The US Justice Department-bsp-bb-link> and 16 state attorneys general sued Apple Inc.-bsp-bb-link> on Thursday, accusing the iPhone maker of violating antitrust laws by blocking rivals from accessing hardware and software features on its popular devices.
The lawsuit, filed in federal court in New Jersey, marks the culmination of a five-year investigation into the world’s second most valuable technology company. The Biden administration has made competition a cornerstone of its economic policy, and Silicon Valley is becoming a key focus.
The lawsuit alleges that Apple used its power over iPhone app distribution to thwart innovations that would make it easier for consumers to switch phones. The company refused to support cross-platform messaging apps, restrict third-party digital wallets and non-Apple smartwatches, and block mobile cloud streaming services.
Apple recently added support for cloud gaming services and said it will add RCS cross-platform messaging later this year.
The group of attorneys general includes those from California, New Jersey and Washington, DC.
Launched in 2019
The Trump administration’s Justice Department opened its antitrust investigation against Apple in 2019. A 2020 House investigation into the four tech giants revealed that Apple operates as a monopoly in the distribution of iPhone software, generating huge profits from commissions as high as 30% charged to developers.
In 2020, Epic Games Inc.-bsp-bb-link>, maker of the popular online video game Fortnite, sued Apple over its App Store. A federal judge found that the App Store rules did not violate federal antitrust law, but did violate California state law.
As a result of the case, Apple said in January that it would allow US developers to use alternative payment systems, but charge a lower fee of 27% for most digital purchases or 12% for subscriptions. Epic disputes the changes, saying they are inadequate.
On Wednesday,
The latest antitrust challenge
The US lawsuit is the latest in a series of antitrust cases challenging the tech giant. Earlier this month, the European Union fined Apple-bsp-bb-link> 1.8 billion euros ($2 billion) for shutting down rival music services on the iPhone. Apple is attractive.
Meanwhile, the company has made several changes to its App Store rules in Europe to comply with the EU’s new watchdog rules for big tech — the Digital Markets Act. Cupertino, California-based Apple will allow European users to download iPhone apps from the web, allow developers to offer discounts outside the App Store and allow third-party marketplaces to sell apps.
Read more: Apple’s 10 biggest challenges, from artificial intelligence to China-bsp-bb-link>
Apple also restructured the fee it charges European developers, setting a lower rate of 17%, along with a 3% processing fee for software that uses its in-app purchase system and a fee of 50 cents per app install for software downloaded more than 1 million times in a period of 12 months. Those fees have already gone up objections from some developers and EU regulators are likely to test whether Apple’s proposed changes comply with the law.
Last week, the company reversed course and said it would refund Epic’s developer account, allowing Fortnite manufacturer to build its own application store in the EU, which could compete with Apple’s. It comes a day after regulators in Brussels questioned Apple’s decision to ban Epic and raised the prospect of further fines for the iPhone maker.
The latest case marks the third time the Justice Department has sued Apple for antitrust violations in the past 14 years. In 2010, the company agreed to settle allegations that it illegally agreed not to poach Google employees,
Two years later, the Justice Department sued Apple and book publishers for illegally fixing the prices of e-books sold on the iPad. After the Justice Department won the lawsuit, Apple was forced to accept the oversight and adopt policies and training to improve its compliance with antitrust law.
— With help from Samuel Stolton-bsp-person> and Mark Gurman-bsp-person>.
To contact the reporter of this story:
Leah Nylen-bsp-person> in Washington at [email protected]
To contact the editors responsible for this story:
Nick Turner, Peter Jeffrey
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