US DOJ announces antitrust lawsuit against tech giant Apple

Department of Justice is joined by 15 states and the District of Columbia in alleging that Apple stifles competition.

The United States Department of Justice (DOJ) has filed a landmark civil antitrust lawsuit against the tech giant Apple, alleging that the company has stifled competition to boost its revenues and illegally monopolize the US smartphone market.

The 88-page suit was filed Thursday in a New Jersey federal court with 16 state and district attorneys general joining the DOJ.

At issue is Apple’s most popular product, the iPhone, which is the linchpin of the company’s $2.7 trillion valuation. With more than a billion users, Apple has manipulated its share of the market to undermine competitors’ products and advantage its own, according to the DOJ.

Instead of competing with rivals by offering more affordable services, federal and state authorities allege that Apple imposed “a series of shapeshifting rules and restrictions” to “extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives”.

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” US Attorney General Merrick Garland said in a statement. “If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

The suit marks the most ambitious antitrust effort yet by President Joe Biden’s administration, which has promised to roll back corporate consolidation in sectors such as technology that critics say has made it all but impossible for smaller rivals to compete.

Justice Department Sues Apple for Monopolizing Smartphone Markets

🔗: https://t.co/sQuqVnTzaX pic.twitter.com/9ipWckqfvc

— U.S. Department of Justice (@TheJusticeDept) March 21, 2024

Apple has disputed that characterisation and said on Thursday that it would “vigorously” defend itself against the suit, which it called “wrong on the facts and the law”.

The California-based company has faced growing scrutiny from anti-monopoly enforcement bodies in Europe, Japan and South Korea.

Apple, a company with annual revenues of about $400bn, has long promoted the strict integration between its products and software, an approach sometimes referred to as a “walled garden”.

The company argues that this helps give users a more seamless experience, but the DOJ said on Thursday that the corporation has achieved its gargantuan status in part by flouting antitrust laws.

“For years, Apple responded to competitive threats by imposing a series of ‘Whac-A-Mole’ contractual rules and restrictions that have allowed Apple to extract higher prices from consumers, impose higher fees on developers and creators, and to throttle competitive alternatives from rival technologies,” Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said in a press release.

“Today’s lawsuit seeks to hold Apple accountable and ensure it cannot deploy the same, unlawful playbook in other vital markets.”

The Biden administration’s antitrust push has already taken aim at corporate behemoths such as Google and Amazon alongside unsuccessful bids to block acquisition deals by Microsoft and Facebook parent Meta Platforms.

Upon news of the suit, Apple’s stock price fell by slightly more than 3 percent.