The U.S. Justice Department accuses Apple of illegally monopolizing the smartphone market in a massive new antitrust lawsuit that seeks to upend many of the ways Apple has locked down the iPhone.
The Justice Department joins 16 state and territory attorneys general in accusing Apple of raising prices for consumers and developers at the expense of making users more dependent on its phones. According to the press release, both parties accuse Apple of “selectively” imposing contractual restrictions on developers and withholding key ways of accessing the phones to prevent competition.
“Apple uses its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants alike,” the Justice Department wrote.
The government pointed to several different ways Apple allegedly illegally maintained its monopoly:
- Disrupting “super apps” that contain many different programs and potentially reducing “iOS stickiness” by making it easier for iPhone users to switch to competing devices
- Block cloud streaming applications such as video games, which will reduce the need for more expensive hardware
- Suppresses messaging quality between competing platforms like iPhone and Android
- Compatibility issues limit the functionality of third-party smartwatches with the iPhone and make it more difficult for Apple Watch users to switch from iPhone to iPhone
- Block third-party developers from creating competing digital wallets with tap-to-pay functionality for iPhone
“Apple responds to competitive threats by imposing a series of ‘whack-a-mole’ contract rules and restrictions”
“For years, Apple has responded to competitive threats by imposing a series of “whack-a-mole” contract rules and restrictions that have allowed Apple to charge higher prices to consumers and higher fees to developers and creators. , and stifle competing substitute competitors’ technologies,” Jonathan Kanter, head of the Justice Department’s antitrust division, said in a statement.
The case is being prosecuted in the U.S. District Court for the District of New Jersey. From New Jersey, Arizona, California, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New York, North Dakota, Oklahoma, Oregon, Tennessee, Vermont, Wisconsin and the District of Columbia’s attorneys general joined the Justice Department’s complaint.
Law enforcers asked the court to prevent Apple from “using its control over app distribution to disrupt cross-platform technologies like super apps and cloud streaming apps” and from “using private APIs to disrupt messaging, smartwatches, and cloud computing.” and other cross-platform technologies”. Digital Wallet” and prevent it from “exploiting the terms and conditions of contracts with developers, accessory manufacturers, consumers or others to obtain, maintain, expand or consolidate a monopoly.” “
They also asked the court to provide any other relief needed to restore competition.
At a news conference announcing the lawsuit on Thursday, Justice Department Deputy Attorney General Lisa Monaco said Apple has gone from “revolutionizing the smartphone market to hindering its growth.” “suppressing competition” and “killing entire industries.” Kanter added that Apple was an “important beneficiary” of the U.S. Department of Justice’s lawsuit against Microsoft more than 20 years ago, a case aimed at “protecting competition and innovation in next-generation technologies.”
U.S. Attorney General Merrick Garland acknowledged that the government is faced with a resource imbalance faced by a multi-trillion-dollar company. “We believe that when an institution with vast resources is harming the American economy and the American people, it’s important that we allocate resources to protect the American people,” Garland said. “This is truly a situation where individual Americans do not have the ability to protect themselves.”
Apple spokesman Fred Sainz said in a statement that the lawsuit “threatens our identity and the principles that make Apple products stand out in a fiercely competitive market. If successful, it will hinder our ability to create the technology that people expect from Apple.” capabilities—the intersection of hardware, software, and services. It would also set a dangerous precedent that would allow governments to take drastic measures when designing human technology. We believe this lawsuit is wrong on fact and law, and we will aggressively Defend.”
Apple is the second tech giant to be subject to two antitrust lawsuits filed by the U.S. Department of Justice against Google in recent years. It reverses a long absence of tech monopoly cases dating back to the landmark Microsoft lawsuit at the turn of the century. The case has been brewing for years, with reports first reporting in June 2019 that the Justice Department would launch an antitrust investigation into the company.
App developers for Apple’s iOS have complained for years about the platform’s closed and often opaque marketplace. The most outspoken among them are companies operating paid subscription services such as Spotify, for which Apple demands a 15% to 30% cut on its platform. On top of that, Apple has its own apps that compete with those in its App Store — the only place Apple allows users to download apps for security reasons — raising concerns among developers about whether they get Fair play for more distrust. Taken at the market.
House panel finds Apple monopolizes iOS app distribution
A few years ago, a House subcommittee conducted its own investigation into tech giants, and some developers were able to get Congress’ attention. A 2020 report from the group found that Apple has a monopoly on the iOS app distribution market. Lawmakers have proposed legislation such as the Open App Markets Act and the American Innovation and Online Choice Act aimed at preventing large platforms like Apple from giving their products an advantage over their competitors in the market. But more than two years since they were proposed, neither has come to a vote in either chamber.
Europe is already ahead of the United States in controlling technology. It sets out new rules through the Digital Markets Act to check the power of gatekeepers on large platforms, some of which are run by Apple. Earlier this month, the European Commission fined Apple 1.84 billion euros (about $2 billion) after Spotify complained about its restrictive app store practices. The EU said its investigation found “Apple prohibits music streaming app developers from fully informing iOS users of alternative and cheaper music subscription services available outside of the app.”
The Justice Department will be busy dealing with tech monopoly lawsuits in the coming years. It wrapped up closing arguments in its search distribution case against Google in May and then is set to begin hearing a case over Google’s ad technology in the fall.