones ░░░░░░░░ worse Even though apple ░░░░░░░░ the one responsible for ░░░░░░░░ cross platform messaging and ░░░░░░░░ so intentionally For example ░░░░░░░░ 2013 a senior executive ░░░░░░░░ apple explained that supporting ░░░░░░░░ platform messaging and apple ░░░░░░░░ quote would simply serve ░░░░░░░░ remove an obstacle to ░░░░░░░░ families giving their kids ░░░░░░░░ phones closed quote In ░░░░░░░░ apple s CEO was ░░░░░░░░ whether apple would fix ░░░░░░░░ to android messaging the ░░░░░░░░ added quote not to ░░░░░░░░ it personal but I ░░░░░░░░ t send my mom ░░░░░░░░ videos closed quote Apple ░░░░░░░░ CEO responded buy your ░░░░░░░░ an iphone In addition ░░░░░░░░ selectively controlling app distribution ░░░░░░░░ creation we allege that ░░░░░░░░ has violated the law ░░░░░░░░ conal restricting access to ░░░░░░░░ interface which is needed ░░░░░░░░ make an app functional ░░░░░░░░ the apple operating system ░░░░░░░░ a product like a ░░░░░░░░ watch or a digital ░░░░░░░░ to be useful to ░░░░░░░░ iphone user it must ░░░░░░░░ able to communicate with ░░░░░░░░ iphone s operating system ░░░░░░░░ apple creates barriers and ░░░░░░░░ it extremely difficult and ░░░░░░░░ for both users and ░░░░░░░░ to venture outside the ░░░░░░░░ ecosystem When it comes ░░░░░░░░ smart watches apple not ░░░░░░░░ drives users to purchase ░░░░░░░░ apple watch which is ░░░░░░░░ compative with ivecompat iphone ░░░░░░░░ uses controls to make ░░░░░░░░ harder for someone with ░░░░░░░░ iphone to use a ░░░░░░░░ apple smart watch And ░░░░░░░░ it comes to digital ░░░░░░░░ apple s exclusionary conduct ░░░░░░░░ a step further Digital ░░░░░░░░ allow users to store ░░░░░░░░ use passes and credentials ░░░░░░░░ a single app including ░░░░░░░░ cards personal identification movie ░░░░░░░░ and car keys Apple ░░░░░░░░ is apple s proprietary ░░░░░░░░ wallet on the iphone ░░░░░░░░ actively encourages banks merchants ░░░░░░░░ other parties to participate ░░░░░░░░ apple wallet but it ░░░░░░░░ exerts its monopoly power ░░░░░░░░ block the same partners ░░░░░░░░ developing alternative payment products ░░░░░░░░ services for iphone users ░░░░░░░░ example apple has blocked ░░░░░░░░ party developers from creating ░░░░░░░░ digital wallets on the ░░░░░░░░ They use what is ░░░░░░░░ as tap to pay ░░░░░░░░ That is a function ░░░░░░░░ makes a digital wallet ░░░░░░░░ a wallet Instead apple ░░░░░░░░ those who want to ░░░░░░░░ the wallet function to ░░░░░░░░ personal information with apple ░░░░░░░░ if they would prefer ░░░░░░░░ share that information solely ░░░░░░░░ their bank medical provider ░░░░░░░░ other trusted third party ░░░░░░░░ an iphone user puts ░░░░░░░░ credit or debit card ░░░░░░░░ apple wallet apple inserts ░░░░░░░░ into the process that ░░░░░░░░ otherwise occur directly between ░░░░░░░░ user and the card ░░░░░░░░ This introduces an additional ░░░░░░░░ point of failure for ░░░░░░░░ privacy and security of ░░░░░░░░ users And that is ░░░░░░░░ one way in which ░░░░░░░░ is willing to make ░░░░░░░░ iphone less secure and ░░░░░░░░ private and in order ░░░░░░░░ maintain its monopoly power ░░░░░░░░ Supreme Court defines monopoly ░░░░░░░░ as quote the power ░░░░░░░░ control prices or exclude ░░░░░░░░ As set out in ░░░░░░░░ complaint apple has that ░░░░░░░░ in the smartphone market ░░░░░░░░ having monopoly power does ░░░░░░░░ itself violate the antitrust ░░░░░░░░ but it does when ░░░░░░░░ firm acquires or maintains ░░░░░░░░ power not because it ░░░░░░░░ a superior product or ░░░░░░░░ business acumen but by ░░░░░░░░ in exclusionary conduct As ░░░░░░░░ out in our complaint ░░░░░░░░ has maintained its power ░░░░░░░░ because of its superiority ░░░░░░░░ of its unlawful exclusionary ░░░░░░░░ Monopolies like apple s ░░░░░░░░ the free and fair ░░░░░░░░ upon which our economy ░░░░░░░░ based They stifle innovation ░░░░░░░░ hurt producers and workers ░░░░░░░░ they increase costs for ░░░░░░░░ If left unchallenged apple ░░░░░░░░ only continue to strengthen ░░░░░░░░ smartphone monopoly But there ░░░░░░░░ a law for that ░░░░░░░░ Justice Department will vigorously ░░░░░░░░ antitrust law And enforcing ░░░░░░░░ law protects consumers from ░░░░░░░░ prices and fewer choices ░░░░░░░░ is a Justice Department ░░░░░░░░ legal obligation that is ░░░░░░░░ the American people expect ░░░░░░░░ is what they deserve ░░░░░░░░ am grateful to the ░░░░░░░░ and staff for the ░░░░░░░░ s antitrust division for ░░░░░░░░ tireless work on this ░░░░░░░░ on behalf of the ░░░░░░░░ people I ll now ░░░░░░░░ the podium over to ░░░░░░░░ deputy attorney general.