The gloves are off. In a landmark lawsuit, the US Department of Justice has accused Apple of wielding its power in the smartphone market to stifle competition and lock in customers. This sprawling legal challenge, one of the biggest Apple has faced, alleges the tech giant has been abusing its control over the iPhone app store to unfairly benefit itself at the expense of consumers and developers.
The lawsuit, filed in New Jersey alongside attorneys general from 16 states, accuses Apple of employing a series of tactics to maintain its dominance. This includes restricting access to its hardware and software while imposing “shapeshifting rules” on app developers. These practices allegedly make it difficult for rival apps to compete effectively, leading to higher prices for consumers and a lack of innovation in the market.
“Apple has not achieved its market position simply by creating superior products,” declared Attorney General Merrick Garland. “The lawsuit claims they’ve broken antitrust laws to maintain their monopoly, forcing customers to pay more.” Apple, unsurprisingly, vehemently denies these claims and has vowed to fight the lawsuit vigorously.
The case hinges on proving Apple’s motivation. Legal experts point out that antitrust laws focus on actions taken to specifically limit competition and solidify a monopoly. If the government can demonstrate Apple’s practices lack any legitimate business justification beyond stifling competition, they may have a strong case.
This lawsuit marks the third legal action against Apple by the US government since 2009 and the first under President Biden. If the government prevails, Apple could be forced to significantly alter its current practices and contracts, or even face a break-up of the company. The potential impact sent shivers down Wall Street, with Apple’s stock price dropping over 4%.
Experts see this lawsuit as part of a broader trend targeting major tech companies. Google, Meta, and Amazon all face similar legal challenges focused on increasing competition and access within their respective ecosystems. Professor Rebecca Allensworth emphasizes the core issue isn’t about dismantling Apple, but rather promoting greater functionality and accessibility for consumers and businesses.
This isn’t the first time Apple has faced legal scrutiny over its app store practices. They are currently embroiled in a legal battle with Epic Games, the creators of Fortnite, and were recently fined €1.8 billion by the EU for anti-competitive practices related to music streaming services. The EU specifically cited Apple’s actions as stifling consumer choice by preventing streaming services from promoting alternative payment options outside the App Store.
Law professor Anant Alon-Beck believes the US lawsuit is far more comprehensive than the EU’s previous actions. “It goes beyond the 30% app store fee and targets the core unfair practices that systematically exclude rivals and harm consumers, developers, and even shareholders,” she stated.
With Apple holding a dominant market share exceeding 70% in the US and 65% globally, the Justice Department’s lawsuit represents a significant challenge. The outcome of this legal battle, which could take years to resolve, will have major ramifications for Apple’s business practices and the future of the smartphone market.
