The company has faced years of disruption

The U.S. Department of Justice sued Apple on Thursday, accusing it of using the iPhone’s market power to shut out competitors, setting off a multi-year lawsuit involving a whole bunch of lawyers and threatening Apple’s “fenced garden” business model.

If the Justice Department wins, it could seek a variety of changes to Apple’s business, and U.S. officials haven’t ruled out the chance that this might end in “structural measures” or a dissolution.

If Apple’s arguments prevail, the court could rule yes estimated 64% of U.S. smartphone share will not be a monopoly or its conduct will not be illegal, giving Apple recent tools to fight future regulation.

But before all this happens, we are going to likely see years of legal wrangling during which Apple might be forced to publicly defend its business, distract its executives with legal meetings, produce internal documents to the federal government, and potentially face bad headlines that would damage its brand. or image.

The Justice Department’s lawsuit still have to be submitted to a judge. In the near future, Apple may ask to alter the placement of the lawsuit outside of New Jersey and can likely ask for the case to be dismissed entirely.

All these steps take different amounts of time, and it’s realistic that a trial might be scheduled for 2025 and the appeal won’t end until 2027, depending on which judge is assigned the case, said William Kovacic, director of the Center for Competition Law at George’ University and Washington.

Often, firms accused of antitrust violations, akin to Apple, wish to drag out the method, said John Newman, a law professor on the University of Miami and former Justice Department lawyer.

“Generally speaking, defendants love to dig in their heels,” Newman said. “Is the judge going to follow the defendant’s proposal, which inevitably means many years, tons and tons of discovery? Drag it out forever? Or can they actually step in and try to control it?” he continued.

For example, in October 2020, Google was sued by the Department of Justice in an analogous case, and the case took almost three years to go to court. Remedial decisions haven’t yet been made and appeals haven’t been heard. The Department of Justice’s case against Apple was inspired by the historic case against Microsoft filed in 1998. The case went to trial later that yr, and the appeal was decided in 2001.

Like Microsoft’s lawsuit, the Department of Justice’s lawsuit against Apple seeks to deliver a brand new, groundbreaking decision in U.S. antitrust law, largely by specializing in your complete Apple ecosystem, not only the product, and whether the best way it operates constitutes conduct. anti-competitive.

In an announcement provided to CNBC on Thursday, Apple said the lawsuit “threatens who we are” and will harm its ability to provide competitive technology products.

Apple provides more details about why it doesn’t like this kind of litigation in its SEC filings. The company says that when laws and regulations change, including antitrust proceedings, it has to spend money to comply. According to the filing, “imposed” changes could harm customer demands, and changing laws or regulations create uncertainty for Apple.

Another challenge for Apple could possibly be that a big, public trial like this competes for executives’ time and a focus, and more decisions made at Apple may require legal review before moving forward.

Companies grappling with antitrust cases often need to hold meetings of employees who don’t have anything to do with the lawsuits to sort through company documents or help determine how the company will present evidence or technical arguments, said Kovacic, a former FTC commissioner.

“In previous major antitrust cases, the real threat to the company was that the company’s attention was focused on winning antitrust cases rather than on winning customers and doing its job,” Kovacic said. “It slows you down. This is real resistance.”

For Apple, it must face not only a lawsuit from the Department of Justice, but in addition recent regulations in Europe and investigations in other countries all over the world.

The U.S. government hasn’t said what it expects Apple to do to treatment its allegations, but its initial filing on Thursday left the matter open and included a broad request for a blanket treatment.

One possibility involves forcing Apple to open the iPhone to third-party stores, because it does in Europe. Many of the Justice Department’s other allegations, akin to Apple’s alleged restrictions on smartwatches and third-party “super apps,” don’t have any recent equivalents in other countries or markets. The Justice Department could also find countermeasures that may reorient your complete technology industry or future products.

“If and when this case goes to trial, I expect it won’t just be about smartphones, even though that’s the crux of the story. This is really about the future of smart devices,” Newman said.

Apple may, because it has prior to now, resolve to preemptively make changes or improvements to targeted products to avoid additional scrutiny. For example, in JanuaryApple has partially opened its App Store to cloud gaming services, one of the important thing types of competitors that Apple says it’s cutting off, based on the Justice Department.

Government lawyers will request internal, confidential Apple documents to support their case in a process called discovery. Apple’s business partners might also receive requests to point out the federal government their very own confidential documents. Generally, firms fear discovery since it’s unclear what might be revealed, and Apple is especially secretive relating to its internal documentation and strategy.

Documents discovered in discovery are sometimes released publicly during a trial, revealing private deliberations.

The government will likely resolve to remove Apple executives, including CEO Tim Cook, and even call them as witnesses on the trial. Cook, for instance, took the stand through the recent antitrust trial against Epic Games.

But testimony or testimony from executives can still be dangerous for tech firms, especially if executives are unable to maintain their egos in check, former Microsoft CEO Bill Gates said. he was extremely touchy and showed complete contempt for trial during David Boies’ videotaped testimony in 1998, which was played through the trial.

“The lesson that the Gates testimony experience taught me is that if you are a CEO, good testimony requires a real art and skill,” Kovacic said. “It requires suppressing some of your ‘Master of the Universe’ impulses in the name of doing good work, and in this case, listening very carefully to the guidance of your lawyers.”

Apple and the Department of Justice could also reach a settlement by which Apple makes some changes and the federal government drops the lawsuit before further discovery or testimony. However, there are not any public signs of reconciliation.

On Thursday, Apple declined to comment when asked whether settlement talks had taken place.