The Apple Antitrust Case: The Real Monopolist Is the Government

At the core of the antitrust lawsuit the Biden administration and 16 states have launched against Apple lurks the complaint that Apple has unfairly kept the iPhone too expensive.“Rather than respond to competitive threats by offering lower smartphone prices to consumers,” the lawsuit says, the company “locked in users.”The U.S. federal government and states like New York and California are complaining that the iPhone is too pricey and hard to quit? That is good for a laugh, especially as annual deadlines approach that make the cost of government explicit for taxpayers who owe money or make quarterly estimated payments.Those tax bills dwarf the price of a cellphone.Take a look at the numbers. Back when Apple introduced the iphone in 2007, the federal government’s outlays — the cost of government — totaled $2.7 trillion. In 2024 they had skyrocketed to an estimated $6.9 trillion, according to the White House Office of Management and Budget. President Biden has proposed spending $7.3 trillion in 2025.Meaning, in 18 years the cost of the federal government has more than doubled. That’s about what has happened to the price of a top-of-the-line iPhone over the same period. The government’s complaint says, “today, Apple charges as much as $1,599 for an iPhone.” Back in 2007, the fanciest iPhone cost $599.Yet that exaggerates Apple’s price increase. A basic iPhone SE model today starts at $429, less than the $499 that the entry-level iPhone cost in 2007. That SE has features — video recording, a flashlight — that the original model lacked.Today’s $429 phone is water resistant, unlike the 2007 one. The SE has a larger screen, longer battery life, a faster internet connection, and 64 gigabytes of storage, up from the original entry-level iPhone’s four gigabytes of storage.While the iPhone has gotten better and, for some models, cheaper, the federal government has failed to improve noticeably — while more than doubling in cost. Even the most ardent defender of the Biden administration would have a hard time making the case that today’s $7 trillion federal government is two or three times better than the federal government of 2007, or that it’s improved as rapidly over time as Apple’s phones have.The federal government faults Apple for creating “switching costs” for consumers who decide to choose a rival. Washington sure would know. The phone-switching costs don’t come anywhere close to the prices imposed by the U.S. government on citizens who choose to leave. There’s a nonrefundable processing fee of $2,350, and anyone above certain income or asset thresholds is required to pay an expatriation tax. The Sun has previously written of efforts to tax companies trying to “escape America’s unreasonably high corporate taxes.” That prompted one reader to suggest a kind of “taxpayer relief act,” phrased in German as a “Steuerzahlervergunstigungsgesetz,” which is likely the longest one-word headline in recorded newspaper history. In the case at hand, America seeks basically all the capital gains taxes due on accumulated assets. Various Democratic politicians have proposed even steeper exit taxes.The budget stories at the state level are roughly similar to the federal one. State spending has soared. Yet while costs have doubled, the state-funded government services — transportation, schools, parks, state courts — aren’t twice as good as they were 15 years ago — and are often worse.For taxpayers, moving from one state to another can be a bigger hassle than switching from an Apple phone to one that runs on Alphabet’s Android operating system. New York and California even sometimes chase people who try to leave, conducting residency audits to make sure former taxpayers have really moved away.If politicians are genuinely concerned about consumers overpaying because of lack of competition and choice, there are plenty of juicy targets in the public sector. One reason the politicians from both political parties are so eager to dismantle Big Tech may be that, at best, it is a potential counterweight to the otherwise unchallenged power of bigger and bigger government.

The Apple Antitrust Case: The Real Monopolist Is the Government

The Apple Antitrust Case: The Real Monopolist Is the Government

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