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“The Justice Department’s lawsuit against the iPhone maker pushes the boundaries of competition rules. Some experts say that may make winning more difficult.
Justice Department officials, including the antitrust chief Jonathan Kanter, foreground, are trying to push the boundaries of regulations with the new lawsuit against Apple.Jose Luis Magana/Associated Press
A shot at Apple’s moneymaker
With its antitrust lawsuit against Apple, the Biden administration has joined a growing list of regulators taking on the iPhone giant. But the Justice Department is taking a more ambitious approach than the others by aiming at the company’s tight control of the iPhone ecosystem, which officials say hurts consumers and developers while producing giant profits.
If successful, the case could upend a business model that has made Apple one of the most profitable companies in history — but victory would require courts to accept a redefinition of decades-old antitrust law.
Prosecutors zeroed in on Apple’s efforts to lock-in consumers. The Justice Department argues that the company unlawfully restricted competition by blocking key iPhone features to prevent consumers from switching devices.
Apple is profiting “not by making its own products better, but by making other products worse,”Attorney General Merrick Garland said on Thursday.
The lawsuit identified five areas: smart watches, digital wallets, cloud-based gaming, messaging apps — yes, the green-bubble debate is key here — and so-called “super apps” that bundle different programs. (It also suggests that Apple’s behavior affects an even wider array of products, including cars.)
Apple said the approach amounted to excessive interference in business.“If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect,” a spokeswoman said, adding that it would let the government have a heavy hand in designing people’s technology.
Regulators globally are already changing how Apple operates. The European Union’s sweeping Digital Markets Act aims to open up iOS and the App Store, and the bloc has also fined the company $2 billion for hampering music-streaming competitors.
The new case pushes the boundaries of traditional antitrust policy. That’s in keeping with the stated aim of regulators like Jonathan Kanter, the Justice Department’s antitrust chief, and Lina Khan, the head of the F.T.C.
“We want to help real people by making sure that our antitrust laws work for workers, work for consumers, work for entrepreneurs and work to protect our democratic values,” Kanter told The Times in January, declining to comment on specific cases.
But some experts think this lawsuit is a stretch. Gus Hurwitz, a senior fellow at the University of Pennsylvania Carey Law School, told DealBook that antitrust policy traditionally hasn’t focused on issues like porting consumer data to different platforms.
He added that while prosecutors were seeking to help some consumers — those who favor switching devices — the lawsuit could end up hurting others. Users of iOS “derive a lot of value from their closed ecosystem,” he said. “Apple users like the closed ecosystem and the benefits that confers on them.”
The US Sues Apple Over iPhone Competition: What to Know
"The Department of Justice says Apple has stifled competition and violated antitrust laws in the name of security.
The US Department of Justice and 16 state attorneys general say Apple has used its industry-defining iPhone to enrich itself while stifling competition.
James Martin/CNET
The US Department of Justice and 16 state attorneys general filed an antitrust lawsuit against Apple on Thursday, saying the company has used itsindustry-defining iPhone as a tool to enrich itself while stifling competition.
In an88-page suitfiled in the US District Court for the District of New Jersey, the government argued that Apple violated antitrust laws through its tight control over the iPhone, preventing other companies from creating key applications and services that would compete with its own. The result, the government said, is that Apple has kneecapped competition from apps that would offer functionality consumers would benefit from, such as support for a competitor's smartwatch, digital wallet or cross-platform messaging service.
"We allege that Apple has consolidated its monopoly power, not by making its own products better, but by making other products worse," US Attorney General Merrick Garland said in a news conference Thursday. He added that Apple's share of the US smartphone market exceeds 65% and that the company maintains its power by creating barriers that "make it extremely difficult and expensive for both users and developers to venture outside the Apple ecosystem."
Apple denied the government's accusations, saying in a statement that the lawsuit "threatens who we are and the principles that set Apple products apart in fiercely competitive markets." The company added that if the suit were to succeed, it would "set a dangerous precedent, empowering government to take a heavy hand in designing people's technology."
"We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it," the company added.
