Monopoly of the App store and Apple

A monopoly is a market situation where a single entity has exclusive control over a product, service, or industry. This allows for dominating the market and influencing prices and availability without competition. However, monopolies are not always forbidden. According to the Sherman Act of 1890 (US antitrust law), some monopolies are permitted.

Innocent Monopoly Achieved through superior business practices (e.g. Google in search) Not subject to antitrust enforcement

Natural Monopoly Single company serves market most efficiently Example: Historical cable companies (e.g., Comcast)

While many consumers prefer certain dominant products (like iPhone or Google's search engine), these companies have faced legal challenges. For instance, they have restricted cross-platform functionality. In fact, in recent years Apple Inc. lost its court fight over a €13 billion ($14.4 billion) Irish tax bill and Google lost its challenge over a €2.4 billion fine for abusing its market power, in a double boost to the European Union's crackdown on Big Tech.

The EU's Court of Justice in Luxembourg backed a landmark 2016 decision that Ireland broke state-aid law by giving Apple an unfair advantage, (ECJ) in Case C‐465/20 P (delivered on 10 September 2024), the European Commission was correct to decide in 2016 that Ireland granted unlawful aid to Apple. In another victory for the EU's antitrust chief, Margrethe Vestager, the same court ruled that Google illegally leveraged its search engine dominance to give a higher ranking to its product listings.

Apple's Business Model and Legal Challenges

Apple's business model centres around its integrated ecosystem of hardware, software, and services. While known for innovation and environmental initiatives, such as the infamous headquarters in Cupertino that have a negative carbon impact, the company faces scrutiny over its App Store policies. Due to its (innocent) monopoly in the market, it set the rules in the digital marketplaces for apps and programs. Recent changes include allowing third-party app stores, with revised commission structures: reduced rates of 10-17% (down from 15-30%), plus a 3% fee for using Apple's payment system. In addition, other legal challenges have emerged, including a $7 billion class action lawsuit set for February 2026 in California federal court. The lawsuit alleges antitrust violations through Apple's control over app distribution, claiming this has inflated prices for millions of iPhone users.

The Department of Justice and 16 state attorneys general have raised concerns about Apple's ecosystem control. Key issues include:

• Restricted app distribution through the App Store

• Use of private APIs that may disadvantage competitors in messaging, smartwatches, and digital wallets

• Creation of artificial barriers between iPhone and Android users

• Preferential treatment of Apple services like FaceTime over third-party alternatives

APIs (Application Programming Interfaces) are sets of rules and protocols that allow different software applications to communicate and interact with each other. Based on the surrounding context of legal documents, this likely refers to technical interfaces that are subject to legal and regulatory considerations, particularly antitrust and competition law. Critics argue that Apple maintains its market position through restrictive practices rather than technological superiority, potentially limiting competition and innovation while increasing costs for consumers.

Conclusion

In the end, monopolies can be natural or innovative and, quite often, provide benefits to consumers through efficiency and superior products. But, as is the case with companies like Apple and Google, the legal and regulatory environment puts their market dominance and business practices under greater scrutiny. These cases show the fine line between promoting innovation and maintaining fair competition. As technology giants continue to face legal challenges, the outcomes will shape not only their business models but also the broader principles of antitrust enforcement and consumer protection in the digital economy.

References and further reading

1. “The history of the app store”(appradar)

2. “Justice Department sues Apple, alleging it illegally monopolized the smartphone market”(AP news)

3. “US v Apple: Everything you need to know”(The Verge)

4. “Apple app store consumer class action set for February 2026 jury trial” (USA today)

5. “Apple loses bid to appeal over allowing consumer antitrust class action” (Reuters)

6. “Apple lose multi-billion dollar court fights with the EU” (Boomberg law)

7. “The ECJ Final Decision in Apple – A Key Milestone in the EU Fight against Tax Avoidance” (IBFD)

8. “The Court of Justice invalidates Decision 2016/1250 on the adequacy of the protection provided by the EU-US Data Protection Shield” ( Court of Justice Press Summary)

9. Simone Colavecchia- Bachelor in Global Law, BA, at Università Commerciale Luigi Bocconi