The United States Department of Justice, in collaboration with various state and district attorneys general, has filed a lawsuit against Apple Inc., alleging monopolization or attempted monopolization of smartphone markets.
The filing asserts that Apple, in contravention of Section 2 of the Sherman Act, unlawfully preserves its monopoly in the smartphone market by selectively imposing contractual constraints on developers and withholding crucial access points. This announcement led Apple shares to decrease by approximately 4.1 percent, closing Thursday's trade at $171.37, while a slight increase of 0.2 percent was noted in after-hours trading.
This anti-monopolization lawsuit was lodged in the U.S. District Court for the District of New Jersey by the Justice Department, receiving the support of 16 other state and district attorneys general. In a statement responding to the filing, Apple spokesperson Fred Sainz defended the company, arguing that the lawsuit attacked the company's principles and misrepresented the facts and the law.
The Department of Justice complaint accuses the Cupertino, California-based giant of exploiting its control over the iPhone to engage in extensive, sustained, and unlawful behaviour, having recognized monopoly power in the smartphone and performance smartphone sectors. It is alleged that Apple's actions make it more difficult for consumers to switch smartphones and hamper the innovation of apps, products, and services that could reduce dependence on the iPhone while promoting interoperability and cost reduction for consumers and developers.
According to the legal document, Apple uses its monopolistic power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants. Attorney General Merrick Garland expressed his resolve to vigorously enforce antitrust laws, arguing that if unchallenged, Apple's behavior could lead to high prices and limited options for consumers.
Apple, which reported net revenues of $383 billion and a net income of $97 billion in fiscal 2023, has been embroiled in numerous legal disputes recently, primarily regarding its App Store rules. While the company initially charged a 30 percent commission on App Store purchases, court rulings in the U.S. and the Digital Markets Act in the European Union forced it to allow third-party payments.
In related developments, tech giants Meta Platforms and Microsoft, social networking site X, and dating app Match Group have accused Apple of planning to impose additional charges on third-party payments outside of the App Store. Apple also faced a fine exceeding 1.8 billion euros from the European Commission in early March, for abusing its dominant position in the App Store by controlling the distribution of music streaming apps for iPhone, iPad and iOS users.
