nodamage

An important point that seems to have been missed by most of the comments: the reason Apple lost this case is not because of the profit shifting scheme itself, but rather than they did not set up the scheme correctly:

> ASI's 2014 structure was an adaptation of a Double Irish scheme, an Irish IP–based BEPS tool used by many US multinationals. Apple did not follow the traditional Double Irish structure of using two separate Irish companies. Instead, Apple used two separate "branches" inside one single company, namely ASI.[34] It is this "branch structure" the EU Commission alleged was illegal State aid, as it was not offered to other multinationals in Ireland, which had used the traditional "two separate companies" version of the Double Irish BEPS tool. Under the Double Irish structure, one Irish subsidiary (IRL1) is an Irish registered company selling products to non–US locations from Ireland. The other Irish subsidiary (IRL2) is "registered" in Ireland, but "managed and controlled" from a tax haven such as Bermuda. The Irish tax code considers IRL2 a Bermuda company (used the "managed and controlled" test), but the US tax code considers IRL2 an Irish company (uses the registration test). Neither taxes it. Apple's subsidiary, ASI, behaved like it was IRL2, it was "managed and controlled" via ASI Board meetings in Bermuda, so Irish Revenue did not tax it. But ASI also did all the functions of IRL1, making circa €110.8 billion[6] of profits from non–US sales. The EU Commission contest IRL1's actions made ASI Irish, and the functions of IRL1 over-rode the Bermuda Board meetings in deciding the "managed and controlled" test. The commission had not brought any cases against US multinationals using the standard double two separate companies Irish BEPS tool. (https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute)

In other words if they had actually set up two separate Irish companies instead of just using two separate branches of a single Irish company, their tax scheme would have been fully legal and not considered state aid. (Since many other companies availed themselves of such a scheme.)

> Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions)

Isn't that the whole point of the European Economic Area? That you can freely sell your goods to other countries within the EEA without having to pay corporate taxes to each individual country?

> the case fell apart and ended up a settlement because the Judge presiding over the case violated the court code of conduct by discussing the case with the media.

That's a bit of an oversimplification. Key parts of the original ruling were overturned because the legal analysis performed by the original judge was done incorrectly. Or more specifically, for the case of bundling IE with Windows, analyzed using the wrong legal framework (per se analysis vs rule of reason).

The case was remanded back to the district level for re-analysis under the rule of reason, and that would have been necessary regardless of the judge's behavior.

> I'm surprised there haven't been more attempts at a "tying" argument against Apple's App Store and their platforms, but I'm also not a lawyer. It has what looks like a pretty clear, long history of being considered an anti-competitive practice by the courts.

Epic tried to make this argument in court and failed, mostly because tying is generally not illegal if the consumer is aware of the tie when purchasing and has the option to purchase an alternative product without such a tie.

In other words it would be absolutely legal for Brother to sell a printer that only uses Brother-branded paper and toner, because if you don't like those restrictions you can simply go and purchase a non-Brother printer instead.

> Antitrust doesn't care about the market share, it cares about actions taken to restrain competition.

Not sure how this myth keeps getting perpetuated. The antitrust laws that are relevant to the lawsuits against Apple (specifically Epic's and the DOJ's) absolutely care about market share for the purposes of proving monopolization or attempted monopolization under the Sherman Act.

(Yes, technically it is true that some antitrust violations can occur with low levels of market share, such as price fixing, but those are not really relevant to the lawsuits against Apple.)

As I understand it the threshold is usually $100,000 in revenue or 200 transactions (following the Wayfair decision), the latter of which is easily reached...

> Monopolies and monopolistic practices are flatly illegal.

You are mistaken.

Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not illegal for a company to have a monopoly, to charge "high prices," or to try to achieve a monopoly position by what might be viewed by some as particularly aggressive methods. The law is violated only if the company tries to maintain or acquire a monopoly through unreasonable methods. For the courts, a key factor in determining what is unreasonable is whether the practice has a legitimate business justification.

https://www.ftc.gov/advice-guidance/competition-guidance/gui...

> Monopoly here is legal jargon for market power.

Market power and monopoly power are not the same thing. I will let the DOJ explain:

Market power and monopoly power are related but not the same. The Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market,"(8) and monopoly power as "the power to control prices or exclude competition."(9) The Supreme Court has held that "[m]onopoly power under § 2 requires, of course, something greater than market power under § 1."(10) Precisely where market power becomes so great as to constitute what the law deems to be monopoly power is largely a matter of degree rather than one of kind. Clearly, however, monopoly power requires, at a minimum, a substantial degree of market power.

https://www.justice.gov/archives/atr/competition-and-monopol...

