The US Department of Justice, in conjunction with 15 states, has initiated legal action against Apple, alleging that the tech giant monopolizes the smartphone market and inflates prices.
This lawsuit is part of a broader crackdown on major tech firms, placing Apple alongside rivals like Google, Meta Platforms, and Amazon, all of which have faced regulatory scrutiny under both the Trump and Biden administrations.
Attorney General Merrick Garland, as cited by Reuters, stated, “Consumers should not have to pay higher prices because companies violate the antitrust laws. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”
The lawsuit asserts that Apple imposes exorbitant prices for its iPhones, with some models reaching prices as high as $1,599, leading to greater profits compared to competitors.
The Justice Department alleges that Apple imposes various fees on its partners, including software developers, credit card companies, and even rivals like Google, contributing to higher consumer prices and boosting Apple’s profits.
The lawsuit aims to challenge Apple’s longstanding business model, which revolves around controlling nearly every aspect of its technology products, from hardware to software.
In response to the allegations, Apple denied any wrongdoing, asserting, “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect.”
Despite Apple’s denial, the Justice Department is advocating for significant changes, including potential structural reforms or the breakup of the company to restore competition in the smartphone market.
The 88-page lawsuit, filed in US federal court in Newark, New Jersey, seeks to “free smartphone markets from Apple’s anticompetitive and exclusionary conduct and restore competition to lower smartphone prices for consumers, reduce fees for developers, and preserve innovation for the future.”
The lawsuit outlines five specific instances where Apple allegedly suppressed technologies that could have increased competition among smartphones, such as super apps, cloud stream game apps, messaging apps, smartwatches, and digital wallets.
A focal point of the lawsuit is Apple’s restrictive app store policies, which the Justice Department argues have stifled competition and consumer choice.
The government seeks to define the market as the smartphone market in the United States, where Apple holds slightly over half of the market share. However, Apple representatives advocate for a global market definition, where the iPhone accounts for only one-fifth of consumers.
Additionally, the Justice Department referenced an email chain from Apple co-founder Steve Jobs, expressing frustration over consumers switching from iPhones to Android phones and vowing to “force” developers to use Apple’s payment systems to lock in both developers and consumers.
The specific changes sought by the Justice Department remain unclear, but the complaint calls for measures to prevent Apple from using its control over app distribution and contracts to undermine rivals.
This is not the first time Apple has faced antitrust probes and legal challenges, having been subject to investigations and orders in Europe, Japan, and Korea, as well as lawsuits from corporate rivals like Epic Games. In Europe, Apple’s App Store business model has already been impacted by the Digital Markets Act, requiring the company to allow developers to offer their own app stores without paying commissions.
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