Critics say Apple's success has come at a cost, choking out competitors whose products are unable to compete against Apple's own products and services built around the iPhone's core functionality.
The lawsuit has the potential to reshape the decisions tech companies can make when creating secondary experiences for the devices they build. The Justice Department cited many examples where it believes this is happening, including video game streaming, cross-platform messaging, smartwatches, web browsers and advertising.
Here's everything you need to know about the lawsuit so far.
Not just the US
The DOJ's lawsuit against Apple is a historic one that will likely have impact far beyond Apple's business practices for many years to come. But it's also the latest in a series of regulatory and legal challenges Apple's faced from governments around the world.
Most notably, the European Union hit Apple witha landmark $2 billion fine earlier this month, for preventing rival streaming services from telling users about cheaper ways to subscribe outside Apple's App Store.
More regulation
There's been a steady drumbeat of increasing regulation aimed at the tech industry over the past few years.
The first major one was theEU's General Data Protection Regulation, or GDPR, which was ratified in 2016. That sweeping law gave EU residents more control over their data, while requiring companies to disclose how it's tracked, gathered and used. Among other things, it forced websites to ask for permission every time they want to usecookies that gather information on you.
Another set of EU laws, known as the Digital Markets Act, attempts to curb the tech industry's power by identifying "gatekeeper" companies, whose power is so vast that they must follow rules that ensure fair competition.
The Justice Department's case against Apple questions the company's marketing thatits strict controls over the App Storeare in the best interests of consumers, and the wider industry.
Apple has argued for years that it needs to treat the security of its iPhones and iPads differently from any other device before, because these handheld internet-connected supercomputers can collect so much information about who we are, where we go and what we do. The DOJ is arguing that even if that's true, Apple has used security as an excuse to push out competitors who could have offered apps, devices or services people benefit from.
The DOJ's specific examples
The US agency's sweeping lawsuit focuses on some specific areas of Apple's business it believes are anticompetitive.
Cross-platform messaging
This is likely to be the issue most of us relate to, as we're all well steeped inthe debate over green bubbles versus blue bubbles. The Justice Department went a step further and noted that green bubble messages are lower quality and don't have modern features like typing alerts that have become commonplace across the industry.
Apple keeps particularly tight control over the web browsing experience on the iPhone, arguing it can be an attack vector for cybercriminals otherwise. Outside the EU, other web browsers are allowed to be offered on the iPhone, but they must use Apple's built-in "engine" to translate web data into the text and images you see on the screen. It may seem nerdy, butit's at the heart of how the internet runs. In the EU, because of the DMA, iPhone and iPad users can choose to use other web browsers and their separate engines, such asMozilla's Firefox.
Smartwatches
The Apple Watch is an industry behemoth, sellingmore units than all Swiss watch makers combined. Few other companies have been able to compete in the smartwatch category, which the Justice Department says is because Apple's tight control over software effectively slows competition.
“Astronomers have used the James Webb and Hubble space telescopes to confirm one of the most troubling conundrums in all of physics — that the universe appears to be expanding at bafflingly different speeds depending on where we look.
This problem, known as the Hubble Tension, has the potential to alter or even upend cosmology altogether. In 2019, measurements by the Hubble Space Telescope confirmed the puzzle was real; in 2023, even more precise measurements from the James Webb Space Telescope (JWST) cemented the discrepancy.
Now, a triple-check by both telescopes working together appears to have put the possibility of any measurement error to bed for good. The study, published February 6 in the Astrophysical Journal Letters, suggests that there may be something seriously wrong with our understanding of the universe.
Reiss, Saul Perlmutter and Brian P. Schmidt won the 2011 Nobel Prize in physicsfor their 1998 discovery of dark energy, the mysterious force behind the universe's accelerating expansion.
Currently, there are two "gold-standard" methods for figuring out the Hubble constant, a value that describes the expansion rate of the universe. The first involves poring over tiny fluctuations in the cosmic microwave background (CMB) — an ancient relic of the universe's first light produced just 380,000 years after the Big Bang.
