According to the lawsuit, the rules and decisions are designed to force Apple customers to stay in the Apple ecosystem and buy the company’s iconic but expensive hardware, the iPhone.
The US Justice Department sued Apple on Thursday for illegally maintaining a monopoly over its iPhone by stifling competition and imposing excessive costs on consumers.
The lawsuit, also brought by several US states, attacked the iPhone for making hundreds of billions of dollars by making it difficult for consumers to switch to cheaper smartphones and devices.
The long-awaited case against Apple puts the company founded by Steve Jobs in 1976 at odds with Washington after nearly half a century of largely escaping US government scrutiny.
It joins Amazon, Google and Facebook owner Meta also facing antitrust lawsuits in the United States.
News of the lawsuit sent Apple shares down on Wall Street by as much as 3.75 percent on Thursday.
At the heart of the case is Apple’s alleged opt-out practice, which imposes strict and sometimes opaque conditions on companies and developers seeking to reach the 136 million iPhone users in the US.
According to the lawsuit, these rules and decisions are designed to force Apple customers to stay in the Apple ecosystem and buy the company’s more expensive hardware, the iPhone.
“Consumers should not have to pay higher prices because companies are violating antitrust laws,” said Attorney General Merrick Garland.
“If not challenged, Apple will only continue to strengthen its smartphone monopoly,” he added.
Apple is fighting back
The far-reaching case singled out practices it said make Apple richer at the expense of advancing innovation and technology for consumers.
In a statement, Apple denied the lawsuit had merit, saying it was “wrong in fact and law, and we will vigorously defend against it.”
If successful, the lawsuit would “set a dangerous precedent, empowering the government to take a heavy hand in designing human technology,” the company added.
The suit, for example, accused Apple of destroying the creation of Super Apps, one-stop web portals that could exist on the iPhone and allow users other ways to get services, such as music, photos or movies.
Other big tech giants like Meta have long dreamed of opening such super-apps on the iPhone, which accounts for roughly half of the smartphone market in the United States.
The allegations also target Apple’s Wallet, which is the only app allowed on the iPhone to access in-store faucet payment technology, forcing others to pay a fee.
Messaging apps are also under the microscope, with plaintiffs accusing Apple of making it difficult for Apple users to easily interact with Android phone users, forcing them to buy a more expensive iPhone.
The broad case also mentions smartwatches, with the Apple Watch only available through the iPhone and competing smartwatches having very limited functionality on the iPhone.
The complaint states that these vicious practices extend to other services such as web browsers, entertainment and even car services.
In recent years, Apple has invested heavily in promoting services as well as hardware as it looks for ways to make money beyond the iPhone, which was introduced in 2007 and changed the world of consumer technology.
But iPhone sales growth has slowed in recent years, increasing pressure on the company to find other sources of revenue.
The DOJ noted that Apple’s profits exceed those of any other Fortune 500 company and exceed the gross domestic product of more than 100 countries.
In 2023, Apple recorded global sales of $383 billion and a net profit of $97 billion.
The DOJ’s investigation into Apple began in 2019 during the Trump administration.
Apple won most of the lawsuit in the US from Epic Games, the maker of Fortnite, which has pursued Apple in jurisdictions around the world over the rules and fees it imposes on the iPhone.
In a case brought by Spotify, the EU this month fined Apple 1.8 billion euros ($1.9 billion) for preventing European users from accessing information about alternative, cheaper music streaming services.
© 2024 AFP
Quote: US sues Apple in wide-ranging iPhone monopoly case (2024, March 21) Retrieved March 21, 2024, from https://techxplore.com/news/2024-03-sues-apple-wide-ranging-iphone.html
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