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US Justice Department Sues Apple for Allegedly Engineering an Illegal Monopoly

Published: March 26, 2024
The exterior of an Apple store photographed on March 22, 2022 in Munich, Germany. (Image: Jeremy Moeller/Getty Images)

On March 21, the U.S Justice Department announced an antitrust lawsuit against tech giant Apple, alleging the company engineered an illegal monopoly in smartphones that eliminated competition, stifled innovation and kept prices artificially high. 

The lawsuit, which was filed in a federal court in New Jersey, alleges that Apple has the influence of a monopoly in the smartphone market and that the company leverages control over the iPhone to “engage in a broad, sustained, and illegal course of conduct.”

Apple blasted the lawsuit, saying that it is “wrong on the facts and the law,” and that the company “will vigorously defend against it,” TechCrunch reported. 

The suit further alleges that Apple uses its technology and business relationships to “extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.”

The lawsuit is but the latest example of the U.S. Justice Department’s aggressive antitrust enforcement, that’s previous actions include taking on other tech giants including Google, and Amazon.

Assistant Attorney General Jonathan Kanter, head of the antitrust division, said at a press conference announcing the lawsuit, “The Department of Justice has an enduring legacy taking on the biggest and toughest monopolies in history. Today we stand here once again to promote competition and innovation for the next generation of technology.”

A ‘tremendous fight’

Yale University fellow and antitrust researcher, Dina Srinavasan, compared this lawsuit to legal action taken against Microsoft some 25 years ago, saying the Justice Department has picked a “tremendous fight.”

“It’s a really big deal to go up and punch someone who is acting like a bully and pretending not to be a bully,” she said according to the Associated Press. 

Until just recently, Apple had a market value of more than $3 trillion, however the company’s shares have fallen by roughly seven percent over the course of 2024 even as most of the stock market performed well.

If the Justice Department is successful in its lawsuit, Apple says it will hinder its ability to “create the kind of technology people expect from Apple — where hardware, software, and services intersect.”

The company said it would also “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”

In a statement the company said, “At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users. This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”

Sumit Sharma, Consumer Reports senior researcher however disagrees, arguing that Apple’s conduct erodes privacy.

“Apple claims to be a champion of protecting user data, but its app store fee structure and partnership with Google search erode privacy,” Sharma said in a statement. 

Apple comes out swinging 

Apple has characterized the legal action as “misguided” and “legally dubious” and warns that the DOJ risks destroying all the things that the company’s customers value about its mobile tech ecosystem.

Apple says that the lawsuit, if successful, would eliminate features that make its smartphones different from Android phones. 

Apple representatives admit that the company’s global smartphone market share is around 20 percent however were quick to point out that when the Justice Department previously went after Microsoft, Microsoft had a 95 percent market share. 

In addition, “While Apple is seeking to paint the government as misguided, it is directly accusing a handful of vested commercial interests of being the driving force behind the lawsuit,” TechCrunch reported.

The company says outfits including the Coalition for App Fairness are influencing the action. The Coalition issued a statement of its own after learning of the lawsuit, saying that they welcome the DOJ’s “strong stand against Apple’s stranglehold over the mobile app ecosystem.”

At a high level, Apple is arguing that the suit threatens the experience that its customers value, an experience which drives loyalty and leads them to choose iPhones over Android devices.