JWST's infrared cameras allow it to look at the universe in more precise detail than any telescope before it. (Image credit: NASA, ESA, CSA, J. Diego (Instituto de FÃsica de Cantabria), B. Frye (University of Arizona), P. Kamieneski (Arizona State University), T. Carleton (Arizona State University), and R. Windhorst (University of Arizona), A. Pagan (STScI), J. Summers (Arizona State University), J. D’Silva (University of Western Australia), A. Koekemoer (STScI), A. Robotham (University of Western Australia), and R. Windhorst (University of Arizona))
Between 2009 and 2013, astronomers mapped out this microwave fuzz using the European Space Agency's Planck satellite to infer a Hubble constant of roughly 46,200 mph per million light-years, or roughly 67 kilometers per second per megaparsec (km/s/Mpc).
The second method uses pulsating stars called Cepheid variables. Cepheid stars are dying, and their outer layers of helium gas grow and shrink as they absorb and release the star's radiation, making them periodically flicker like distant signal lamps.
As Cepheids get brighter, they pulsate more slowly, giving astronomers a means to measure their absolute brightness. By comparing this brightness to their observed brightness, astronomers can chain Cepheids into a "cosmic distance ladder" to peer ever deeper into the universe's past. With this ladder in place, astronomers can find a precise number for its expansion from how the Cepheids' light has been stretched out, or red-shifted.
But this is where the mystery begins. According to Cepheid variable measurements taken by Riess and his colleagues, the universe's expansion rate is around 74 km/s/Mpc: an impossibly high value when compared to Planck's measurements. Cosmology had been hurled into uncharted territory.
"We wouldn't call it a tension or problem, but rather a crisis," David Gross, a Nobel Prize-inning astronomer, said at a 2019 conference at the Kavli Institute for Theoretical Physics (KITP) in California.
Initially, some scientists thought that the disparity could be a result of a measurement error caused by the blending of Cepheids with other stars in Hubble's aperture. But in 2023, the researchers used the more accurate JWSTto confirm that, for the first few "rungs" of the cosmic ladder, their Hubble measurements were right. Nevertheless, the possibility of crowding further back in the universe's past remained.
To resolve this issue, Riess and his colleagues built on their previous measurements, observing 1,000 more Cepheid stars in five host galaxies as remote as 130 million light-years from Earth. After comparing their data to Hubble's, the astronomers confirmed their past measurements of the Hubble constant.
"We've now spanned the whole range of what Hubble observed, and we can rule out a measurement error as the cause of the Hubble Tension with very high confidence," Riess said. "Combining Webb and Hubble gives us the best of both worlds. We find that the Hubble measurements remain reliable as we climb farther along the cosmic distance ladder."
In other words: the tension at the heart of cosmology is here to stay.”
Malaysia Rises as Crucial Link in Chip Supply Chain
"U.S. and European companies looking to diversify from China are expanding around Southeast Asia, a sign of how geopolitics is reshaping tech manufacturing.
The European firm Osram was early to open shop in Penang, Malaysia.Jes Aznar for The New York Times
The European firm Osram was early to open shop in Penang, Malaysia.Jes Aznar for The New York Times
Reporting from Penang, Kulim and Kuala Lumpur in Malaysia and from Bangkok, Thailand.
Construction cranes still surround the brand-spanking new plant in Kulim’s industrial park in Malaysia. But inside, legions of workers hired by the Austrian tech giant AT&S are already gearing up to produce at full capacity by year’s end.
Outfitted in head-to-toe coveralls, with oversized safety glasses and hard hats, they’re reminiscent of the worker bees in the movie “Minions,” but color coded by function: Blue for maintenance. Green for vendors. Pink for janitors. White for operators.
AT&S is just one of a flood of European and American companies that have recently decided to move to or expand operations in Malaysia’selectrical and electronicsmanufacturing mecca.
The American chip giant Intel and the German corporation Infineon are each investing $7 billion. Nvidia, the world’s leading maker of chips powering artificial intelligence, is teaming up with the country’s utilities conglomerate to develop a $4.3 billion artificial intelligence cloud and supercomputer center. Texas Instruments, Ericsson, Bosch and Lam Research are all expanding in Malaysia.
