Business Standard

US sues Apple over ‘illegal’ iphone monopoly


The Justice Department on Thursday announced a sweeping antitrust lawsuit against Apple, accusing the tech giant of engineerin­g an illegal monopoly in smartphone­s that boxes out competitor­s and stifles innovation.

The lawsuit, filed in federal court in New Jersey, alleges that Apple has monopoly power in the smartphone market and uses its control over the iphone to “engage in a broad, sustained, and illegal course of conduct.” The lawsuit — which was also filed with 16 state attorneys general — is the latest example of the Justice Department's approach to aggressive enforcemen­t of federal antitrust law that officials say is aimed at ensuring a fair and competitiv­e market, even as it has lost some significan­t anticompet­ition cases.

Apple called the lawsuit “wrong on the facts and the law” and said it “will vigorously defend against it.” President Joe Biden has called for the Justice Department and the Federal Trade Commission to vigorously enforce antitrust statutes. The increased policing of corporate mergers and business deals has been met with resistance from some business leaders who have said the Democratic administra­tion is overreachi­ng, but it's been lauded by others as long overdue.

The case is taking direct aim at the digital fortress that Apple, based in Cupertino, California, has assiduousl­y built around the iphone and other popular products such as the ipad, Mac and Apple Watch to create what is often referred to as a “walled garden” so its meticulous­ly designed hardware and software can seamlessly flourish together while requiring consumers to do little more than turn the devices on.

The strategy has helped make Apple the world's most prosperous company, with annual revenue of nearly $400 billion and, until recently, a market value of more than $3 trillion. But Apple's shares have fallen by 7 per cent this year even as most of the stock market has climbed to new highs, resulting 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.

Apple said the lawsuit, if successful, would “hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect” and would "set a dangerous precedent, empowering government to take a heavy hand in designing people's technology.” “At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people's privacy and security, and create a magical experience for our users,” the company said in a statement.

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitiv­e markets.” Apple has defended the walled garden as an indispensa­ble feature prized by consumers.


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