Return to Transcripts main page

CNN Newsroom

DOJ Sues Apple, Alleging Antitrust Violations; Trump Faces Monday Deadline to Pay $464 Million Bond. Aired 11-11:30a ET

Aired March 21, 2024 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[11:01:01]

JIM ACOSTA, CNN HOST: You are live in the CNN NEWSROOM. I'm Jim Acosta in Washington. Good morning.

We begin this hour with big news from the tech world. Any moment from now, we're expecting the attorney general, Merrick Garland to announce a blockbuster lawsuit against Apple, yes, Apple, alleging the iPhone maker's practices and policies violate antitrust laws. We will bring that news conference to you live once it gets under way and we will just go right to it. So, stay tuned for that.

But, first, Donald Trump running out of options, running out of time, with his nearly half-billion-dollar bond due in a matter of days. He has until Monday to pay the massive judgment from his civil fraud case, or some of his most prized properties could be seized, like Trump Tower.

Sources say the former president is panicking, but it's not exactly clear why he can't come up with the bond at this point, because he has a history of bragging about his wealth. Listen to what he said back in 2015.

(BEGIN VIDEO CLIP)

DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES (R) AND CURRENT U.S. PRESIDENTIAL CANDIDATE: I'm really rich. I will show you that in a second.

(CHEERING AND APPLAUSE)

TRUMP: Total net worth of $8 billion, net worth, not assets, not liability, a net worth. So the total is $8,737,540,000. Now, I'm not doing that -- I'm not doing that to brag, because you know what? I don't have to brag. I don't have to, believe it or not.

(END VIDEO CLIP)

ACOSTA: All right, there, Trump says he was worth $8 billion, but this week he claimed it was -- quote -- "practically impossible" to secure the $464 million sum after being turned down by 30 insurance companies.

The New York attorney general is pushing back on that claim and demanding that Trump tell an appeals court why he can't find anyone to underwrite that bond.

CNN's Kara Scannell is in New York.

Kara, I guess what options does Trump have at this point?

KARA SCANNELL, CNN CORRESPONDENT: Yes, well, Trump can still try to find money from a number of sources. It's just not clear that he's going to be able to come up with half-a-billion dollars in time by Monday.

He has said that he's been unable to get insurance companies to secure a bond based on property as collateral. They all want cash, and Trump does not have half-a-billion dollars in cash to put up here. He could also try to get money out of some of the properties he owns by going to banks and taking out mortgages, but there are complications with that as well.

You still have to get someone who's willing to take out that much money, who's willing to take on that risk. Some of these companies already have debt on them, so that's another step for a financial institution to take on. And there's limited number of big financial institutions who will do business with the former president because of his history as being litigious and as a bad client.

So he's blocked out of a lot of that market. I mean, his other possibilities is, he could try to sell a property, but there's really not enough time to pull that off. And he has been arguing that that would be unfair and harmful because he would have to do it at a fire sale. And if he were ultimately to prevail in any way, he would not be able to recover that asset and that money.

So the clock really is ticking here. They're -- his big hope is that the appeals court will allow him to post a smaller bond or say he doesn't have to post any money until the appeal plays out. The attorney general's office, Trump, they have been making all these filings this week.

The ball, though, is in the hands of the appeals court. Trump's due date to post this money is Monday. So, the big question is, does the appeals court act in time? Or does -- if they don't, does the New York attorney general's office on Monday take the initial first steps to try to seize some of his assets, including potentially Trump Tower, his penthouse apartment there, the hotel on the corner of Central Park in New York, or the family compound known as Seven Springs in Westchester just north of the city, Jim?

ACOSTA: Yes.

And, Kara, we're looking at the value of some of these properties on screen.

We should note that we have got a two-minute warning or less than a two-minute warning from the attorney general on the Apple case.

But might we see padlocks going on doors Monday morning? Is that beyond the realm of possibilities? SCANNELL: I mean, that's unlikely. I think the initial first steps

will play out in court.

