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Why Apple's Newest System Is Getting Antitrust Authority Consideration

On Tuesday, Apple announced the release of AirTag, a small electronic tracker that people could attach to keys, luggage, or anything, and then use Apple's Find My system to find that item. For Apple fans, it's another handy product. For Tile, the maker of a similar tracker, the long-awaited announcement is yet another sign of Apple's anti-competitive behavior.

Tile again encouraged Congress to look closely at Apple in a Senate antitrust hearing in which Tile Advocate General Kirsten Daru testified along with executives from Spotify, Match, Google, and Apple. The hearing came because Apple has been repeatedly charged with anti-competitive behavior as all iOS apps must be sold through Apple's App Store, where Apple receives a sales commission.

In the case of the new AirTags, however, the criticism goes even further. According to Tile, Apple not only develops hardware similar to its own, but also develops Apple software in a way that gives preference to its own products and discriminates against Tile's products.

"Apple launched this product and its competitor app with a knowledge of a lot of information about our business," Daru told the senators on Wednesday. “You know how our devices behave in shops. You know who our customers are. You know our subscription tariffs. You know what functions people use. I mean the list goes on and on. "

That sentiment coincided with that of Tile CEO CJ Prober, who made a statement shortly after Apple's AirTag announcement on Tuesday. "We welcome competition as long as it is fair competition," he said. "Given Apple's well-documented history of using its platform advantage to unfairly restrict competition for its products, we are unfortunately skeptical."

Apple AirTags, which will hit stores in late April, do exactly what Tile products have been doing for a while: keep track of things. The new trackers use Bluetooth technology to locate these lost items. AirTags also feature the U1 chip, which uses ultra-broadband technology for more accurate object location. This approach – and even the physical design of the trackers – is very similar to what Tile has been doing for years. Tile also uses Bluetooth to locate objects, and the company is in the process of rolling out ultra-broadband capabilities (along with an augmented reality feature) on its trackers.

One big difference between the new AirTags and Tile trackers: Tile relies on Apple to make the location tracking tools work smoothly in the Apple App Store and on iOS, but not the other way around. Tile has long argued that Apple unfairly designed its iOS mobile operating system and Find My app to prefer its own location tracking tools. Tile did not respond to Recode's request for comment prior to Wednesday's hearing.

For its part, Apple has resisted this criticism.

"Apple created Find My over a decade ago to help users find and manage lost devices in a private and secure manner," the company said in a statement to Recode. "We have always seen competition as the best way to deliver great experiences to our customers, and we've worked hard to create a platform for iOS that enables third-party developers to thrive."

However, Apple was reluctant to let Tile explain its allegations of anti-competitive behavior. At the hearing on Wednesday, Senator Mike Lee, the senior Republican on the Senate subcommittee on antitrust and consumer rights, asked Apple's chief compliance officer, Kyle Andeer, Daru, Tile's general counsel, to be released from a nondisclosure agreement, so that they can talk about the terms of Apple's Find My system. Apple's Andeer refused. During the hearing, he also said that AirTags would bring something "extremely different from anything else on the market".

The stalemate between Apple and Tile has been going on for years. As early as 2019, there were rumors that Apple was working on a tracker system that would compete with Tile's products. Daru told Congress last January that Apple is making it harder for users to connect their iPhone to Tile devices by requiring permissions in iOS 13.5 buried in Settings and prompting users for those permissions after they are set up of the devices. Daru also claimed that Apple's Find My app rivaled Tile's own app. Tile sent a letter to European authorities accusing Apple of anti-competitive behavior that, among other things, iOS 13.5 was developed to favor Apple's Find My app over Tiles' app. Apple "vigorously" denied the allegations.

After the large number of legal letters, Apple announced last summer that it was launching a new program that allows third-party trackers to work with the Find My app. It wasn't until early April this year – two weeks before AirTags started – Apple finally updated the Find My app to work with third-party devices.

However, the argument that Apple is wrongly pushing users to the Find My system through the Tile system has won congressional support in the past. An extensive antitrust report by House last October alleged that "Apple's service would oblige companies like Tile to abandon their apps and differentiate their service from Apple and other competitors" and place "a competitive disadvantage" on companies like Tile procure.

After Senator Amy Klobuchar called Apple's AirTags announcement "on time", she ignored her words at the hearing.

"I just don't think this' we built it, so trust us and we can run it '' won't work anymore," said Klobuchar at the end of the hearing. “Of course, if you use history as a guide, people build things and they do great things – they keep a lot of people busy. And then at some point it becomes a monopoly and then a problem. "

Update, April 21, 2021, 6:30 p.m. ET: This piece has been updated to include details of the Wednesday hearing.

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