The battle against tech monopolies reached a crescendo with the United States Justice Department unleashing its legal firepower against Apple. The government body has alleged that the iPhone juggernaut stifled competition and harmed various stakeholders through anti-competitive practices. The DOJ further accuses Apple of using its market dominance “to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants.”
The Justice Department filed an 88-page lawsuit in the United States District Court for the District of New Jersey last Thursday, accusing Apple of using unfair tactics to solidify its smartphone dominance and stifle innovation. The suit alleges that “each step in Apple’s course of conduct built and reinforced the moat around its smartphone monopoly”.
“The cumulative effect of this course of conduct has been to maintain and entrench Apple’s smartphone monopoly at the expense of the users, developers, and other third parties who helped make the iPhone what it is today,” said the government in its lawsuit. The Justice Department claims Apple is stifling competition through several tactics. For instance, Apple is blocking “super apps” – all-in-one apps that could make switching from iPhones to other phones easier. Additionally, the company is banning cloud gaming services, which allow you to play games without needing a powerful console.
Furthermore, Apple’s practices make it harder to use messaging apps that work on both iPhones and Androids (think green vs. blue message bubbles). The lawsuit also accuses Apple of limiting compatibility with non-Apple smartwatches, meaning your new watch might not work with your iPhone. Finally, Apple is also preventing other companies from using the iPhone’s tap-to-pay feature for their own digital wallets, making it harder to use payment options besides Apple Pay.
The DOJ lawsuit claims that Apple acts unfairly in two main ways: First, it puts limits on what developers can offer iPhone users through contracts and fees. Second, it selectively blocks access for third-party apps to connect with the iPhone’s system, which makes non-Apple apps and accessories work less well.
“As a result, for most of the past 15 years, Apple has collected a tax in the form of a 30 per cent commission on the price of any app downloaded from the App Store as well as on in-app purchases,” said U.S. Attorney General Merrick Garland. “Apple is able to command these fees from companies of all sizes.” The lawsuit wants two things from Apple. First, it wants an injunction to stop Apple from continuing these practices the government believes are hurting competition. Second, the lawsuit wants the court to provide “relief as needed to cure any anticompetitive harm.” You can view a copy of the complaint via this link.
“Consumers should not have to pay higher prices because companies violate the antitrust laws,” U.S. Attorney General Merrick Garland said in a statement. “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.”
In an official statement, Apple fired back at the lawsuit, calling it a misunderstanding and dismissing it as grounded in an unsubstantiated legal theory that suggests it is obligated to alter its product design to aid competitors. “At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users. This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” the iPhone manufacturer said 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 would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”
