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Apple hit with iPhone antitrust lawsuit by DOJ

Aaron Mok   

Apple hit with iPhone antitrust lawsuit by DOJ
  • The US Department of Justice filed an antitrust lawsuit against Apple on Thursday.
  • It accuses Apple of abusing its monopoly power in the smartphone industry and stifling competition.

Apple just got hit with a US antitrust lawsuit that accuses the iPhone maker of illegally maintaining a smartphone monopoly not by improving its own products — but by making rivals' offerings worse.

The US Department of Justice and 16 attorneys general sued Apple on Thursday, saying the iPhone giant restricts competition from other companies by "delaying, degrading, or outright blocking" other technology in the smartphone market.

"For many years, Apple has built a dominant iPhone platform and ecosystem that has driven the company's astronomical valuation," the suit said. It has "repeatedly responded" to competitive threats by "making it harder or more expensive for its users and developers to leave than by making it more attractive for them to stay," the DOJ wrote in its complaint.

"Each step in Apple's course of conduct built and reinforced the moat around its smartphone monopoly," the lawsuit said, which was filed in the US District Court for the District of New Jersey.

It's the latest swing by regulators in America and the EU to curb what they say are Apple's anticompetitive tactics, and the DOJ's third attempt to sue Apple over allegations of anticompetitive behavior in the past 14 years, Bloomberg reported.

"This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets," Apple said in a statement to Business Insider. "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," the statement continues. "We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it."

The DOJ accuses Apple of dominating the smartphone market using five main tactics. Those include:

  • Suppressing 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."

  • Worsening the quality of cross-platforming messaging with rivals like Android.

  • Limiting 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."

  • Preventing non-Apple digital wallets from providing tap-to-pay functionality.

  • Blocking the development of "super apps" — which integrate multiple features into a single platform — which could be used on other smartphones.

The DOJ cited internal Apple emails in its antitrust lawsuit

The lawsuit cites a selection of Apple's internal emails. In a 2010 message, an Apple executive flagged an ad for an Amazon Kindle e-reader that they claimed could make it easier for iPhone customers to switch to Android. In response, according to the suit, Steve Jobs, who was then CEO of Apple, wrote: "One message that can't be missed is that it is easy to switch from iPhone to Android." The lawsuit cited another email from the CEO saying that making iMessage available on Android could "hurt us more than help us."

Apple's shares fell more than 3% on Thursday.

The tech giant is not just facing regulatory pressure in the US. In early March, the European Commission hit Apple with a nearly $2 billion fine for disallowing apps like Spotify to provide cheaper payment options outside the app store. In response, the company claimed in a public statement that regulators don't have any "credible evidence of consumer harm."

That comes as the EU moves to investigate Apple for its potential violation of its Digital Markets Act, which aims to allow for more fair competition in the EU's digital marketplace.

Other companies are also pushing back against Apple. On Wednesday, Meta, Microsoft, X, and Match Group joined Epic Games in the video-game maker's efforts to get Apple to open its App Store to external payment options, Bloomberg reported.

Thursday's DOJ 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 suit said.

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