Washington — Apple Inc., one of the world’s most valuable and influential companies, engaged in illegal anticompetitive behavior in an effort to build a “moat around its smartphone monopoly” and maximize its profits at the expense of consumers, the Justice Department alleged in a successful antitrust lawsuit filed Thursday.
In a lawsuit filed in federal district court in New Jersey, the Justice Department accused the company of using its rules for app development, iPhone features and hardware customers use every day — including iMessage, Apple Wallet and smartwatches — to thwart competition and expand its business. by charging higher prices. Fifteen states and the District of Columbia have joined the Justice Department as plaintiffs in the suit.
“Apple has maintained monopoly power in the smartphone market not only by staying ahead of the competition on merit, but also by violating federal antitrust laws,” Attorney General Merrick Garland said in a speech at the Justice Department headquarters. “Consumers should not have to pay higher prices because companies are breaking the law.”
Apple’s antitrust lawsuit
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In their 88-page complaint, state attorneys alleged that Apple violated the Sherman Antitrust Act, including by using “a series of rules and shape-shifting restrictions in its App Store guidelines and developer agreements that would allow Apple to extract higher royalties, stifle innovation , offer a less secure or degraded user experience and slow down competing alternatives.”
Specifically, investigators argued that the tech giant — which brought in nearly $400 billion in revenue last year — edged out its smaller competitors by blocking the spread of so-called “super apps” that provide identical services across devices; interfering with message formats and capabilities between Apple and other devices; and monopolizing the use of touch payment functions on iPhones only to Apple Wallet.
Users have long been frustrated by differences in messaging between Apple and other products, including lower media quality, reduced editing options, and even different colors for the messages themselves. Garland said these issues are examples of how Apple is degrading the user experience to get them to stay in the company’s ecosystem.
“As any iPhone user who has ever seen a green text message or received a grainy, tiny video can attest, Apple’s anticompetitive behavior also includes making it difficult for iPhone users to communicate with users of non-Apple products,” he said. . “It does this by reducing the functionality of its own messaging app and by reducing the functionality of third-party messaging apps.”
However, according to investigators, Apple’s alleged anti-competitive practices did not stop there. They also reportedly worked to stifle the use of non-Apple smartwatches by limiting how users interact with them to iPhone and used cloud streaming, location services and web browsers on iPhones to suffocate smaller rivals.
“Critically, Apple’s anticompetitive behavior not only restricts competition in the smartphone market, but also reverberates through industries affected by these restrictions, including financial services, fitness, gaming, social media, media, entertainment and more,” it said. complaints. alleged. “Unless Apple’s anti-competitive and exclusive behavior is stopped, it is likely to expand and consolidate its monopoly over the iPhone into other markets and parts of the economy.”
The government asked the court to order Apple to stop its allegedly anti-competitive activities and to stop undermining cross-platform services and hardware. Prosecutors said the court should take the necessary steps to “restore competitive conditions in markets affected by Apple’s illegal conduct.”
In response to the lawsuit, Apple said in a statement that the lawsuit “threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”
“If successful, it would impede 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 role in designing human technology,” the company said. “We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”
Apple is not the first behemoth in the tech space to face scrutiny from the Justice Department’s antitrust division. Over the past few years, Google has faced two lawsuits — one during the Trump administration and the other during President Biden’s administration — that alleged monopolistic business practices.
Jo Ling Kent and Andres Triay contributed reporting.