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US Government Sues Apple, Alleging Illegal Monopoly in Smartphone Industry

ByHuey Yee Ong

Mar 22, 2024
US Government Sues Apple, Alleging Illegal Monopoly in Smartphone Industry

US Government Sues Apple, Alleging Illegal Monopoly in Smartphone Industry

The U.S. Department of Justice (DOJ), alongside 16 state and district attorneys general, has filed an antitrust lawsuit against Apple. The complaint, lodged in the U.S. District Court for the District of New Jersey, alleges that Apple has unlawfully maintained a monopoly over the smartphone market, engaging in practices that not only stifle competition but also harm consumers, developers, and a broad range of other stakeholders.

The Allegations Against Apple

Central to the DOJ’s lawsuit are allegations detailing how Apple has purportedly engaged in practices aimed at preserving its dominance in the smartphone sector through a combination of technological restrictions, contractual limitations, and strategic suppression of rival services. Specific practices cited include:

  • Inhibiting the development and functionality of “super apps” that could potentially reduce dependence on the iOS ecosystem by facilitating easier migration to competing devices.
  • Prohibiting cloud-streaming apps that offer alternatives to Apple’s hardware, thus maintaining demand for its own, more expensive devices.
  • Degrading the quality of messaging services between iPhones and non-iOS devices, such as Android smartphones, which impedes seamless communication across different platforms.
  • Restricting the interoperability of third-party smartwatches with iPhones, thereby discouraging users from switching away from Apple products due to compatibility issues.
  • Blocking third-party developers from introducing competing digital wallet applications with tap-to-pay features for the iPhone.

The DOJ, supported by statements from Antitrust Division Chief Jonathan Kanter, accuses Apple of engaging in these practices not just to safeguard its market share but to extract higher prices and fees from consumers and developers, stifling innovation and competition in the process.

The Legal Battle and its Implications

The coalition of state attorneys general and the DOJ is urging the court to implement measures that would dismantle Apple’s alleged monopolistic barriers. These include prohibiting Apple from leveraging its app distribution control to disadvantage cross-platform technologies and mandating a halt to the use of private APIs and contractual terms that consolidate its monopoly.

While DOJ officials have refrained from specifying whether they would seek to dismantle Apple if proven liable, the nature of the relief sought hints at significant potential changes to how Apple operates within the marketplace. This case, reminiscent of the DOJ’s lawsuit against Microsoft over two decades ago, aims not just to challenge Apple’s current practices but to lay a foundation for fostering innovation and competition in future technological developments.

Apple’s Response

Apple has vehemently denied the allegations, with spokesperson Fred Sainz asserting that the lawsuit misunderstands the company’s ethos and could, if successful, impede its ability to deliver the high-quality, integrated technology experiences its customers expect. The company also disputes the DOJ’s market definition, arguing for a broader view that encompasses the global smartphone market rather than focusing solely on the U.S.

This lawsuit against Apple is part of a larger trend of regulatory scrutiny over major tech companies, including previous actions against Google. It also comes at a time when legislative efforts, both in the U.S. and abroad, are increasingly aimed at curbing the influence of digital platform giants. The European Union, for example, has already taken steps through its Digital Markets Act and a significant fine against Apple for app store practices, highlighting a global push towards ensuring a more competitive and open digital market.

The case against Apple highlights ongoing concerns among app developers about the iOS platform’s closed nature and the difficulties faced in operating within Apple’s ecosystem. High-profile complaints from companies like Spotify, which have criticized Apple’s app store fees and competitive practices, illustrate the tensions between app developers and the tech giant.

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Featured Image courtesy of stLegat/Alamy Stock Photo

Huey Yee Ong

Hello, from one tech geek to another. Not your beloved TechCrunch writer, but a writer with an avid interest in the fast-paced tech scenes and all the latest tech mojo. I bring with me a unique take towards tech with a honed applied psychology perspective to make tech news digestible. In other words, I deliver tech news that is easy to read.

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