Judge cites allegations of 'linked' anti-competitive conduct
It's a case that challenges the limits of "freedom of design" usually enjoyed by companies accused of making changes to product design that allegedly harm competition. Normally, a design change isn't the kind of behavior that goes against antitrust laws, but on March 21, U.S. Judge Jeffrey S. The lawsuit alleges that Apple illegally maintained its market monopoly on heart rate analysis apps by updating WatchOS, the Apple Watch operating system on which heart rate analysis app AliveCor runs. (AliveCor, Inc. against Apple Inc. , No. 21-cv-03958-JSW, ND California).
Heart rate analysis apps analyze the user's heart rate in real time using a sensor near the user's wrist and determine if the user's heart rate is normal or irregular. The app works continuously while the device is being worn and alerts the user when a situation arises that requires EKG recording and medical analysis. AliveCor also sells an EKG-capable wrist strap for the Apple Watch and related WatchOS software that analyzes the reading from the band. AliveCor claims that its products — the ECG-wristband hardware and software and heart rate analysis app — "helped change the concept of the Apple Watch from an accessory to a personal health monitoring tool."
AliveCor calls the heart rate monitoring app "SmartRhythm". According to AliveCor, when SmartRhythm sales took off, Apple was inspired to announce an update to WatchOS with its heart monitoring app designed to exclude AliveCor from the US market for WatchOS heart rate analysis apps.
SmartRhythm works using data from the heart rate algorithm on your Apple Watch. According to the complaint, Apple's update for WatchOS changed the heart rate algorithm in a way that prevents third-party developers from detecting heart rate fluctuations and irregularities. As a result of these changes, SmartRhythm was unable to provide an accurate heart rate analysis, and AliveCor removed it from the market.
Thus, Apple has a monopoly on the WatchOS heart rate analysis app market, which AliveCor claims Apple is maintaining with exceptional design changes to WatchOS, in violation of Section 2 of the Sherman Act, the California Unfair Competition Act, and Section 17200 of the Business Code in California. Professions Law.
The court rejected Apple's request to dismiss AliveCor's antitrust lawsuit in what it described as "[single brand] After-sales for WatchOS applications.” Application of factors counted by the court in Newcal Indus., Inc. Against Ikon Office Sol., 513 F.3d 1038, 1044 (9th Cir. 2008), the court found that the aftermarket WatchOS app was wholly derived from the primary smartwatch market, the alleged limitations applied only to aftermarket, and Apple's aftermarket power was not obtained By contract terms reached in the primary market, this competition in the smart watch market does not regulate anti-competitive practices in the aftermarket for WatchOS application. Accordingly, the court ruled that AliveCor's market definition complies with neocal Market standards related to "single product".
Apple has argued that a company that improves a product for consumers is not violating antitrust laws "in the absence of some anti-competitive behavior," citing a groundbreaking "freedom of design" case in the Allied Orthopedic Appliances Inc. against Tyco Health Care Group LP, 592 F.3d 991, 998-99 (9th Cir. 2010). contract court quotes allies: “If changing the monopolist’s design is an improvement, it is necessarily borne by antitrust laws, unless the monopolist abuses or otherwise increases its monopoly power when introducing the product.”
Apple argued that its update to WatchOS was just a design change that benefited users, without any anti-competitive behaviour. You note that AliveCor has not proven that consumers use the Apple app instead of some third-party apps, that Apple has rejected any third-party apps, or that there are no other third-party heart apps available to Apple Watch users. But the court rejected those arguments, stating that Apple had failed to provide any legal authority to require such claims.
Apple has ignored AliveCor's allegations that Apple abused or took advantage of its monopoly power "in another way" by changing its heart rate algorithm to make it impossible for third parties to inform the user when an ECG was performed. AliveCor confirmed that Apple's updated heart rate algorithm, which was pushed to all previous Apple Watch models, did not improve the user experience. Its purpose was to prevent third parties from identifying irregular heart rates and offering competing apps based on that data. These allegations display the kind of 'associated behavior' that makes product design changes perceptible under antitrust law. Judge White maintained that the plaintiff's allegations reasonably demonstrated that Apple's conduct was anti-competitive. A case management conference was held on May 20.
Suspension
It's really hard to see how a separate "linked" behavior by Apple other than changing its design to WatchOS would violate Section 2. It seems easy to view the design change itself as a perceived anti-competitive act. It might be time to drop the fantasy that has been preserved Allies vs. Taiko That design changes are 'never' antitrust violations unless accompanied by 'other' behaviour. Here, Apple has created the market itself in the form of an operating system platform used by the millions of consumers who depend on it to access all kinds of competing complementary products. Under these circumstances, it is indisputable to hold the platform operator liable under antitrust laws for design changes that exclude competitors or exclude market participants, without indulging in the illusion of “associated” behavior.
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