The United States (US) has filed a lawsuit against Apple. The US accuses the company of monopolizing the smartphone market and avoiding competition.
In its lawsuit, the Department of Justice accuses Apple of abusing its control over the iPhone App Store to “lock in” customers and developers.
Quoted from the BBC, Friday (22/3/2024), the US accuses the Cupertino-based company of taking illegal steps to hinder the development of applications that could compete with Apple’s native apps and make its competitors’ products less appealing.
The report alleges that Apple has engaged in a series of efforts to change rules and limit access to its hardware and software, aiming to increase profits.
Apple is also accused of increasing costs for customers and hindering innovation.
“Apple has maintained monopoly power in the smartphone market not only by staying ahead in competition but also by violating antitrust laws,” said Attorney General Merrick Garland at a press conference announcing the lawsuit.
Apple Accused of Impeding Competition
The 88-page report focuses on five areas where Apple is alleged to have abused its power.
For example, the US accuses Apple of using its app review process to stifle the development of superapps and streaming apps, fearing these apps would provide less incentive for customers to stick with the iPhone.
The report also states that Apple has made it difficult to connect iPhones to other brand smartwatches and has blocked banks and other financial companies from accessing its tap-to-pay technology.
This blocking allows Apple to earn billions in Apple Pay transaction processing fees.
The complaint also focuses on how Apple treats messages sent from competing phones, distinguishing them with green bubble icons and limiting videos and other features.
It is said that Apple’s actions have created a “social stigma” that helps the tech giant maintain its position in the market.
Apple Fights Charges from the US Government
Nevertheless, Apple is fighting the lawsuit and denying the claims.
Apple claims loyal customers appreciate its services because of the features it provides.
Additionally, according to Apple, under US law, companies are free to choose their business partners. They have cited privacy and security issues to justify their rules.
The company says it will ask the court to dismiss the lawsuit.
“We are confident that this lawsuit is based on incorrect facts and laws, and we will vigorously defend against it,” said an Apple representative.
This is the third legal challenge Apple has faced from the US government since 2009 and the first antitrust lawsuit filed against the company under President Joe Biden’s administration.
If the government wins the trial, it could force Apple to overhaul its existing contracts and practices or even cause internal division within the company.
As a result of this case, Apple’s stock fell more than 4% as investors digested the implications of the legal battle.
Not the First Time Apple Has Been Sued
Apple faces increasing legal scrutiny over its iOS ecosystem and business practices.
They have been embroiled in a lengthy legal battle with Epic Games, the maker of Fortnite.
Last month, Apple was fined €1.8 billion by the European Union for violating competition laws in music streaming.
The company has prevented streaming services from informing users about payment options outside the Apple App Store, the European Commission said.
Competition Commissioner Margrethe Vestager said Apple has abused its dominant position in the market for a decade and ordered the tech giant to lift all restrictions.
Vanderbilt University Professor Rebecca Allensworth called the case a “cinematic spectacle” following other legal challenges the Department of Justice has brought against major tech giants.
She said it’s about improving functionality across smartphones and making technology and software more accessible to consumers and other businesses. !!!!!!!!
“It’s not about breaking Apple into smaller units or separating corporate divisions,” she said.
Apple Isolates Its Competitors Within Its Ecosystem
Anat Alon-Beck, a business law professor at Case Western Reserve University in Ohio, said the Department of Justice’s new lawsuit is “much broader” than previous legal actions in the EU.
“It’s not just about the 30% app store fees, but about Apple’s unfair core practices,” she said.
“Apple systematically isolates its competitors from the Apple ecosystem. In doing so, Apple harms many startup businesses, stakeholders, customers, and, in my opinion, its shareholders,” she said.
According to the Department of Justice, Apple’s share of the US smartphone market exceeds 70%, and its share of the broader smartphone market exceeds 65%.
