Apple sued in wide-ranging iPhone monopoly case
An antitrust lawsuit filed against Apple by the US Justice Department on Thursday takes direct aim at the company’s iPhone, could take years to play out, and force the tech giant to make changes in some of its most valuable businesses.
They include the iPhone, in which Apple reported more than $200 billion in sales in 2023; the Apple Watch, part of the company’s $40 billion wearables business; and its profitable services line, which reported $85 billion in revenue.
“Consumers should not have to pay higher prices because companies violate the antitrust laws,” Attorney General Merrick Garland said in a statement.
He claimed that Apple has a monopoly over the smartphone market, alleging the tech giant blocked software developers and mobile-gaming companies from offering better options on the iPhone, resulting in higher prices for consumers.
“We allege that Apple has consolidated its monopoly power, not by making its own products better, but by making other products worse,” Garland said.
The long anticipated case against Apple sees the company founded by Steve Jobs in 1976 clash with Washington after largely escaping US government scrutiny for nearly a half century.
Big Tech
It joins Amazon, Google and Facebook owner Meta, which are also facing antitrust lawsuits in the United States.
Reaction from Apple was swift. Apple said the suit was “wrong on the facts and the law, and we will vigorously defend against it”.
If successful, the suit would “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology,” the company added in a statement.
Apple plans to file a motion to dismiss the case in the next 60 days.
Apple is worth nearly $3 trillion, making it one of the highest valued companies in the world. News of the lawsuit sent shares in Apple down by as much as 4.3 percent on Wall Street on Thursday.
Apple had 64 percent of the market share for US smartphones in the last quarter of 2023, versus 18 percent for Samsung.
Colin Kass, an antitrust lawyer at New York-based Proskauer Rose, told The New York Times that the most compelling allegation is that Apple could be contractually preventing rivals from developing apps that work with other app providers, as “super apps” could.
Other legal experts noted that companies are legally allowed to favor their own products and services, so the government will have to explain why that is a problem with Apple.
“This case is about technology,” said Kass. “Can the antitrust laws force a company to redesign its product to make it more compatible with competitors’ products?”
This is the third lawsuit the Justice Department has brought against Apple over antitrust violations in the past two decades. European regulators also have targeted the company over anticompetitive behavior, including claims of blocking rivals with its music streaming service.
Garland said a key principle of US antitrust law is a critical part of the suit. It isn’t illegal to hold a monopoly, he said. It is only illegal when a monopolist resorts to anticompetitive tactics, or harms competition, in an effort to maintain that monopoly.