In what is being seen as a landmark antitrust case, the US Department of Justice and 15 states have sued Apple, alleging it uses its ecosystem of iPhone and other products to monopolise and drive up prices for its services that hurts consumers, developers, and smaller rivals.
The Apple antitrust case, filed in US federal court in Newark, New Jersey, is the latest move in a crackdown on Big Tech companies in the US. Alphabet’s Google, Meta Platforms and Amazon.com have also been sued in the past.
The company’s share price fell over 4 percent to $170.84 following the news.
“Consumers should not have to pay higher prices because companies violate the antitrust laws,” said Attorney General Merrick Garland. “We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law.
“If left unchallenged, Apple will only continue to strengthen its smartphone monopoly. The Justice Department will vigorously enforce antitrust laws that protect consumers from higher prices and fewer choices. That is our legal obligation and what the American people expect and deserve.”
Acting Associate Attorney General Benjamin Mizer commented: “The complaint describes how Apple’s anti-competitive conduct discourages developers from offering new and innovative applications and makes it more difficult for consumers to switch to other smartphones. Apple’s conduct leaves consumers with higher prices, fewer new products, and a worse user experience.
“In this way, today’s complaint also reflects the broader importance of vigorous antitrust enforcement. Markets that lack competition shift power from consumers and workers to powerful corporations. A lack of competition means fewer choices and higher prices for consumers. It means fewer options and lower wages for workers. And it means that the owners of powerful corporations make more without expanding the size of the pie for anyone else.
“Promoting competition through antitrust enforcement levels that playing field and is critical to promoting economic opportunity and equity.”
In a statement, Apple said: “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”
The US accused the company is making its products worse for consumers to block competitors. This anti-competitive behaviour is designed to maintain its monopoly power while extracting as much revenue as possible. The filing cites five examples where it used mechanisms to suppress technologies that would have increased competition among smartphones…
Blocking innovative Super Apps: Apple has disrupted the growth of apps with broad functionality that would make it easier for consumers to switch between competing smartphone platforms.
Suppressing mobile cloud streaming services: It has blocked the development of cloud-streaming apps and services that would allow consumers to enjoy high-quality video games and other cloud-based applications without having to pay for expensive smartphone hardware.
Excluding cross-platform messaging apps: The company has made the quality of cross-platform messaging worse, less innovative, and less secure for users so that its customers have to keep buying iPhones.
Diminishing the functionality of non-Apple smartwatches: Apple has limited the functionality of third-party smartwatches so that users who purchase the Apple Watch face substantial out-of-pocket costs if they do not keep buying iPhones.
Limiting third-party digital wallets: Apple has prevented third-party apps from offering tap-to-pay functionality, inhibiting the creation of cross-platform third-party digital wallets.
The Cupertino-based Apple generated annual net revenues of $383 billion in the fiscal year 2023 and net income of $97 billion, which exceeds any other company in the Fortune 500 and the gross domestic products of more than 100 countries. It has a 64 percent share of the US market, way ahead of second-placed Samsung at 18 percent.
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