[11:05:03]

They will move to try to either put liens on some of these properties or begin foreclosure proceedings. It's not likely we will see the padlocks and the stickers going up.

ACOSTA: All right, Kara, I'm so sorry to do this to you. We have got to go to the attorney general, Merrick Garland. He's going to be laying out this case against Apple. Let's go to that live.

MERRICK GARLAND, U.S. ATTORNEY GENERAL: Good morning.

Earlier today, the Department of Justice, joined by 15 states and the District of Columbia, sued Apple in the U.S. District Court for the District of New Jersey for violating Section 2 the Sherman Anti-Trust Act.

Over the last two decades, Apple has become one of the most valuable public companies in the world. Today, its net income exceeds the individual gross domestic product of more than 100 countries. That is in large part due to the success of the iPhone, Apple's signature smartphone product.

For over a decade, iPhone sales have made up a majority of Apple's annual revenue. Today, Apple's share of the U.S. performance smartphone market exceeds 70 percent. And its share of the entire U.S. smartphone market exceeds 65 percent.

Apple charges as much as nearly $1,600 for an iPhone. But as our complaint alleges, Apple has maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits, but by violating federal antitrust law.

Consumers should not have to pay higher prices because companies break the law. We allege that Apple has employed a strategy that relies on exclusionary, anticompetitive conduct that hurts both consumers and developers.

For consumers, that has meant fewer choices, higher prices and fees, lower-quality smartphones, apps and accessories, and less innovation from Apple and its competitors. For developers, that has meant being forced to play by rules that insulate Apple from competition.

And as outlined in our complaint, we allege that Apple has consolidated its monopoly power not by making its own products better, but by making other products worse.

Apple carries out its exclusionary anticompetitive conduct in two principle ways. First, Apple imposes contractual restrictions and fees that limit the features and functionality that developers can offer iPhone users.

Second, Apple selectively restricts access to the points of connection between third-party apps and the iPhone's operating system, degrading the functionality of non-Apple apps and accessories. As a result, for most of the past 15 years, Apple has collected a tax in the form of a 30 percent commission on the price of any app downloaded from the App Store, as well as in-app purchases.

Apple is able to command these fees from companies of all sizes. Apple has also suppressed the emergence of programs like cloud streaming apps, including gaming apps, as well as super apps that could reduce user dependence on Apple's own operating system and expensive hardware.

And, as any iPhone user who has ever seen a green text message or received a tiny, grainy video can attest, Apple's anticompetitive conduct also includes making it more difficult for iPhone users to message with users of non-Apple products.

It does this by diminishing the functionality of its own messaging app and by diminishing the functionality of third-party messaging apps. By doing so, Apple knowingly and deliberately degrades quality, privacy and security for its users.

For example, if an iPhone user messages a non-iPhone user in Apple Messages, the text appears not only as a green bubble, but incorporates limited functionality. The conversation is not encrypted, videos are pixelated and grainy, and users cannot edit messages or see typing indicators.

As a result, iPhone users perceive rival smartphones as being lower quality because the experience of messaging friends and family who do not own iPhones is worse, even though Apple is the one responsible for breaking cross-platform messaging.

And it does so intentionally. For example, in 2013, a senior executive at Apple explained that supporting cross-platform messaging in Apple messages -- quote -- "would simply serve to remove an obstacle to iPhone families giving their kids Android phones" -- close quote.

In 2022, Apple's CEO was asked whether Apple would fix iPhone-to- Android messaging. The questioner added -- quote -- "Not to make it personal, but I can't send my mom certain videos" -- close quote.

[11:10:12]

Apple's CEO responded: "Buy your mom an iPhone."

In addition to selectively controlling app distribution and creation, we allege that Apple is violating the law by conditionally restricting developers' access to the interface which is needed to make an app functional on the Apple operating system.

For a product like a smartwatch or a digital wallet to be useful to an iPhone user, it must be able to communicate with the iPhone's operating system. But Apple creates barriers that make it extremely difficult and expensive for both users and developers to venture outside the Apple ecosystem. When it comes to smartwatches, Apple not only drives users to purchase

an Apple Watch, which is only compatible with an iPhone. It also uses its technical and contractual controls to make it harder for someone with an iPhone to use a non-Apple smartwatch.

