The Justice Department and 16 state attorneys general filed an antitrust lawsuit against Apple on Thursday, the federal government's most significant challenge to the reach and influence of the company that has put iPhones in the hands of more than a billion people.
The government argued that Apple violated antitrust laws by preventing other companies from offering apps that compete with Apple products, such as its digital wallets, which could decrease the value of the iPhone. Apple's policies harm consumers and smaller businesses that compete with some of Apple's services, according to excerpts from the lawsuit released by the government, which was filed in the U.S. District Court for the District of New York. Sweater.
“Each step in Apple's course of conduct built and reinforced the moat around its smartphone monopoly,” the government said in the lawsuit.
The lawsuit ends years of regulatory scrutiny of Apple's popular suite of devices and services, which have fueled its growth into a nearly $2.75 trillion public company that was for years the most valuable on the planet. It takes direct aim at the iPhone, Apple's most popular device and most powerful business, and attacks the way the company has turned the billions of smartphones it has sold since 2007 into the centerpiece of its empire.
By tightly controlling the user experience on iPhones and other devices, Apple has created what critics call an uneven playing field, giving its own products and services access to core features that it denies to its rivals.. Over the years, it has limited financial companies' access to the phone's payment chip and Bluetooth trackers from taking advantage of its location service feature. It's also easier for users to connect Apple products, such as smartwatches and laptops, to the iPhone than those made by other manufacturers.
The company says this makes its iPhones more secure than other smartphones. But rival app developers and device makers say Apple uses its power to crush competition.
“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” an Apple spokeswoman said. “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 the government to take a heavy hand in the design of people's technology.”
Apple has effectively fought other antitrust challenges. In a lawsuit over its App Store policies that Epic Games, the maker of Fortnite, filed in 2020, Apple persuaded a judge that customers could easily switch between their iPhone's operating system and Google's Android system. He has presented data showing that the reason few customers switch phones is their loyalty to the iPhone.
Also has defended its business practices in the past saying that their “focus has always been to grow the pie” and “create more opportunities not only for our business, but also for artists, creators, entrepreneurs and everyone 'crazy' with a great idea.”
Every tech giant today has faced a significant federal antitrust challenge. The Justice Department is also pursuing a case against Google's search business and another focused on Google's control over advertising technology. The Federal Trade Commission filed one lawsuit accusing Meta, which owns Facebook, of thwarting competition when it bought Instagram and WhatsApp and another accusing Amazon of abusing its power over online retail. The FTC also tried, unsuccessfully, to stop Microsoft from acquiring Activision Blizzard, the video game publisher.
The lawsuits reflect a push by regulators to apply greater scrutiny to companies' roles as gatekeepers of commerce and communications. In 2019, under President Donald J. Trump, agencies opened antitrust investigations into Google, Meta, Amazon and Apple. The Biden administration has put even more energy into the effort, appointing critics of the tech giants to lead both the FTC and the Justice Department's antitrust division.
In Europe, regulators recently punished Apple for preventing music streaming competitors from communicating with users about promotions and options to upgrade their subscriptions, imposing a fine of 1.8 billion euros. App makers have also appealed to the European Commission, the executive arm of the European Union, to investigate allegations that Apple is violating a new law requiring it to open iPhones to third-party app stores.
In South Korea and the technology/dutch-regulator-rejects-apples-objections-against-fines-2023-10-02/” title=”” rel=”noopener noreferrer” target=”_blank”>Netherlands, the company faces potential fines for the fees it charges app developers for using alternative payment processors. Other countries, including Britain, Australia and Japan, are considering rules that would undermine Apple's control over the app economy.
The Justice Department, which began its investigation into Apple in 2019, chose to build a broader and more ambitious case than any other regulator has brought against the company. Instead of focusing exclusively on the App Store, as European regulators have done, it focused on Apple's entire ecosystem of products and services.
The lawsuit filed Thursday focuses on a group of practices that the government said Apple had used to shore up its dominance.
The company “undermines” the ability of iPhone users to send messages to owners of other types of smartphones, such as those running the Android operating system, the government said. That split, summarized by the green bubbles displayed in messages from the Android owner, sent a signal that other smartphones were of lower quality than the iPhone, according to the lawsuit.
Similarly, Apple has made it difficult for the iPhone to work with smartwatches other than its own Apple Watch, the government argued. Once an iPhone user owns an Apple Watch, it becomes much more expensive to get rid of the phone.
The government also said Apple had tried to maintain its monopoly by not allowing other companies to build their own digital wallets. Apple Wallet is the only iPhone app that can use the chip, known as NFC, that allows a phone to tap to pay at checkout. Although Apple encourages banks and credit card companies to allow their products to work within Apple Wallet, it prevents them from accessing the chip and creating their own wallets as alternatives for customers.
The government also said Apple refuses to allow game streaming apps that could make the iPhone a less valuable piece of hardware or offer “super apps” that allow users to do a variety of activities from a single app.
