The U.S. Department of Justice has filed a sweeping antitrust lawsuit against Apple, accusing the iPhone maker of being anti-competitive and creating a monopoly over the smartphone market.
The lawsuit, filed in federal court in New Jersey, alleges that Apple uses its control over the iPhone platform to “extract higher fees, thwart innovation,” and “throttle” competition through its App Store. The government says Apple’s conduct “reverberates” across at least a half dozen industries, and that unless stopped, the Cupertino, California-based tech giant will extend its monopoly beyond the smartphone market.
“This case is about freeing smartphone markets from Apple’s anticompetitive and exclusionary conduct and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future,” the Justice Department said in the complaint, which was also filed with 16 state attorneys general.
The case is taking aim at Apple’s so-called “walled garden,” its ecosystem of security measures and restrictions on users of its iOS platform. The plaintiffs contend that Apple has disrupted the growth of apps that would make it easier for consumers to switch between competing smartphone platforms and diminished the functionality of non-Apple smartwatches.
“[This is a] kind of Hail Mary pass when it comes to antitrust law,” NetChoice vice president and general counsel Carl Zabo told Yahoo!Finance. “Americans know that if we want to go buy a device we actually have two clear choices: we have Apple and we have Android.”
But the lawsuit claims that Apple’s practices extend beyond its iPhone and Apple Watch businesses, citing its advertising, news subscription, and FaceTime services. The Justice Department also refers to Apple’s presence in the auto industry, which was recently undercut by the company’s shutdown of its electric vehicle project.
A representative for Apple did not immediately return a request for comment.
Apple stock was down 3.7% in Thursday afternoon trading.
Apple’s history with antitrust challenges
The lawsuit is the latest example of the Justice Department’s aggressive approach to federal antitrust law and a wider trend of companies and organizations fighting to break down Apple’s walled garden, which helped it become one of the most valuable companies in the world with an annual revenue of nearly $400 billion.
Thursday’s lawsuit marks the third antitrust case filed by the Department of Justice against Apple since 2010; the prior lawsuits were over e-book prices and allegations that Apple worked with other tech companies to depress salaries.
Apple has faced several antitrust challenges in recent years, mostly regarding its control over the App Store. Most recently, Fortnite maker Epic Games sued the company in 2020. Although Apple prevailed in the case in 2021, it was forced to make some concession and alter its policies under California law.
On March 4, the European Commission slapped Apple with a $1.95 billion fine, accusing the company of abusing its dominant position on the market for the distribution of music streaming apps, such as Spotify or Apple Music. Apple’s conduct, which E.U.’s regulatory arm alleges has gone on for nearly 10 years, may have led iOS users to pay “significantly higher prices” because of the company’s high commission fee for app developers, according to the Commission.
Apple is also entangled in the Justice Department’s lawsuit against Google, which is headed toward final arguments in May. The lawsuit is the Department’s first major antitrust trial since it took Microsoft to court in 1998.
Regulators allege that Google has hurt competition by paying companies to make its online search engine the default option on a variety of web browsers, including Apple’s Safari. Apple has been paid billions of dollars annually for that service and earns 36% of all search ad revenue Google makes through Safari.