And when it comes to digital wallets, Apple's exclusionary conduct goes a step further. Digital wallets allow users to store and use passes and credentials in a single app, including credit cards, personal identification, movie tickets, and car keys. Apple Wallet is Apple's proprietary digital wallet on the iPhone.

Apple actively encourages banks, merchants, and other parties to participate in Apple Wallet. But it simultaneously exerts its monopoly power to block these same partners from developing alternative payment products and services for iPhone users.

For example, Apple has blocked third-party developers from creating, competing digital wallets on the iPhone. They use what is known as tap-to-pay functionality. That is a function that makes a digital wallet, well, a wallet.

Instead, Apple forces those who want to use the wallet function to share personal information with Apple, even if they would prefer to share that information solely with their bank, medical provider, or other trusted third party.

When an iPhone user puts a credit or debit card in Apple Wallet, Apple inserts itself into the process that would otherwise occur directly between the user and the card issuer. This introduces an additional potential point of failure for the privacy and security of Apple users.

And that is just one way in which Apple is willing to make the iPhone less secure and less private in order to maintain its monopoly power. The Supreme Court defines monopoly power as -- quote -- "the power to control prices or exclude competition."

As set out in our complaint, Apple has that power in the smartphone market. Now, having monopoly power does not itself violate the antitrust laws. But it does when a firm acquires or maintains monopoly power, not because it has a superior product or superior business acumen, but by engaging in exclusionary conduct.

As set out in our complaint, Apple has maintained its power not because of its superiority, because of its unlawful exclusionary behavior. Monopolies like Apple's threaten the free and fair markets upon which our economy is based. They stifle innovation. They hurt producers and workers.

And they increase costs for consumers. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly. But there's a law for that. The Justice Department will vigorously enforce antitrust law. Enforcing the law protects consumers from higher prices and fewer choices.

That is the Justice Department's legal application. That is what the American people expect. That is what they deserve.

I am grateful to the attorneys and staff of the department's Antitrust Division for their tireless work on this case on behalf of the American people.

I will now turn the podium over to the deputy attorney general.

UNIDENTIFIED FEMALE: Thank you very much, Mr. Attorney General.

ACOSTA: All right, there's the attorney general, Merrick Garland, announcing this major antitrust suit against Apple, essentially accusing the tech giant of constructing things with its iPhone to basically knock out the rest of the competition in that very lucrative market.

Let's talk about it with CNN legal analyst and former Department of Justice counsel Carrie Cordero, and Tripp Mickle, a tech reporter for "The New York Times" who has been covering Apple since 2016.

[11:15:03]

Carrie, you just heard the attorney general just a few moments ago, here with me in the studio. I mean, they are making no bones about this. They think that Apple essentially has, what, an iPhone monopoly? Are those the words that I heard him use?

CARRIE CORDERO, CNN LEGAL ANALYST: Yes, I mean, this is a really huge case brought by the Justice Department's Antitrust Division, consistent with some other cases that they have brought.

They have had a big case against Google. And so this administration has made it a point to direct their attention and their law enforcement and their regulatory attention towards the tech sector and all of the big tech companies.

This Apple case, I thought was really interesting, some of the things the attorney general said, because he went right after Apple's commitments to security and privacy. And those are two aspects of Apple's business and the iPhone that they purport to be a market leader, but also a leader in providing to their consumers security and privacy, in particular.

So I think that point that the attorney general is making is really going to be one that Apple, when it defends itself in this suit, is going to come back at really, really hard.

ACOSTA: Yes, I mean, Tripp, this is no small thing, I mean, the Department of Justice going after one of the biggest companies in the world.

I mean, your -- what stood out to you when you heard the attorney general there?

TRIPP MICKLE, TECH REPORTER, "THE NEW YORK TIMES": Really the ambition of the case.

ACOSTA: Yes.

