May 18, 2024

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The United States files a historic case against Apple for monopolizing the smartphone market

The United States files a historic case against Apple for monopolizing the smartphone market

Washington:

The US Department of Justice filed a lawsuit against Apple on Thursday, accusing it of illegally monopolizing its iPhone by stifling competition and imposing excessive costs on consumers.

The lawsuit, also filed by several US states, attacked the iPhone for generating hundreds of billions of dollars by making it difficult for consumers to switch to cheap smartphones and devices.

The long-awaited case against Apple sees the company, founded by Steve Jobs, clash with Washington after it has largely escaped US government scrutiny for nearly half a century.

It joins Amazon, Google and Facebook owner Meta, which is also facing antitrust lawsuits in the United States.

News of the lawsuit sent Apple shares falling as much as 3.75 percent on Wall Street on Thursday.

At the heart of the case are Apple's allegedly exclusionary practices that place strict and sometimes vague conditions on companies and developers seeking to reach the 136 million US iPhone users.

According to the lawsuit, these rules and decisions are designed to force Apple users to stay in the Apple ecosystem and buy the company's most expensive hardware, the iPhone.

“Consumers should not pay higher prices because companies violate antitrust laws,” Attorney General Merrick Garland said.

He added: “If Apple is left unchallenged, it will continue to strengthen its smartphone monopoly.”

Apple is fighting back

The case highlighted practices that it said made Apple richer at the expense of developing innovation and technology for consumers.

In a statement, Apple denied the lawsuit's validity, saying it was “wrong in terms of facts and law, and we will defend it vigorously.”

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The company added that if the lawsuit is successful, it “would set a dangerous precedent, enabling the government to take a strong hand in the design of human technology.”

For example, the lawsuit accused Apple of squashing the creation of super apps, which are comprehensive web portals that can reside on an iPhone and give consumers other ways to get services, such as music, photos or movies.

Other big tech companies like Meta have long dreamed of opening such super apps on the iPhone, which accounts for nearly half of the U.S. smartphone market.

The charges also target Apple Wallet, the only app allowed on the iPhone to access store payment technology, forcing others to pay fees.

Messaging apps are also under the microscope, with plaintiffs accusing Apple of making it difficult for Apple users to easily interact with Android phone users, and forcing them to buy the more expensive iPhone.

The general case also refers to smartwatches, as the Apple Watch is only available through the iPhone, while competing smartwatches have very limited functionality on the iPhone.

The complaint alleges that these nefarious practices extend to other services such as web browsers, entertainment, and even car services.

In recent years, Apple has invested heavily in promoting services as well as devices as it seeks to find ways to make money outside of the iPhone, which was introduced in 2007 and changed the world of consumer technology.

But iPhone sales growth has slowed in recent years, increasing pressure on the company to find other sources of revenue.

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The Ministry of Justice indicated that Apple's profits exceed any other company on the Fortune 500 list, and that it exceeds the gross domestic product of more than 100 countries.

In 2023, Apple saw global sales of $383 billion and net profits of $97 billion.

The Justice Department's investigation into Apple began in 2019 under the Trump administration.

Apple has largely won a US lawsuit from Fortnite maker Epic Games, which has been pursuing Apple in jurisdictions around the world over rules and fees it charges for the iPhone.

In a case brought by Spotify, the European Union this month fined Apple 1.8 billion euros ($1.9 billion) for blocking European users from accessing information about alternative and cheaper music streaming services.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)