Why Apple’s latest gadget is catching the attention of antitrust regulators

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

Tile once again encouraged Congress to take a closer look at Apple in a Senate antitrust hearing, where Tile’s general counsel, Kirsten Daru, testified alongside executives from Spotify, Match, Google, and Apple. The hearing came as Apple has repeatedly been accused of anti-competitive behavior due to its requirement for all iOS apps to be distributed through Apple’s App Store, where Apple takes a commission for sales.

But in the case of the new AirTags, the criticism goes further. Tile says that Apple is not only creating hardware that’s similar to its own, but is also designing Apple software in a way that favors its own products and disadvantages Tile’s products.

“Apple launched this product, and its competing app, with a knowledge of a lot of information about our business,” Daru told senators on Wednesday. “They know how our devices do in stores. They know who our customers are. They know our subscription take rates. They know what features people use. I mean, the list goes on and on.”

This sentiment echoed that of Tile CEO CJ Prober, who issued a statement soon after Apple’s AirTag announcement on Tuesday. “We welcome competition, as long as it is fair competition,” he said. “Unfortunately, given Apple’s well-documented history of using its platform advantage to unfairly limit competition for its products, we’re skeptical.”

Apple AirTags, which go on sale at the end of April, do what Tile’s products have done 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 wideband technology for more precise object location. This approach — and even the physical design of the trackers — is very similar to what Tile’s been doing for years. Tile also uses Bluetooth to locate objects, and the company is in the midst of launching ultra wideband capabilities (along with an augmented reality feature) on its trackers.

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

Apple, for its part, has pushed back against this criticism.

“Apple created Find My over a decade ago to help users locate and manage lost devices in a private and secure way,” the company told Recode in a statement. “We have always embraced competition as the best way to drive great experiences for our customers, and we have worked hard to build a platform in iOS that enables third-party developers to thrive.”

But Apple was hesitant to let Tile expound on its allegations of anti-competitive behavior. At Wednesday’s hearing, Sen. Mike Lee, the ranking Republican on the Senate subcommittee that deals with antitrust and consumer rights, asked Apple’s chief compliance officer, Kyle Andeer, to release Daru, Tile’s general counsel, from a nondisclosure agreement so that she could to speak about the terms of Apple’s Find My system. Apple’s Andeer declined. He also said during the hearing that AirTags would bring something that’s “extremely different than anything else in the marketplace.”

The standoff between Apple and Tile has been years in the making. Rumors emerged back in 2019 that Apple was working on a tracker system that would compete with Tile’s products. Daru told Congress last January that Apple was making it harder for users to connect their iPhone to Tile devices by requiring permissions in iOS 13.5 that were buried in settings, and prompting users to turn off those permissions after the devices had been set up. Daru also claimed that Apple’s Find My app competed with Tile’s own app. Tile sent a letter to European authorities accusing Apple of anti-competitive behavior, saying that iOS 13.5 was built to favor Apple’s Find My app over Tile’s app, among other complaints. Apple “strenuously” denied the allegations.

Following the volley of lawyer letters, Apple announced last summer that it would be launching a new program that would enable third-party trackers to work with its Find My app. But it wasn’t until early April of this year — two weeks ahead of the AirTags launch — that Apple finally updated the Find My app to allow it to work with third-party devices.

The argument that Apple unfairly nudges users toward the Find My system over Tile’s system has gotten traction in Congress in the past, however. An expansive House antitrust report from last October claimed that “Apple’s service would require companies like Tile to abandon their apps and the ability to differentiate their service from Apple’s and other competitors” and put companies like Tile “at a competitive disadvantage.”

After calling Apple’s announcement of AirTags “timely,” Sen. Amy Klobuchar did not mince her words at the hearing.

“I just don’t think this ‘We built it so trust us and we can run it’ is going to work anymore,” said Klobuchar at the end of the hearing. “Because if you look at history as a guide, of course people build things, and they do great things — they employ a bunch of people. And then at some point it becomes monopoly and then it becomes a problem.”

Update, April 21, 2021, 6:30 pm ET: This piece was updated to include details of Wednesday’s hearing.

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source https://www.vox.com/recode/22395840/apple-airtags-tile-tracker-antitrust-regulators