Apple faces US antitrust lawsuit over smartphone monopoly practices
Department of Justice and 15 states sue Apple claiming it monopolises the US smartphone market, penalises app developers and drives up prices
Apple is to face an antitrust lawsuit led by the Department of Justice and 15 states, who accuse it of monopolising the US smartphone market and driving up prices.
In a press conference, attorney general Merrick Garland accused Apple of violating section two of the Sherman Antitrust Act, forcing higher prices and fees for "lower quality smartphones" and apps, and privileging its own apps against third-party apps by selectively restricting access to iOS operating system features.
In particular, the DoJ accuses Apple of blocking innovative "super apps" that would make it easier for consumers to switch to rivals; suppressing mobile cloud streaming services; acting to block the development of cross-platform messaging apps; reducing the functionality of non-Apple smartwatches; and, inhibiting the development of third-party digital wallets.
This last complaint dovetails with a May 2022 charge by European Union antitrust regulators that Apple had "abused its dominant position" in mobile payment wallets to prevent rival services from accessing the iPhone's built-in NFC contactless payment technology
The complaint also claims that Apple's monopolistic conduct extends to web browsers, video communications, news subscriptions, entertainment, automotive apps, advertising, location services and more.
Apple's "exclusionary conduct", claimed the DoJ, makes it harder for American consumers to switch smartphones, undermines innovation and adds costs for developers and consumers, he said.
"For more than a decade, iPhone sales have made up a majority of Apple's revenues. Today, Apple's share of the performance smartphone market exceeds 70 per cent, and its share of the entire smartphone market exceeds 65 per cent. Apple charges nearly $1,600 for an iPhone. But, as our complaint alleges, Apple has maintained monopoly power in the smartphone market not by staying ahead of the competition on its merits," said Garland
"Consumers should not have to pay higher prices because companies break the law. We allege that Apple has employed a strategy that relies on exclusionary, anti-competitive conduct that hurts both consumers and developers.
"For consumers, that means fewer choices, higher prices and fees, lower quality smartphones, apps and accessories, and less innovation from Apple and its competitors. For developers, that has meant being forced to play by rules that insulate Apple from competition. We allege that Apple has consolidated its monopoly power, not by making its own products better, but by making other products worse.
"Apple carries out this exclusionary and anti-competitive conduct in two principal ways. First, Apple imposes contractual restrictions and fees that limit the features and functionality that developers can offer iPhone users.
"Second, Apple selectively restricts access to the points of connection between third-party apps and the iPhone's operating system, degrading the functionality of non-Apple apps and accessories."
Garland claimed that Apple maintains its US monopoly by imposing ever-changing "Whack-A-Mole" contractual rules and restrictions on developers and partners, preventing alternative companies and technologies from competing.
The action comes in the same week that Apple announced significant changes to its App Store in response to European Union antitrust action, enabling Apple iPhone developers to offer apps to consumers direct from their website, opening up the company's closed iOS ecosystem.