Apple Met With DOJ Antitrust Chief in Last-Ditch Bid to Avoid Expected Suit

Leah Nylen, Bloomberg News

The Apple App Store app on a smartphone arranged in New York, US, on Monday, Aug. 14, 2023. , Bloomberg

(Bloomberg) -- Apple Inc. representatives met with the Justice Department last week in a final bid to persuade the agency not to file an antitrust suit against the company, according to people familiar with the matter.

The company and its lawyers met with Assistant Attorney General Jonathan Kanter, who will make the final call on whether to file a suit, said the people, who asked not to be identified discussing the confidential meeting. Such “last rites” meetings are often one of the final steps before a lawsuit is filed.

Antitrust enforcers, who have been probing the company since 2019, allege that Apple has imposed software and hardware limitations on its iPhones and iPads to impede rivals from effectively competing. The suit is expected in the coming weeks, likely by the end of March, the people said.

Apple didn’t immediately respond to a request for comment. The Justice Department declined to comment.

Apple’s App Store, which charges developers a commission of either 15% or 30%, has come under heavy criticism by developers and lawmakers.

In January, Apple said it will allow US developers to use alternative payment systems, but charge a 27% fee for most digital purchases or 12% on subscriptions. Epic Games Inc., which sued the company over its App Store policies, is contesting the proposed changes, saying they are inadequate and would effectively prevent developers from reducing consumer prices.

Read More: Apple Accused by Epic of Failing to Fix App Store as Court Asked

In an interview with Bloomberg News this month, California Attorney General Rob Bonta said the state was in touch with the Justice Department about the potential case and could join onto an eventual complaint.

“We’re very interested in” possibly joining, Bonta said. “We are very aware of the federal government’s interest in Apple. We are interested also, and it’s very aligned with our overall strategy in the tech industry.”

The Justice Department has also been monitoring Apple’s moves in Europe as it prepares to begin enforcing new digital gatekeeper rules on March 7.

To comply with those rules, Apple said it will allow customers to download software from outside its App Store, use alternative payment systems and more easily choose a new default web browser. Yet several developer groups have slammed Apple’s proposed changes as “malicious compliance” with the EU’s rules, criticizing the iPhone maker for introducing new fees for payment processing and a €0.50 per app installation fee for software downloaded more than 1 million times. While Apple said most developers in the EU would see their payments decrease or stay the same, developers say the new fee will force them to stay within the App Store or face prohibitive payments.

Apple is expected to face a fine of at least €500 million ($542 million) by EU’s antitrust watchdog as soon as next week related to allegations it silenced music-streaming rivals, including Spotify Technology SA, on its platforms. The company separately offered to settle a second probe into its tap-to-pay technologies, by opening up access to its coveted near-field communication chip on iPhones to rival digital wallets.

--With assistance from Mark Gurman and Anna Edgerton.

(Updates with comments from California attorney general in seventh paragraph.)