MICKLE: If you look back at the challenges that are -- Apple's facing right now, it's being challenged by regulators in Europe, regulators in Asia, all over the world.

But most of that has been very narrow and focused on the App Store. The U.S. government's looking more broadly at the iPhone business as a whole. And that's really the centerpiece of Apple's empire. It's what has made it such a dominant company for so long. And it's an ambitious case. We will see if the Justice Department is able to argue in court that it is in fact a monopoly.

ACOSTA: And, Tripp, we could show Apple's stock price on screen if we have it. The price is down a few percent, 3.29 percent this morning. Is Apple going to take much of a hit as a result of this, do you think? Or I suppose that remains to be seen at this point.

MICKLE: You know, I -- certainly, there's going to be a negative reaction from investors on this, but that reaction in regards to this case is amplified by some of the other challenges that Apple is facing.

I mentioned the regulators in Europe, but then also, last year, if you think back to around August or September, China made some moves to limit government use of iPhones. And so Apple's business is being challenged there. A lot of this is all coming to a head at the same time. And that's why you have seen a decrease in Apple's stock price.

ACOSTA: Yes.

And, Carrie, I mean, I can imagine the folks at Apple saying -- and I should just note, right now as we're talking, I have an iPhone right here. I have a Mac sitting here and I have my Apple Watch on my wrist. So I can imagine the Apple folks saying, well, we just make great products. That's why we're doing so well.

That is not what the attorney general is saying.

CORDERO: Well, and that's going to be a really -- I mean, that is going to be...

ACOSTA: Yes.

CORDERO: ... the burden for the Justice Department in proving this case...

ACOSTA: Yes.

CORDERO: ... is, what they are alleging, as the attorney general just laid out, is not just that Apple makes better products, and that's why we buy them and we're willing to pay high prices for them.

ACOSTA: Right.

CORDERO: What the Justice Department is alleging is that they engage in actual anticompetitive behavior. And that is going to require not just allegations. That is going to require proof in terms of the evidence the department has been able to collect, the proof they will be able to put on, whether that is internal company communications and other evidence that they actually were engaging in this anticompetitive behavior.

ACOSTA: All right, very interesting.

Carrie and Tripp, thank you very much. Really appreciate it.

We will be right back.

(COMMERCIAL BREAK)

[11:23:41]

ACOSTA: All right, back to our top story now, former President Donald Trump running out of options to pay his nearly half-billion-dollar bond due in a matter of days. He has until Monday to pay the massive judgment from his civil fraud case, or some of his most prized possessions could be seized, like Trump Tower.

Let's discuss all of this. Carrie Cordero is back with me, as well as CNN senior political analyst and CNN -- senior editor of "The Atlantic," Ron Brownstein, and CNN political commentator S.E. Cupp.

Guys, thank you so much, and, S.E. and Ron, for sticking around for a few extra minutes while we heard from the attorney general there.

Carrie, I did want to go back to you just very briefly, because I asked Kara this at the top of the show. The prospect that we could see padlocks on doors at Trump buildings in Manhattan.

CORDERO: I think it's unlikely.

ACOSTA: A stretch at this point?

CORDERO: I think it's unlikely. I think we're not there yet.

I do think the attorney general of New York is going to push things as far as she possibly can, so she might try to go in that direction. But I think the big question here, as Kara had reported earlier, is what the appellate court will do, and whether the appellate court will give the former president the opportunity to see his appeal through before he experiences what genuinely, objectively, would be the real harm of losing his actual properties.

ACOSTA: Yes.

And, S.E., I mean, no surprise, Trump is trying to fund-raise off of the situation. I mean, this has been his playbook, I mean, since the beginning of this campaign, telling Democrats to -- quote -- "keep your filthy hands" off of Trump Tower.

[11:25:06]

I mean, this has worked for him politically, but, financially, the clock is ticking, and it may not work out for him.

S.E. CUPP, CNN POLITICAL COMMENTATOR: Yes.

And I don't know how many golden sneakers or NFT cards he'd have to sell...

