The US Department of Justice sued Apple on Thursday for allegedly establishing a monopoly on the iPhone by limiting competition and imposing high fees on consumers.
The case, filed by 17 US states, accused the iPhone of making it impossible for users to transition from Apple to cheaper smartphones and devices, resulting in hundreds of billions of dollars in revenue.
The long-anticipated prosecution against Apple pits the business created by Steve Jobs against Washington after mostly avoiding US government scrutiny for nearly 50 years.
At the center of the issue is Apple’s app store, which imposes stringent and sometimes opaque requirements on businesses and developers wishing to access the iPhone’s 136 million US customers.
According to the lawsuit, these regulations and judgments were intended to force Apple consumers to stay in the Apple ecosystem and purchase the company’s pricey 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 broad complaint singled out activities that it claimed were enriching Apple at the expense of fostering innovation and technology for customers.
In a statement, Apple refuted the claims, claiming it was “wrong on the facts and the law, and we will vigorously defend against it.”
If successful, the lawsuit will “set a dangerous precedent, empowering the government to take a heavy hand in designing people’s technology,” according to the corporation.
The lawsuit, for example, accused Apple of preventing the development of Super Apps, one-stop online portals that might reside on an iPhone and provide consumers with other methods to obtain services such as music, photos, and movies.
The claims also target Apple’s wallet, which is the only app on the iPhone that can use the technology to conduct tap payments in stores, forcing others to pay a fee.
Messaging apps are also under the focus, with prosecutors charging Apple of making it hard for Apple customers to engage readily with Android phone users, strong-arming users to the more expensive iPhone.
The complaint claims that these malicious methods extend to other businesses such as online browsers, entertainment, and even car services.
In recent years, Apple has invested extensively in pushing both services and hardware as it seeks new revenue streams beyond the iPhone, which was debuted in 2007 and transformed the world of consumer technology.
However, iPhone sales growth has slowed in recent years, putting pressure on the corporation to find other streams of cash.
According to the DOJ, Apple’s profits exceed those of any other Fortune 500 business, as well as the GDPs of more than 100 nations.
In 2023, Apple’s global sales were $383 billion, with a net profit of $97 billion.