The US government is suing Apple, claiming the company used its monopoly power over the iPhone to prevent developers from offering better alternatives to iPhone apps, raising costs for consumers.
The antitrust suit was filed in New Jersey with 16 state attorneys general joining the US Department of Justice. The government argues that because of Apple’s behavior, iPhone owners have no choice but to obtain their applications through Apple-approved channels. This, in turn, makes it difficult to switch to other mobile platforms.
“Consumers should not have to pay higher prices because companies are violating antitrust laws,” US Attorney Merrick Garland said in a statement announcing the lawsuit. “We argue that 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 law. If not challenged, Apple will only continue to strengthen its smartphone monopoly.”
No one would dispute that Apple maintains a rigorous level of control over what apps can and cannot go on its smartphones. In the past, the company has argued that its policies are necessary to prevent unverified app viruses and scams.
“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” Apple said in a statement. “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 hand in designing human technology.”
Apple’s App Store practices have come under increasing scrutiny both at home and abroad. In addition to the Department of Justice’s antitrust lawsuit, European Union regulators have targeted Apple’s App Store with the passage of the Digital Markets Act. As a result, Apple now allows iPhone owners in EU countries to download apps from third-party stores, albeit with some lingering restrictions. The feature became active with the recent iOS 17.4 update.
It’s too early to say whether a US antitrust lawsuit could force a similar move in this country. “Lawsuits take time and Apple will fight it,” said Avi Greengart, lead analyst at Techsponsential. “Therefore, in the short term, I would not expect any changes to the App Store or Apple’s business.”
In its complaint (available as a PDF), the government claims that Apple’s conduct prevented app makers from creating apps that would facilitate the transition to other platforms. It is also alleged that Apple has blocked the development of cloud streaming apps and services, shut down cross-platform messaging apps, and prevented third-party apps from offering tap-to-pay features. In addition to the iPhone, the lawsuit also alleges that Apple’s policies have diminished the functionality of smartwatches other than the Apple Watch.
“We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,” Apple said in a statement.
There is no word on when the case will go to trial. “These lawsuits are not knock-offs; before the government can prove damages, they will have to define the market in such a way that Apple has a monopoly in the first place,” Greengart said. “Apple’s current smartphone market share is high, but not overwhelming, and competition is certainly there.”
In the fiscal quarter that ended last December — Apple’s last completed quarter — the company posted $69.7 billion in iPhone-related sales, or 58% of Apple’s total revenue.