ACOSTA: A lot.

CUPP: ... to be able to pay this one off.

But you're right, Jim. I mean, in 2015, very quickly after promising he couldn't be bought and he wouldn't be taking any money from anyone, he was holding fund-raisers and adding contributions links to his pages. And he has been an avid fund-raiser since then, really grifting off of his own supporters, taking lots of their money to -- quote -- "stop the steal" and help prevent election fraud, meanwhile, diverting a lot of that to pay for his own aides and assistance, Melania's stylists.

I mean, he's happy to take his supporters' hard earned money, and he's asking for it again. He's also used the RNC to fund some of his legal defenses. There's no one he won't go to for money. And he needs a lot of it now. It's why it's a really serious -- it's a serious problem for him.

ACOSTA: Yes, Ron, I mean, Trump is sort of trading the golden sneakers for, I guess, a gold-plated tin cup to pass around, collection plate, maybe?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Yes.

Yes, this is -- first of all, this is an interesting moment in the campaign. Joe Biden has a substantial cash advantage, cash-on-hand advantage over former President Trump in the latest figures that are -- that are just out, in part because he is diverted -- Trump has diverted, I think, $10 million-plus of campaign contribution toward legal fees.

And Joe Biden now is able to blanket the swing states with an advertising barrage that Trump can't match. The general feeling historically has been that paid media doesn't matter as much in the presidential election as in other elections, because there's so much other information that voters get.

But there are exceptions, like 1996, when Bill Clinton did exactly this to Bob Dole. I look at this is kind of an important moment for Biden, when he's got this big advantage on the airwaves and whether he can see any movement in the polls.

But I would say that the implications of this are probably less significant for the presidential race kind of tactically than the larger question of, you have a potential U.S. president who is in enormous financial strain and distress at this moment.

ACOSTA: Yes. BROWNSTEIN: And if we had some of our national security analysts on,

they would talk about the problems that creates in terms of vulnerability to potentially foreign influences.

So it's a big moment for him to see if he can find a way out of this -- out of this dead end that he's looking at right now.

ACOSTA: Yes.

And, S.E., I mean, I did want to ask you about, I mean, some of the rhetoric that Trump has been using in recent days, talking about a bloodbath and how Jewish Democrats are not loyal to Israel if they vote for Joe Biden.

I mean, the other piece of rhetoric that has been making the rounds is how Trump has been calling January 6 criminals patriots. And some of our colleagues up on Capitol Hill have been catching up with various Republican leaders to ask them to comment on Trump calling these January 6 criminals patriots.

Here is how Mitch McConnell characterized those criminals in the immediate aftermath of the insurrection. Let's listen to that.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY): American citizens attacked their own government. They used terrorism to try to stop a specific piece of domestic business they did not like.

A mob was assaulting the Capitol in his name. These criminals were carrying his banners, hanging his flags and screaming their loyalty to him.

(END VIDEO CLIP)

ACOSTA: S.E., how much of a problem is this going to be for Republican leaders? I mean, we have seen this in the past, right? "I didn't see the tweet. I don't know the context of this" and so on.

Mitch McConnell was very clear in the way he condemned the former president after January 6.

CUPP: Right.

Well, what's the difference between 2021 and 2024? 2024 is an election year, and there will be very few profiles in courage. I think you're going to see a lot of profiles in cowardice and people who want to help the president, the former president, and stay on his good graces.

And that always, Jim, requires lying for him. I mean, just ask Ken Buck, retiring from Congress because he explicitly said he was tired of having to lie for Donald Trump. Ask all the people that have gone to jail for him because they had to lie for him and cover up for him.

So, listen, they're all going to do it again. They want his -- they want to stay in his good graces. They want to be on the veep list. They want to get reelected. They want to keep their jobs. They want to go into the Cabinet.

ACOSTA: Yes.

CUPP: They will all do it again and lie based on what -- wherever he's telling them to go.

ACOSTA: And they're -- Ron, and so many of these Republican allies of the president have said they want this race to be about

[11:30:00]