DOJ faces 'two critical issues' in Apple suit

The Department of Justice has brought a lawsuit against Apple (AAPL) over alleged monopolistic practices concerning its Apple iPhone. University of Chicago Professor of Law Randy Picker joins Yahoo Finance Live to provide insights into Apple's legal battle.

Picker highlights that the Department of Justice will face "two critical challenges" in its attempted suit against Apple: first, defining "what's the market," which in this case is the smartphone market, and second, establishing what specific actions taken by Apple with its monopoly power are deemed "problematic" or illegal. The center of the matter will be determining what "sharing obligations" Apple has regarding its products.

Picker draws a parallel to Europe's legislation, which has mandated changes to the iPhone, granting users choices for browsers, virtual assistants, and search engines. He notes that while the United States had considered legislation previously, it did not come to fruition. However, the professor suggests that such a legislative approach would be "a cleaner" solution, as a case of this magnitude could potentially take three to five years to navigate through the court system.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video transcript

SEANA SMITH: The Department of Justice alongside 16 attorneys general filing a lawsuit yesterday accusing Apple of violating antitrust laws. The DOJ saying that the tech giant is blocking its rivals from accessing both hardware and software features on its iPhone devices. This is the culmination of a five-year probe into one of the world's most valuable technology companies.

For more on Apple's legal trouble and the next steps in this landmark lawsuit, we want to bring in Randy Picker, University of Chicago's law professor. Professor, it's great to have you here. Just talk to me about the nuts and bolts of this suit. How strong do you think the suit is here from the DOJ against Apple?

RANDY PICKER: Look, they're going to face two critical issues. So in any antitrust case, we worry about market definition. What's the market? And this is an attempt to say that Apple has a monopoly in the smartphone market. They've got a couple of versions of that.

We've seen litigation like that before. So Epic, the maker of Fortnite ran a lawsuit like that that was in a different court. They concluded then that Apple wasn't a monopolist. So that's one issue.

Second issue then is assuming you find monopoly, then you only get in trouble. You're allowed in the United States to compete and win, and Apple has certainly done that. The question is, what have you done with your monopoly that's problematic, what's illegal? And what we're going to want to focus on here is the critical issue here and you talked about it a little bit is this question of how does Apple play with others? And what sharing obligations does Apple have with regard to the inside workings of the iPhone and devices like the Apple Watch?

SEANA SMITH: Will we need to see new legislation passed in order to prove or in order to enact any meaningful change when it comes to Apple's App Store, when it comes to that third party app store policies just given what you just laid out and what we have seen play out in the past?

RANDY PICKER: Yeah, so a couple of thoughts on that. So Europe is running this experiment right. Now so Europe passed a law called the Digital Markets Act.

They've just turned that on. When you turn on an iPhone, you see choice screens for the browser, for the assistant, for search and that's all driven by recent new legislation that they're going to fight about. We considered legislation in this country.

My law school classmate Amy Klobuchar, Senator Klobuchar tried to get bills through. Those did not succeed. That would clearly be a different path and in some ways other than the politics, and I'm not a politics expert, a cleaner path than what's going to be a long, hard slog, I think, in the court system.

SEANA SMITH: And this wasn't exactly a surprise. Like I mentioned there in the intro, there have been talks about this. They've been looking into this going back to the Trump administration for the last five years. Talk to me just though, about the timeline process of this and how long a suit like this typically takes to work its way through the courts.

RANDY PICKER: So I've been listening to your coverage. So the Microsoft case, there was an initial case against Microsoft in 1994, that one settled. Settling a case moves things so much faster.

So we shouldn't be afraid of settlements. There have been some famous settlements with other tech firms in the past, AT&T. If we're going to litigate and litigate to the hilt, that's going to be three to five years probably.

SEANA SMITH: So three to five years. I know it's very early and we just got this suit yesterday. But from what we know now, how do you see this ending? Do you see Apple prevailing in the end?

RANDY PICKER: I want to take it in steps.

SEANA SMITH: Yeah.

RANDY PICKER: What happens at the district court, don't know, don't know the district court judge. So then the question is, what happens on appeal and then ultimately possibly to the Supreme Court. To answer your question, yes, I think Apple will prevail in the end.

They may not prevail in the first instance. It may have to go up a level, maybe up two levels. But yes, if you're asking me for a guess, my guess is they will win.