> Personally, I don't think DoJ is going to have a problem showing market power.

For the type of violation they have alleged (monopolization and attempted monopolization under Section 2 of the Sherman Act) they will need to show Apple holds monopoly power, or a dangerous probability of achieving it.

At its core, section 2 makes it illegal to acquire or maintain monopoly power through improper means. The long-standing requirement for monopolization is both "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident."

https://www.justice.gov/archives/atr/competition-and-monopol...

I've seen this quoted multiple times now and I do not think it is the slam dunk people think it is. A literal monopoly is 100% market share, of course that is not required for antitrust law to apply. But the people who quote this intend to imply that 60% market share is sufficient to declare Apple a monopolist in violation of antitrust law, and that does not actually follow from a careful reading of this quote.

I will reply with a separate quote from the DOJ discussing what thresholds of market share are likely to be considered monopoly power:

> In determining whether a competitor possesses monopoly power in a relevant market, courts typically begin by looking at the firm's market share.(18) Although the courts "have not yet identified a precise level at which monopoly power will be inferred,"(19) they have demanded a dominant market share. Discussions of the requisite market share for monopoly power commonly begin with Judge Hand's statement in United States v. Aluminum Co. of America that a market share of ninety percent "is enough to constitute a monopoly; it is doubtful whether sixty or sixty-four percent would be enough; and certainly thirty-three per cent is not."(20) The Supreme Court quickly endorsed Judge Hand's approach in American Tobacco Co. v. United States.(21) Following Alcoa and American Tobacco, courts typically have required a dominant market share before inferring the existence of monopoly power. The Fifth Circuit observed that "monopolization is rarely found when the defendant's share of the relevant market is below 70%."(22) Similarly, the Tenth Circuit noted that to establish "monopoly power, lower courts generally require a minimum market share of between 70% and 80%."(23) Likewise, the Third Circuit stated that "a share significantly larger than 55% has been required to establish prima facie market power"(24) and held that a market share between seventy-five percent and eighty percent of sales is "more than adequate to establish a prima facie case of power."(25)

https://www.justice.gov/archives/atr/competition-and-monopol...

My reading of this is that below 50% is very unlikely to be considered monopoly power while above 70-80% is very likely. 60% appears to sit somewhere in between where it is possible but not likely. Historically, I have not seen any major cases where monopoly power was found at the market share level that Apple currently holds.

It is worth noting that the DOJ in their filing does not seem very confident in being able to prove that Apple's 60% of the smartphone market constitutes monopoly power either. They have instead opted to define a narrower market of "performance smartphones" where Apple apparently holds 70% market share, putting it above the thresholds quoted above. Whether this artificially narrowed market definition will be accepted by the courts will likely determine the outcome of this case.

> The first is their attempt to redefine what the market is in order to declare Apple a "monopoly": they've posited a completely separate market for "performance smartphones", and tried to use total revenue rather than number of units sold in order to push Apple up to having a very high percentage of this invented market.

This comes across as very strange, they must not have much confidence in their ability to prove that Apple holds monopoly power in the overall smartphone market. I suspect if they lose this case it's going to be because the court rejects such an intentionally narrowed market definition.

Sony Music also sued Cox (and won) on willful contributory infringement because they were aware specific users were repeatedly sharing copyrighted material and still continued offering service to those users.

This case does not prove what you think it does because the market for "Intel compatible PC operating systems" does not consist of a single competitor (there are much stricter legal requirements when alleging a single-competitor market).

Market analysis under US antitrust law doesn't work that way. You don't just get to choose an arbitrarily narrow market such that a single competitor by definition owns 100% of it, otherwise plaintiffs would basically never lose in court. Market analysis is done by examining actual consumer behaviors, and in general, markets comprised of a single competitor are not permitted by the courts in antitrust cases (unless specific exceptions are met).

> It was very close to splitting Microsoft because Microsoft was held to have monopolistic market share and was abusing its monopolistic position in operating systems to illegally and anticompetitively push their web browser. Violation of antitrust law.

This was overturned on appeal and subsequently settled out of court so it was never actually determined whether bundling IE with Windows would have been illegal under US antitrust law.

Other aspects of the case were upheld on appeal (mostly related to shady dealings with OEMs) but the appeals panel concluded that the district judge incorrectly analyzed the browser issue. They also overturned the original court ordered split for the same reason.