The boom is evidence of how much geopolitical friction andcompetitionare reshaping the globe’s economic landscape and driving multibillion-dollar investment decisions. As rivalries between the United States and China over cutting-edge technology simmer and traderestrictionspile up, companies — particularly those in crucial sectors like semiconductors and electric vehicles — are looking to strengthen their supply chains and production capabilities.
AT&S, an Austrian chip maker whose largest plant is in China, started looking to diversify locations in 2020.Jes Aznar for The New York Times
AT&S had production sites in Austria, India, South Korea and China — its largest plant — when it started hunting for a new location.
“It was clear after 20 years of investment in China, we needed to diversify our footprint,” said Andreas Gerstenmayer, chief executive of AT&S. The company manufactures high-end printed circuit boards and substrates, which serve as the foundation for advanced electronic components that power artificial intelligence and supercomputers.
The company’s site search started in early 2020, just as warnings began to spread about a dangerous new coronavirus in China. AT&S scouted 30 different countries on three continents before settling on Malaysia.
Southeast Asia’s strategic position in the South China Sea and longstanding economic ties to China and the United States make the region an attractive place to set up shop. Nations likeThailandandVietnam, AT&S’s second choice, are also aggressively courting semiconductor firms to expand, offering tax incentives and other lures.
But Malaysia has the advantage of a head start.
The countryhas been riding the tech wave since the 1970s when it energetically courted some of the world’s electrical and electronic superstars, like Intel and Litronix (now ams Osram, with headquarters in Austria and Germany). It created a free-trade zone on the island of Penang, offered tax holidays, and built industrial parks, warehouses and roads. Cheap labor was an additional draw, as was its large English-speaking population and a government supportive of foreign investment.
Vendors and trishaw drivers in Penang, where a free-trade zone has helped draw foreign companies.Jes Aznar for The New York Times
Malaysia’s history in the back end of making semiconductors was one of the primary draws, Mr. Gerstenmayer said.
“They are quite aware of what the needs of the semiconductor industry are,” he said. “And they have a well-developed ecosystem in the universities, in education, labor force, supply chain” and more. Support from the government was another attraction, he said.
Tengku Zafrul Aziz, Malaysia’s minister of investment, trade and industry, said foreign investment began to pick up 2019, driven by the widening use of semiconductors in everything from automobiles to medical devices. “There’s 5,000 chips in one car,” he said.
After the Covid-19 pandemic revealed devastating weaknesses in global supply chains, interest in Malaysia as an additional source soared.
That trend accelerated as great power conflicts bubbled over.
Both China and the United States moved to forge their own reliable semiconductor supply chains, in addition to supporting other critical sectors likerenewable energyand electric vehicles.
“U.S. and European companies and even Chinese companies wanted to diversify out of China,” Mr. Zafrul Aziz said. China, too, is locating production facilities outside of the mainland, in part, some say, to sidestep U.S. sanctions. It’s a “China plus one” strategy.
Worries about Taiwan, the world’s largest producer of semiconductors, has further fueled investment in Malaysia, he said. The island is a source of growing friction between China, which maintains Taiwan is part of its territory, and the United States, which supports it politically.
Tech workers in Penang. Having so many tech companies in proximity has helped attract others.Jes Aznar for The New York Times
Malaysia is already the world’s sixth largest exporter of semiconductors, and packages 23 percent of all American chips.
“For a country of this size to be having that big an impact on the global semiconductor market is quite fantastic,” said David Lacey, director of advanced development and services at Osram, one of the world’s largest lighting companies.
Seated at a large conference table at the Sciences University of Malaysia on Penang, he rapidly pointed to the technology around the room. “There’s a TV, there are lights, there’s a projector, there are phones,” he said. “You can pretty much guarantee there is a Malaysia component somewhere.”
The proximity of so many tech companies also exerts a gravitational pull. In Penang and Kulim, which are connected by two long, snaking bridges, there are more than 300 companies.
“Everything is here,” said Eric Chan, a vice president and general manager at Intel in Malaysia. After a half century, that network and infrastructure are not easily duplicated.
