The Justice Department and 16 attorneys general filed an antitrust lawsuit against Apple on Thursday, marking the federal government’s most vital challenge to the reach and influence of a company that has put iPhones in the hands of greater than a billion people.
The government argued that Apple violated antitrust laws by stopping other corporations from offering applications that compete with Apple products, resembling digital wallets, which could reduce the value of the iPhone. Apple’s policies harm consumers and smaller businesses that compete with some of Apple’s services, in accordance with excerpts from the government’s lawsuit filed in the U.S. District Court for the District of New Jersey.
“Each step in Apple’s conduct built and strengthened a moat around its smartphone monopoly,” the government said in the lawsuit.
The lawsuit ends years of regulatory scrutiny of Apple’s wildly popular suite of devices and services that helped it grow into a nearly $2.75 trillion public company that was for years the most useful in the world. It takes direct aim at the iPhone, Apple’s hottest device and strongest company, and attacks how the company has turned the billions of smartphones sold since 2007 into the centerpiece of its empire.
By tightly controlling the user experience of iPhones and other devices, Apple has created what critics call an uneven playing field during which it gives its own services access to basic features that it denies to its competitors.. For years, it restricted financial firms from accessing the phone’s payment chip and Bluetooth trackers, allowing it to make use of its location-based service features. Users also can connect Apple products, resembling smartwatches and laptops, to iPhone more easily than to products from other manufacturers.
The company claims this makes its iPhones safer than other smartphones. But app developers and rival device makers say Apple is using its power to crush the competition.
“This lawsuit threatens who we are and the principles that distinguish Apple products in extremely competitive markets,” an Apple spokeswoman said. “If successful, it will make it harder for us to create the technology people expect from Apple — where hardware, software and services intersect. It would also set a dangerous precedent, empowering the government to take a decisive role in designing technology for people.”
Apple has successfully faced other antitrust challenges. In a 2020 App Store policy lawsuit brought by Fortnite maker Epic Games, Apple convinced a judge that customers could easily switch between the iPhone’s operating system and Google’s Android. Data was presented showing that the reason few customers switch phones is loyalty to the iPhone.
It also has this has defended its business practices in the past saying that her “approach has always been to let the dough rise” and “create more opportunities not only for our company, but for artists, creators, entrepreneurs and anyone ‘crazy’ with a great idea.”
Every modern tech giant now faces a serious federal antitrust challenge. The Justice Department is also pursuing a case against the search firm Google and one other case involving Google’s control over promoting technology. The Federal Trade Commission filed a lawsuit accusing Facebook owner Meta of thwarting competition in its purchase of Instagram and WhatsApp, and one other accusing Amazon of abusing its power over online retailing. The FTC also tried unsuccessfully to forestall Microsoft from acquiring Activision Blizzard, a video game publisher.
The lawsuits reflect a push by regulators for greater scrutiny of corporations’ role as gatekeepers to commerce and communications. In 2019, under President Donald J. Trump, agencies launched antitrust investigations into Google, Meta, Amazon and Apple. The Biden administration has put much more energy into the initiative, appointing critics of the tech giants to leadership positions at each the FTC and the Justice Department’s antitrust division.
In Europe, regulators recently penalized Apple for stopping music streaming competitors from communicating with users about promotions and subscription upgrade options, imposing a high quality of €1.8 billion. The app developers have also asked the European Commission, the European Union’s executive arm, to analyze claims that Apple is violating a latest law requiring iPhones to be made available on third-party app stores.
IN South Korea and Netherlandsthe company faces potential penalties attributable to fees charged to app developers for using alternative payment processors. Other countries, including the UK, Australia and Japan, are considering laws that might undermine Apple’s control over the app economy.
The Justice Department, which began investigating Apple in 2019, has chosen to construct a broader and more ambitious case than some other regulator has brought against the company. Instead of focusing solely on the App Store, as European regulators did, the focus was on the entire ecosystem of Apple services.
The lawsuit filed Thursday focuses on a group of practices that the government says Apple used to strengthen its dominance.
The government said the company “undermines” the ability of iPhone users to speak with owners of other types of smartphones, resembling those running the Android operating system. According to the lawsuit, this division – embodied by green bubbles displaying the Android owner’s messages – sends a signal that other smartphones are of lower quality than the iPhone.
The government argued that Apple had similarly made it difficult for the iPhone to work with smartwatches apart from the Apple Watch. Once an iPhone user has an Apple Watch, it becomes rather more expensive for them to ditch their phone.
The government also said Apple was trying to keep up its monopoly by not allowing other corporations to construct their very own digital wallets. Apple Wallet is the only iPhone app that may use a chip called NFC, which allows your phone to pay contactlessly at checkout. While Apple encourages banks and bank card corporations to permit their products to run on Apple Wallet, it blocks them from accessing the chip and creating their very own wallets in its place for purchasers.
The government also said Apple doesn’t allow game streaming apps that would make the iPhone a less precious piece of hardware or offer “super apps” that allow users to do a variety of things with a single app.
