Justice officials said Thursday they are suing Apple – saying its devices and software are a monopoly that give it vast profits at the expense of customers.
‘Each step in Apple’s course of conduct built and reinforced the moat around its smartphone monopoly,’ the suit says.
The US Department of Justice and 15 states allege it used the powerful demand for its iPhone and other products to drive up prices for its services and hurt smaller rivals in the first major antitrust effort
For example, officials say it blocked makers of third-party apps and products from using key features, such as its contactless technology that allows mobile payments.
Another major complaint is over messaging. US Attorney General Merrick Garland, speaking this morning, said users who try to message owners of other makes of smartphone end up having problems – such as videos not sending.
Apple’s shares are having their worst day since August 2023 – down 4 percent at one point – on a day when the stock market was hitting highs.
Apple joins a list of major tech companies sued by US regulators, including Alphabet’s Google, Meta Platforms and Amazon.com across the administrations of both former President Donald Trump and President Joe Biden.
The case could drag on for years. If the DoJ wins or Apple makes concessions, it would be Apple’s rivals that initially benefit.
But it would also mean better and cheaper apps and products made by third-party companies like Spotify or tracking gadget Tile.
Apple boss Tim Cook
FILE – The Apple logo is shown on a screen during an announcement on the Apple campus Sept. 12, 2023, in Cupertino, Calif. The Justice Department announced a sweeping antitrust lawsuit Thursday, March 21, 2024 against Apple, accusing the tech giant of having an illegal monopoly over smartphones in the U.S. (AP Photo/Jeff Chiu, File)
‘Consumers should not have to pay higher prices because companies violate the antitrust laws,’ Attorney General Merrick Garland said in a statement.
‘If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.’
The Justice Department alleges that Apple uses its market power to get more money not just from consumers – but also developers, content creators, artists, publishers, small businesses and merchants.
The 88-page lawsuit, filed in US federal court in Newark, New Jersey, said it was focused on ‘freeing smartphone markets from Apple´s anticompetitive and exclusionary conduct and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future.’
The case is taking direct aim at the digital fortress that Apple has built around the iPhone and other popular products such as the iPad, Mac and Apple Watch.
They have created what is often referred to as a ‘walled garden’ – whereby its meticulously designed hardware and software can seamlessly flourish together while requiring consumers to do little more than turn the devices on.
But the complaint is that it doesn’t allow other companies to work as seamlessly.
The strategy has helped make Apple the world´s one of the world’s biggest companies, with annual revenue of nearly $400 billion and, until recently, a market value of more than $3 trillion.
Apple’s shares have fallen by 7 percent this year even as most of the stock market has climbed to new highs.
It has resulted in long-time rival Microsoft – a target of a major Justice Department antitrust case a quarter-century ago – to seize the mantle as the world´s most valuable company.
According to the lawsuit, rules and decisions have been designed to force Apple users into staying in the Apple ecosystem and buying the company’s iconic yet expensive hardware, the iPhone
Apple has already been subject to antitrust probes and orders in Europe, Japan and Korea, as well as lawsuits from corporate rivals such as Epic Games.
One of Apple’s most lucrative businesses – its App Store, which charges developers commissions of up to 30 percent – has already survived a lengthy legal challenge under US law by Epic.
While the lawsuit found that Apple did not violate antitrust laws, a federal judge ordered Apple to allow links and buttons to pay for apps without using Apple’s in-app payment commission.
‘We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,’ Apple said in a statement.
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