The US Department of Justice (DOJ) has wasted no time once it had Apple within its sights, and with the conclusion of the investigation, has been joined by 16 other state and district attorneys general in filing a civil antitrust lawsuit against the Cupertino-headquartered company. According to an official statement, this lawsuit has been filed for Apple’s “monopolization or attempted monopolization of smartphone markets in violation of Section 2 of the Sherman Act” in the US District Court for the District of New Jersey. Whether this new lawsuit prompts the company to make changes or not remains to be seen.
The lawsuit alleges that the company increases prices for consumers and developers, while “selectively imposing contractual restrictions” on developers. Some of the ways in which Apple is alleged to illegally maintain its monopoly include the disruption of “super apps” that encompass different programs, blocking the development of cloud-streaming apps and services for things like video games, as well as the suppression of the the quality of messaging between iPhones and competing platforms. Apart from this, Apple also (allegedly) prevents third-party developers from creating competing digital wallets with tap-to-pay functionality for the iPhone, and limits the functionality of third-party smartwatches.
As of 2023, the iPhone more than $200 billion in sales. “For years, Apple responded to competitive threats by imposing a series of ‘Whac-A-Mole’ contractual rules and restrictions that have allowed Apple to extract higher prices from consumers, impose higher fees on developers and creators, and to throttle competitive alternatives from rival technologies,” DOJ Antitrust Division Chief Jonathan Kanter said in the official statement. The news saw Apple’s shares fell by more than 4% during trading on Thursday – they are currently priced at $171.37 per share.
[Original article]: Antitrust issues continue to be a plague for tech majors – this time, the US Department of Justice (DOJ) is on the verge of filing a landmark antitrust lawsuit against tech behemoth Apple. This lawsuit, expected to be filed in federal court as early as Thursday, March 21st, centers on allegations and concerns that Apple’s control over its iPhone ecosystem stifles competition and unfairly advantages its own products and services. This latest lawsuit against Apple comes on the heels of similar legal challenges facing other tech giants, including Alphabet’s Google, social media company Meta, and e-commerce behemoth Amazon.
The DOJ’s lawsuit is expected to argue that Apple restricts access to certain hardware and software features for rival companies. This could include limitations on how developers can utilize specific iPhone functionalities within their apps, potentially hindering their ability to compete effectively with Apple’s own offerings. Additionally, the lawsuit might delve into Apple’s control over the App Store and how Apple’s App Store policies and fees create an uneven playing field, potentially discouraging competition from alternative app marketplaces and services.
According to media reports, the investigation by the DOJ into Apple’s business practices began five years ago, during the Trump administration. Initially, the department prioritized twin antitrust lawsuits against Google, leaving the Apple investigation on hold. However, with the Google case concluded, the DOJ appears ready to shift its focus. The current lawsuit against the iPhone-maker represents the third time in 14 years that the DOJ has sued Apple for antitrust violations. However, it’s the first case that specifically targets Apple’s alleged efforts to maintain its dominant position in the smartphone market.
A loss for Apple will have massive ramifications for its practices, potentially forcing the company to loosen its control over the iPhone ecosystem. For one, the DOJ could argue for changes that allow for lower fees for developers or even the possibility of alternative app marketplaces existing on iPhones. It could also target Apple’s limitations on cloud gaming services within the App Store, as well as the Cupertino-headquartered tech giant’s practices that give preferential treatment to its own hardware products within the iPhone ecosystem.
For its part, the company has consistently maintained that its practices are not anti-competitive and benefit users by contributing to a seamless and secure user experience, and contends that its control over the iPhone platform allows it to deliver a high-quality, unified experience for its customers. This impending US lawsuit also coincides with heightened scrutiny of Apple on a global scale – the European Union recently fined Apple €1.8 billion for anti-competitive practices within the App Store (over music streaming). The EU’s Digital Markets Act (DMA) also mandates changes to Apple’s iPhone ecosystem, potentially requiring the company to open up its platform to alternative app stores and payment systems.
