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BUSINESS John Chambliss I Managing Editor 770-718-3407 I news@gainesvilletimes.com The Times, Gainesville, Georgia Weekend Edition-March 22-23, 2024 Checking for a rotten core Photos by Jeff Chiu Associated Press iPhone 15 phones are shown during an announcement of new products on the Apple campus in Cupertino, Calif., Sept. 12. The Justice Department announced a sweeping antitrust lawsuit Thursday, March 21, against Apple, accusing the tech giant of having an illegal monopoly over smartphones in the U.S. Justice Department: Apple has kept an illegal monopoly The Apple logo is shown on a screen during an announcement. The lawsuit is the lastest example of the Justice Department’s approuch to aggressive enforcement of federal antitrust law that officials say is aimed at ensuring a fair and competitive market. BY MICHAEL LIEDTKE, LINDSAY WHITEHURST AND MIKE BALSAMO Associated Press WASHINGTON — The Justice Department on Thursday announced a sweeping antitrust lawsuit against Apple, accusing the tech giant of engineering an illegal monopoly in smartphones that boxes out competitors and stifles innovation. The lawsuit, filed in federal court in New Jersey, alleges that Apple has monopoly power in the smartphone market and uses its control over the iPhone to “engage in abroad, sustained, and illegal course of conduct.” It specifically seeks to stop Apple from undermining technologies that compete with its own apps -- in areas including streaming, messaging and digital payments - and prevent it from building language into its contracts with developers, accessory makers and consumers that lets it “obtain, maintain, extend or entrench a monopoly.” The lawsuit — which was also filed with 16 state attorneys general — is the latest example of the Justice Department's approach to aggressive enforcement of federal antitrust law that officials say is aimed at ensuring a fair and competitive market, even as it has lost some significant anticompetition cases. “The Department of Justice has an enduring legacy taking on the biggest and toughest monopolies in history,” said Assistant Attorney General Jonathan Kanter, head of the antitrust division, at a press conference announcing the lawsuit. “Today we stand here once again to promote competition and innovation for next generation of technology.” Apple called the lawsuit “wrong on the facts and the law” and said it “will vigorously defend against it.” President Joe Biden has called for the Justice Department and the Federal Trade Commission to vigorously enforce antitrust statutes. The increased policing of corporate mergers and business deals has been met with resistance from some business leaders who have said the Democratic administration is overreaching, but it's been lauded by others as long overdue. The case is taking direct aim at the digital fortress that Apple Inc., based in Cupertino, California, has assiduously built around the iPhone and other popular products such as the iPad, Mac and Apple Watch to create what is often referred to as a “walled garden” so its meticulously designed hardware and software can seamlessly flourish together while requiring consumers to do little more than turn the devices on. The strategy has helped make Apple the world's most prosperous company, with annual revenue of nearly $400 billion and, until recently, a market value of more than $3 trillion. But Apple's shares have fallen by 7% this year even as most of the stock market has climbed to new highs, resulting in long-time rival Microsoft — a target of a major Justice Department antitrust case a quarter- century ago — to seize the mantle as the world's most valuable company. Apple said the lawsuit, if successful, would “hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect” and would “set a dangerous precedent, empowering government to take a heavy hand in designing people's technology.” “At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people's privacy and security, and create a magical experience for our users,” the company said in a statement. “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. Apple has defended the walled garden as an indispensable feature prized by consumers who want the best protection available for their personal information. It has described the barrier as a way for the iPhone to distinguish itself from devices running on Google's Android software, which isn't as restrictive and is licensed to a wide range of manufacturers. “Apple claims to be a champion of protecting user data, but its app store fee structure and partnership with Google search erode privacy,” Consumer Reports senior researcher Sumit Sharma said in a statement. The lawsuit complains that Apple charges as much as $1,599 for an iPhone and that the high margins it earns on each is more than double what others in the industry get. And when users run an internet search, Google gives Apple a “significant cut” of the advertising revenue those searches generate. The company's app store also charges developers up to 30 percent of the app's price for consumers. Critics of Apple's anticompetitive practices have long complained that it's claim to prioritize user privacy is hypocritical when profits are at stake. While its iMessage services is sheathed from prying eyes by end-to-end encryption, that protection evaporates the moment someone texts a non-Apple device. Prominent critic Cory Doctorow has complained that while Apple has blocked Facebook from spying on its users it runs its “own surveillance advertising empire” that gathers the same kinds of personal data but for its own use. Fears about an antitrust crackdown on Apple's business model have contributed to the drop in the company's stock price, along with concerns that it is lagging Microsoft and Google in the push to develop products powered by artificial intelligence technology. Wall Street adds to records, led on by chipmakers BY DAMIAN J.TROISE AP Business Writer NEW YORK — Stocks extended their push to record highs Thursday on Wall Street, led by big gains in chipmakers. The S&P 500 rose 0.6% in morning trading Thurs day, following up on hitting a record high for a sec ond straight day. Roughly 80% of stocks in the index gained ground. The Dow Jones Industrial Average rose 327 points, or 0.8% as of 11:18 