U.S. sues Apple for illegal monopoly over smartphones

In a landmark case, the U.S. Department of Justice (DOJ) filed an antitrust lawsuit against tech behemoth Apple for 'monopolization' of smartphone markets.

The complaint, filed in the U.S. District Court for the District of New Jersey, alleges that Apple illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers.

Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers, the U.S. Justice Department alleges. Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others, it says.

The U.S. lawsuit comes two weeks after the European Commission fined Apple over 1.8 billion euros ($2 billion) for abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad iOS users through its App Store. The Commission found that Apple applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app which is illegal under EU antitrust rules.

The DoJ was joined by 16 other state and district attorneys general.

"Consumers should not have to pay higher prices because companies violate the antitrust laws," says Attorney General Merrick B. Garland. "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. The Justice Department will vigorously enforce antitrust laws that protect consumers from higher prices and fewer choices."

No matter how powerful, no matter how prominent, no matter how popular — no company is above the law, says U.S. deputy attorney General Lisa Monaco.

Apple has monopoly power in the smartphone and performance smartphones markets, and it uses its control over the iPhone to engage in a broad, sustained, and illegal course of conduct, the lawsuit alleges. This anticompetitive behaviour is designed to maintain Apple's monopoly power while extracting as much revenue as possible, it says.

Apple has disrupted the growth of apps with broad functionality that would make it easier for consumers to switch between competing smartphone platforms, it alleges.

The Cupertino, California-based company has blocked the development of cloud-streaming apps and services that would allow consumers to enjoy high-quality video games and other cloud-based applications without having to pay for expensive smartphone hardware, the antitrust suit claims.

Apple has made the quality of cross-platform messaging worse, less innovative, and less secure for users so that its customers have to keep buying iPhones, it alleges.

Apple has limited the functionality of third-party smartwatches so that users who purchase the Apple Watch face substantial out-of-pocket costs if they do not keep buying iPhones, the antitrust suit says.

In fiscal year 2023, Apple generated annual net revenues of $383 billion and net income of $97 billion. Apple's net income exceeds any other company in the Fortune 500 and the gross domestic products of more than 100 countries.