> Which is ironic, considering that the App Store is likely one of the largest malware distribution vectors on the planet.

Sorry but the actual statistics from mobile security companies that track this stuff show otherwise. From Nokia's Threat Intelligence Report 2020 (https://pages.nokia.com/T005JU-Threat-Intelligence-Report-20...):

Among smartphones, Android devices are the most commonly targeted by malware. Android devices were responsible for 26.64% of all infections, Windows/PCs for 38.92%, IoT devices for 32.72% and only 1.72% for iPhones.

Android malware infections are an order of magnitude higher compared to iPhones.

(I tried to look for data from more recent years but iPhones don't show up in the reports after 2020.)

That's a very condescending accusation you've made, but okay I'll bite. How exactly does the OS prevent this? Just to be very clear, the scenario is:

1) The app requests access to the microphone.

2) The user grants the app access to the microphone.

3) The app, now having microphone access, processes the user's voice command and does what is requested.

4) The app also uploads the voice recording to their backend and later sells the voice recording to someone else.

What mechanism in the operating system do you believe prevents (4) from occurring?

And? You can say the same about pretty much anyone that sells anything. Why does a restaurant charge $15 for a cocktail that costs them 50 cents to make?

I'm quite not sure what you're asking for an example of?

I mean ultimately both companies have invested R&D into building their SDKs and it comes across as bizarre to me to suggest that one company should be legally banned from charging licensing fees for their use.

> Additionally, those privacy controls are more fundamental than those in the App Store. It's more important that the app not be able to toggle the microphone at will than for you to be able to control what it does with that audio after capture.

I mean both are equally important really. I might want to grant you access to my microphone to run a voice command but that doesn't mean I want you to collect my voice recordings and sell them to someone else. I might want to grant you access to my contacts so I can message my friends but that doesn't mean I want you to scrape my contact list to data mine my social network.

> That's not an iOS problem, and Apple fundamentally cannot regulate that, App Store or no - after your personal information goes to a third party's servers, Apple has zero visibility into what happens.

Yes they can. Maybe not perfectly but the App Store Review Guidelines define specific restrictions on what you can do with personal information, with the threat of having your developer account terminated if you violate those restrictions.

> Apple cannot and should not be responsible for fixing this - we need a good set of government regulations designed to restrict how your personal data is collected or used.

Sure, specific privacy regulations would be great, but the government moves very slowly and the government itself isn't going to be able to enforce such regulations on a massive scale in the same way that the app review process currently does.

The key difference of course is the App Store can take direct action against that app in such a scenario.

So Microsoft, Sony, and Nintendo too? So much for "ridiculous by all industry standards" when there is an entire software industry where this is commonplace.

> The notion that maker of the toolchain gets to claim a percentage of what the app written using it brings in is ridiculous by all industry standards.

Do you also believe that Epic's Unreal Engine pricing is also ridiculous under the same standard?

Sandboxing insufficiently addresses this problem as permissions can be granted by the user for legitimate purposes and then once granted they could be abused to violate user privacy.

Privacy controls are not a panacea against abuse by malicious developers. Permissions can be granted for legitimate purposes and then abused for nefarious purposes once granted.

Many of the App Store privacy rules relate to what you are allowed to do with the user data after access is granted by the user. In other words they relate to data retention rather than access in the first place.

For example they recently added a rule saying if a user can create an account inside your app you have to also give them an option to delete the account from the app as well. This is a behavior enforced by app review, not by operating system privacy controls.

> Apple doesn't develop those SDKs and tools in order to make money selling them to developers

Yes, they do. They explicitly stated so during the Epic trial. Otherwise there would be no fee at all.

The primary purpose of the 30% fee is not payment processing or delivering updates, it is the licensing fee for the use of Apple's intellectual property (SDKs and developer tools).

Under US law the requirements for recognizing single brand aftermarkets are very particular, that’s why Epic failed to prove Apple held a monopoly over iOS software distribution.

> This is just literally wrong, by-definition.

No it's not. There are plenty of ways to distribute software without Apple being involved at all.

Perhaps you meant to argue that Apple has a monopoly on iOS software distribution, but that's not actually what was originally written. It's also highly questionable given that the courts have rejected "iOS software distribution" as a valid antitrust market for the purpose of monopolization claims.

The first half of your claim is false, "iOS app distribution" was not accepted as a valid "relevant market" in the very court case being discussed. But I think you knew that already.