The US government has taken a major step by filing a landmark lawsuit against Apple. They have claimed that the company has too much control over the smartphone market and is unfairly pushing out competition to maximize its profit. This Apple antitrust lawsuit could have a big impact on the tech industry.
In the lawsuit, the Justice Department claims that the company used its power over the iPhone app store to keep customers and developers tied to its platform.
The accusation is that the company took unlawful actions to stop apps that posed a challenge and to make rival products seem less attractive.
Apple has vowed to ‘vigorously’ fight the lawsuit and rejects the accusations. The extensive complaint, submitted to a federal court in New Jersey alongside attorneys general from 16 states, represents one of the largest challenges Apple has faced so far. Over the years, the company has faced increasing complaints about its practices.
The Apple antitrust lawsuit claims that Apple employed “a series of shapeshifting rules” and limited access to its hardware and software to increase its own profits while driving up costs for customers and hindering innovation.
“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,” Attorney General Merrick Garland said at a press conference announcing the suit.
“Customers should not have to pay higher prices because companies break the law”, Mr. Garland said.
The 88-page complaint zeroes in on five areas where Apple is accused of misusing its authority.
The US claims that Apple used its app review process to stop the development of apps that could rival its own services. They were concerned that these apps might lure customers away from iPhones. Furthermore, Apple allegedly made it hard for iPhones to work with smartwatches from other companies and prevented banks and financial firms from using its tap-to-pay technology. This strategy allowed Apple to make lots of money from fees charged for processing Apple Pay transactions.
The complaint also talks about how Apple handles messages from phones made by other companies. It says Apple marks these messages with green bubbles and restricts some features like videos. This makes people feel different and creates a ‘social stigma’ that helps Apple stay popular.
People have often felt annoyed when sending messages between Apple and non-Apple devices. There are differences in media quality, editing options, and even the colors of the messages. Garland mentioned these problems as examples of Apple making the user experience worse to keep them using Apple products.
“Critically, Apple’s anticompetitive conduct not only limits competition in the smartphone market, but also reverberates through the industries that are affected by these restrictions, including financial services, fitness, gaming, social media, news media, entertainment, and more,” the complaint alleged. “Unless Apple’s anticompetitive and exclusionary conduct is stopped, it will likely extend and entrench its iPhone monopoly to other markets and parts of the economy.”
The government requested the court to tell Apple to stop its actions that are considered anti-competitive. They want Apple to stop hurting services and hardware that work across different platforms. The plaintiffs believe the court should do whatever is necessary to make the markets fair again after Apple’s actions.
Apple mentioned that customers stick with them because they’re satisfied. They also said they have the right to pick their business partners according to US laws. Apple has specified privacy and security as causes for their rules.
The company stated it would request the court to reject the Apple antitrust lawsuit, which it believed would not succeed.
“We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,” the company said.
The case will depend on why Apple did what it did, explained Bill Baer, a visiting expert at Brookings who worked on antitrust matters during the Obama administration.
“Antitrust laws and the courts’ interpretation of them suggest that once you’re a monopolist,” he said, “if you do engage in behaviors that have no legitimate business justification other than to limit competition and cement your monopoly, then that is problematic.”
This is Apple’s third time facing legal action from the US government since 2009 and the first antitrust challenge under President Joe Biden’s leadership.
If the government succeeds, it might make Apple change its contracts and the way it operates—or it could even split up the company.
Apple is facing more and more legal troubles because of its iOS system and how it does business.
It’s in a big legal fight with Epic Games, the company behind Fortnite.
Just last month, it got fined €1.8bn (£1.5bn) by the EU for breaking competition laws related to music streaming.
The EU said Apple stopped streaming services from telling users about payment options outside of the Apple app store.
Margrethe Vestager, who’s in charge of competition, said Apple has been too dominant in the market for ten years and told them to stop these restrictions. Apple said it would fight against this decision.
Anat Alon-Beck, who teaches business law at Case Western Reserve University in Ohio, said that the Justice Department’s latest lawsuit covers a lot more ground than its previous legal battles in the EU.
“Apple systematically excludes rivals from the Apple ecosystem. By doing that, Apple is hurting so many startup businesses, stakeholders, customers and, in my opinion, its shareholders,” she said.