US Government, US States Sue Apple For Smartphone Monopoly

Apple has, as expected, been sued by the US Department of Justice (DoJ), as well as 16 other state and district attorneys general, for alleged anticompetitive practices.

The DoJ announced the civil antitrust lawsuit on Thursday 21 March 2024 against Apple “for monopolisation or attempted monopolisation of smartphone markets in violation of Section 2 of the Sherman Act.”

This lawsuit has long been expected, after both the DoJ and the FTC began their own investigations back in 2019 into Apple, as well as other tech firms including Amazon, Facebook and Google, over alleged antitrust issues.

Antitrust investigations

US authorities had been accused of previously giving huge American tech companies a relatively free hand, even as in Europe firms such as Apple, Facebook and Google were the target of wide-ranging regulatory probes and massive fines.

Thus the US began its investigations five years ago, and in February 2020 app developers were reportedly questioned by the DoJ as part of its antitrust investigation of Apple, and other big name technology giants.

Then in August 2020, a very senior DoJ official confirmed that his department was moving “full-tilt” on its antitrust investigation.

Fast forward to October 2021 it was reported that the DoJ investigation of tech giants had witnessed an acceleration of the Apple probe, reportedly increasing likelihood of lawsuit against the iPhone maker.

In February 2023 the Department of Justice said it was accelerating its antitrust investigation into Apple.

Antitrust investigations have already resulted in lawsuits against other big name tech firms, after Google and Meta were hit with antitrust lawsuits.

Antitrust lawsuit

Now a federal lawsuit by the US has begun against Apple, after a complaint was filed in the US District Court for the District of New Jersey.

It alleges that “Apple illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers. Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers.”

The lawsuit also alleges “Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others. Through this monopolization lawsuit, the Justice Department and state Attorneys General are seeking relief to restore competition to these vital markets on behalf of the American public.”

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” said Attorney General Merrick B. 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,” said Garland. “The Justice Department will vigorously enforce antitrust laws that protect consumers from higher prices and fewer choices.”

“No matter how powerful, no matter how prominent, no matter how popular – no company is above the law,” added Deputy Attorney General Lisa Monaco. “Through today’s action, we reaffirm our unwavering commitment to that principle.”

The complaint alleges that Apple’s anticompetitive course of conduct has taken several forms, many of which continue to evolve today, including:

• Blocking Innovative Super Apps. Apple allegedly 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. Apple allegedly 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. Apple allegedly 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 allegedly 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 allegedly has prevented third-party apps from offering tap-to-pay functionality, inhibiting the creation of cross-platform third-party digital wallets.

The complaint also alleges that Apple’s conduct extends beyond these examples, affecting web browsers, video communication, news subscriptions, entertainment, automotive services, advertising, location services, and more.

Apple response

Apple has responded to the DoJ and US state lawsuit, disagreeing with the US authorities.

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” Apple was quoted by Reuters as saying in a statement.

“If successful, it would hinder our ability to create the kind of technology people expect from Apple – where hardware, software, and services intersect,” it added.

Apple has already been subject to antitrust probes and orders in the UK, Europe, Japan and South Korea, as well as lawsuits from corporate rivals such as Epic Games.