Mr. Chan also mentioned the government’s crucial cooperation during the pandemic in keeping factories open.
Foreign direct investment wasnearly $40 billionlast year, more than twice the total generated in 2019.
“For a country of this size to be having that big an impact on the global semiconductor market is quite fantastic,” said David Lacey, an executive at Osram.Jes Aznar for The New York Times
Mario Lorenz, managing director in Malaysia for the German logistics company DHL Supply Chain, said “most of our big investments have happened in the last two years.”
During that time, the semiconductor sector has grown to dominate the company’s business in Malaysia. “We followed the trend,” he said.
Inside DHL Supply Chain’s newest global distribution center, Penang Logistics Hub No. 4, are bespoke orange and blue shelves specifically designed to handle the heavy, oversized crates used by a semiconductor company.
Four new supply chain facilities are in the works in Malaysia.
Malaysia’s track record has been mostly in the back end of the semiconductor supply chain — which includes packing, assembling and testing components — activities that traditionally have been considered less complex and of lower value.
But now the industry’s focus onpackagingsmaller chips — chiplets — more tightly together to increase computing power is increasing the value and technical complexity of those activities.
Intel is building its first overseas facility for advanced 3-D chip packaging in Malaysia. When you bring in cutting-edge technology there is a “ripple effect,” said AK Chong, a vice president and managing director of Intel in Malaysia. That development will attract dozens of new businesses and help advance the labor force’s entire skill set.
Such advancements will require a huge expansion of utilities like green energy, sanitation, water and a 5G digital infrastructure.
That’s a challenge for any country, particularly one whose history has been marred by amultibillion dollar corruption scandalinvolving its sovereign wealth fund. Even so, several company executives said they were confident in Malaysia role in the supply chain.
“They have projects to provide green energy by building up big solar farms,” Mr. Gerstenmayer of AT&S said. “Malaysia is on good path to becoming a hot spot in the electronics industry globally.”
Facebook and Instagram restored after users report widespread outages
ByAimee Picchi
"Meta says its Facebook and Instagram services have been restored, after more than half a million users reported widespread issues earlier in the day, with many saying they were booted out of the social media platforms and unable to log back in.
DownDetector, a site that monitors internet service outages, on Tuesday said it received more than 500,000 reports of problems by U.S. Facebook users and more than 70,000 reported problems with Instagram as of about 10:30 a.m. ET. The most frequently reported problems were with logging into the Facebook app and issues with the Instagram app, according to DownDetector.
"Earlier today, a technical issue caused people to have difficulty accessing some of our services," a Meta Spokesman said in a statement on Tuesday. "We resolved the issue as quickly as possible for everyone who was impacted, and we apologize for any inconvenience."
Facebook users from across the globe reported that they were unable to log in to the service, ranging from Egypt to Oklahoma, according to DownDetector. Some people on social media expressed concern that their accounts had been hacked because they had been booted out of the service and were unable to get back in with their passwords.
"Meta platforms including Facebook, Instagram, Messenger and Threads are currently experiencing outages related to login sessions in multiple countries; incident not related to country-level internet disruptions or filtering," according to NetBlocks, a global internet monitor, on X earlier Tuesday.
Meta Quest's artificial reality headsets were also signed out, according to tech site 9to5Mac.WhatsApp, which is also owned by Meta, appeared unaffected.
The issue represented a "major outage incident," wrote NetBlocks director of research Isik Mater on X during the service interruption. "[E]ven the company's official status page is currently showing status 'Unknown' across the board."
A senior official with the U.S. Cybersecurity and Infrastructure Security Agency told reporters Tuesday that the agency was "not aware of any specific election nexus nor any specific malicious cyberactivity nexus to the outage."
The outage came just ahead of Thursday's deadline for large technology companies to fall in line with the European Union's new Digital Markets Act. To comply, Meta is making changes, like allowing users to separate their Facebook and Instagram accounts so personal information can't be combined to target them with online ads. It's not clear whether the outage is connected to any preparations Meta might be implementing to adhere to the law.
Facebook has more than 2 billion daily active users worldwide, according to Meta.
