by The Department of Justice and more than a dozen state attorneys general have sued Apple, claiming the tech giant has an illegal monopoly on the smartphone market.
Attorney General Merrick Garland told reporters this morning that Apple has “maintained monopoly power in the smartphone market not only by staying ahead of the competition on the merits, but by violating federal antitrust law. Consumers should not have to pay higher prices because companies break the law.” He said that Apple’s share of the performance smartphone market exceeds 70%.
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In the lawsuit, the Justice Department and the states claim that “rather than responding to competitive threats by offering lower smartphone prices to consumers or better financing for developers, Apple would meet competitive threats by imposing a series of shape-shifting rules and restrictions in its App Store. guidelines and developer agreements that would allow Apple to charge higher fees, stifle innovation, offer a less secure or degraded user experience, and crowd out competitive alternatives,” the Department of Law said and Justice in law. “This playbook is deployed across many technologies, products and services, including super apps, text messaging, smartwatches, and digital wallets, among many others.”
Read the Apple antitrust lawsuit.
The lawsuit is the latest Biden-era effort to curb the power of tech giants, as the DOJ and regulatory agencies have sued Meta, Google and Amazon.
Apple’s stock price fell 3.54% in the first 90 minutes of trading this morning.
In a statement, Apple said the lawsuit “threatens who we are and the principles that set Apple products apart in highly competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple – where hardware, software and services intersect.” The company said the law would “also set a dangerous precedent, allowing the government to take a strong hand in people’s technology design.”
The DOJ also warned that Apple’s monopoly on smartphones could spread to other areas of the economy, including entertainment.
In the lawsuit, the Department of Justice said that “Apple’s anti-competitive behavior not only limits competition in the smartphone market, but also reverses the industries affected by these restrictions, including financial services , fitness, gaming, social media, news media, entertainment. , and others. If Apple’s anti-competitive and exclusionary behavior is not stopped, it is likely to expand and extend the iPhone monopoly to other markets and parts of the economy.”
“For example, Apple is rapidly expanding its influence and growing its power in the automotive, content creation and entertainment, and financial services industries – and often by doing so in exclusive ways that strengthen and deepen the competitive moat on across the iPhone.”
The lawsuit cited Apple’s expansion into entertainment “as a television and film producer,” claiming it had “that role to control content.”
The lawsuit also cited what the DOJ characterized as excessive pricing, both for consumers and app creators. Among other things, the government cited a 30% cut in Apple’s iPhone app store sales, which has long been the focus of antitrust hearings on Capitol Hill.
“Today, Apple charges up to $1,599 for an iPhone and earns high margins on each, more than double the others in the industry,” the lawsuit stated. “When developers imagine a new product or service for iPhone consumers, Apple claims up to 30 percent of the price of an app that did not create their content, product or service. Then when a consumer wants to buy some additional service within that app, Apple takes another 30 percent, again for a service that Apple doesn’t create or develop. When customers buy coffee or pay for groceries, Apple charges a fee for each ‘tap-to-pay’ transaction, imposing its own form of interchange fee on banks and a significant new cost of using credit cards. When users search the internet, Google gives Apple a significant cut of the advertising revenue generated by iPhone user searches.”
Garland claimed that Apple’s holdon app developers hindered the creation of cloud streaming apps, and tried to prevent users from relying less on their own operating system and hardware.
“As any iPhone user who has ever seen a green text message, or received a tiny, ugly video can tell you, Apple’s anti-competitive behavior is making it harder for iPhone users to message users of non-Apple products,” a he said.
More to come.
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