THE US DEPARTMENT of
Justice sued Apple on Thursday for illegally maintaining a monopoly for its
iPhone by stifling competition and imposing exorbitant costs on consumers. The
lawsuit, brought also by 17 US states, attacked the iPhone for raking in
hundreds of billions of dollars by making it difficult for consumers to switch
away from Apple to cheaper smartphones and devices.
The long anticipated case
against Apple sees the company founded by Steve Jobs clash with Washington
after largely escaping US government scrutiny for nearly a half century.
At the heart of the case
is Apple's app store which sets strict and at times opaque conditions on firms
and developers seeking to reach the iPhone’s 136 million US users.
According to the lawsuit,
these rules and decisions have been designed to force Apple users into staying
in the Apple ecosystem and buying the company’s expensive hardware, the iPhone.
“Consumers should not
have to pay higher prices because companies violate the antitrust laws,” said
Attorney General Merrick Garland.
“If left unchallenged, Apple
will only continue to strengthen its smartphone monopoly,” he added.
'Dangerous precedent'?
The far-reaching case
singled out practices that it said was making Apple richer to the detriment of
advancing innovation and technology for consumers.
In a statement, Apple
denied the charges, saying it was "wrong on the facts and the law, and we
will vigorously defend against it."
If successful, the suit
would "set a dangerous precedent, empowering government to take a heavy
hand in designing people’s technology," the company added.
The lawsuit for example
accused Apple of squashing the creation of Super Apps, one-stop web portals
that could exist on an iPhone and give consumers other ways to get services,
such as music, photo or movies.
The accusations also target
Apple’s wallet, which is the only application allowed on the iPhone to access
the technology to make tap payments in stores, forcing others to pay a fee.
Messaging apps are also
under the microscope, with prosecutors accusing Apple of making it hard for
Apple users to interact easily with Android phone users, strong-arming users to
the more expensive iPhone.
The complaint alleges
that these nefarious practices go into other services such as web browsers,
entertainment and even automotive services.
In recent years Apple has
invested heavily in promoting services as well as hardware as it seeks ways to
make money beyond the iPhone, which was introduced in 2007 and changed the
world of consumer technology.
But iPhone sales growth
has been slowing in recent years, raising pressure on the company to find other
sources of revenue.
The DOJ pointed out that
Apple’s profits exceed any other company in the Fortune 500 and that it exceeds
the gross domestic product of more than 100 countries.
In 2023, Apple saw global
sales of $383 billion and net profit of $97 billion.