a.m. Eastern. The Nasdaq com posite rose 0.6%. Both indexes are also coming off of record high. Micron surged 16% and led chipmakers higher after reporting blowout results for its latest quarter that easily surpassed analysts' expectations. Chip- maker Broadcom jumped 8.7% after reporting strong earnings. On the losing end, Apple slumped 3.3% after the Justice Department announced a sweeping anti trust lawsuit against the iPhone maker. It accuses the tech giant of engineering an illegal monopoly in smartphones that boxes out competitors and stifles innovation. A few retailers slipped following disappointing financial updates. Footwear retailer Designer Brands slumped 14.8% and discount retailer Five Below fell 14.7% after their financial forecasts fell short of Wall Street expectations. Olive Garden owner Darden Restaurants fell 5.9% after cutting its revenue forecast for the year. Traders will be keeping a close eye on Reddit, whose shares begin trading today. Treasury yields were mostly steady a day after the Federal Reserve said it still expects to make three rate cuts this year. That helped calm some nerves on Wall Street, which has been rallying to records on expecta tions for interest rate cuts, but has recently been con cerned about hotter-than-expected inflation updates. Lower interest rates would ease conditions for economic growth and take pressure off of prices for investments. Wall Street expects the Fed to start cut ting rates at its meeting in June. Markets in Europe and Asia gained ground. The Chinese government announced fresh mea sures to support its economy. The Swiss National Bank said it is trimming its key interest rate, a surprise move that makes Switzerland the first major financial center to announce a cut in recent months. The Bank of England kept its main interest rate unchanged at a 16-year high and avoided signaling when it might start to cut even though infla tion has dropped sharply. Federal officials want know how airlines handle personal info WASHINGTON — Federal officials said Thurs day they will review how airlines protect personal information about their passengers and whether they are making money by sharing that information with other parties. The U.S. Department of Transportation said its review will focus on the 10 biggest U.S. airlines and cover their collection, handling and use of informa tion about customers. “Passengers should have confidence that their personal information is not being shared improp erly with third parties or mishandled by employees,” Transportation Secretary Pete Buttigieg said. A spokeswoman for the trade group Airlines for America said, “U.S. airlines take customers' personal information security very seriously, which is why they have robust policies, programs and cybersecu rity infrastructure to protect consumers' privacy.” In announcing the review, the Transportation Department did not make allegations against any of the carriers or cite any events that might have prompted the move. A spokesman said it is being done “proactively” to help the department determine how to protect passengers' information. The department said it sent letters to each of the airlines — Delta, United, American, Southwest, Alaska, JetBlue, Spirit, Frontier, Hawaiian and Alle- giant — about their procedures for collecting and using passenger information, including “monetiza tion of passenger data, targeted advertising, and pre vention of data breaches.” The agency also asked airlines if they have received complaints about employees or contractors mishandling personal information. Associated Press Reddit, the self-anointed ‘front page of the internet,’ soars in stock market debut BY MICHAEL LIEDTKE AND WYATTE GRANTHAM-PHILIPS AP Business Writers NEW YORK — Reddit soared in its Wall Street debut as investors pushed the value of the company close to $9 billion seconds after it began trading on the New York Stock Exchange. Reddit, which priced its IPO at $34 a share, debuted Thursday afternoon at $47 a share. The going price soon climbed even higher, but still oscillated some. As of around 2:30 p.m. ET, shares for the self-anointed “front page of the internet” were up more than 40%. The IPO will test the quirky company's ability to overcome a nearly 20-year history colored by uninterrupted losses, manage ment turmoil and user backlashes to build a sustainable business. Reddit's high open on the public market was no surprise to some industry experts. “The supply is pretty limited and there's strong demand, so my sense is that this is going to be a hot IPO,” Reena Aggarwal, director of Georgetown University's Psaros Center for Financial Markets and Policy, said ahead of Reddit's trading Thursday — while also pointing to bullish market conditions overall. Still, she also anticipated Reddit's IPO to be volatile. Even with a sizeable “pop” right out of the gate, it's possible that some might sell their shares to reap gains soon after — potentially causing prices to drift. The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to exis tential worries, as well as get recommenda tions from like-minded people. About 76 million users checked into one of Reddit's roughly 100,000 communities in December, according to the regulatory dis closures required before the San Francisco company goes public. Reddit set aside up to 1.76 million of 15.3 million shares being offered in the IPO for users of its service. Per the usual IPO custom, the remaining shares are expected to be bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time. Reddit's moneymaking potential also has attracted some prominent supporters, including OpenAI CEO Sam Altman, who accumulated a stake as an early investor that has made him one of the company's biggest shareholders. Altman owns 12.2 million shares of Reddit stock, according to the com pany's IPO disclosures. By the tech industry's standards, Reddit remains extraordinarily small for a company that has been around as long as it has. Thurs day's opening debut valuation of $9 billion, for example, is still far below the $1.2 trillion market value boasted by Meta Platforms — whose biggest social media service Face- book was started just 18 months earlier than Reddit. Yuki Iwamura Associated Press Reddit Inc. signage is seen on the New York Stock Exchange trading floor, prior to Reddit IPO, Thursday, March. 21.
