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The US Department of Justice on Thursday sued Apple for illegally maintaining a monopoly on its iPhone by stifling competition and imposing exorbitant costs on consumers.
The lawsuit, also filed by several US states, attacked the iPhone for raising hundreds of billions of dollars by making it difficult for consumers to switch to cheaper smartphones and devices.
In the long-awaited case against Apple, the company founded by Steve Jobs in 1976 clashes with Washington after largely escaping US government scrutiny for nearly half a century.
It joins Amazon, Google and Facebook owner Meta, which also face antitrust lawsuits in the United States.
News of the lawsuit sent Apple shares down as much as 3.75 percent on Wall Street on Thursday.
At the center of the case are Apple’s alleged exclusionary practices that impose strict and sometimes opaque conditions on companies and developers seeking to reach the 136 million iPhone users in the United States.
According to the lawsuit, these rules and decisions have been designed to force Apple users to remain in the Apple ecosystem and purchase the company’s most expensive hardware, the iPhone.
“Consumers should not have to pay higher prices because companies violate antitrust laws,” said Attorney General Merrick Garland.
“If left unchecked, Apple will only strengthen its monopoly on smartphones,” he added.
Apple strikes back
The wide-ranging case highlighted practices that it said were enriching Apple to the detriment of advancing innovation and technology for consumers.
In a statement, Apple denied the merit of the lawsuit, saying it was “factually and legally incorrect, and we will vigorously defend against it.”
If successful, the lawsuit would “set a dangerous precedent, empowering the government to take a heavy hand in the design of people’s technology,” the company added.
The lawsuit, for example, accused Apple of squashing the creation of Super Apps, comprehensive web portals that could exist on an iPhone and offer consumers other ways to get services, such as music, photos or movies.
Other big tech giants, like Meta, have long dreamed of opening such super apps on the iPhone, which accounts for about half of the smartphone market in the United States.
The allegations also target Apple Wallet, which is the only app 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 difficult for Apple users to easily interact with Android phone users, forcing them to buy the more expensive iPhone.
The broad case also mentions smartwatches, as the Apple Watch is only available through the iPhone and competing smartwatches have very limited functionality on the iPhone.
The complaint alleges that these nefarious practices apply to other services such as web browsers, entertainment, and even automotive services.
In recent years, Apple has invested heavily in promoting services and hardware as it looks for ways to make money beyond the iPhone, which was introduced in 2007 and changed the world of consumer technology.
But iPhone sales growth has slowed in recent years, increasing pressure on the company to find other sources of revenue.
The DOJ noted that Apple’s profits exceed those of any other Fortune 500 company and that it exceeds the gross domestic product of more than 100 countries.
In 2023, Apple recorded global sales of $383 billion and net profits of $97 billion.
The Justice Department’s investigation into Apple began in 2019 under the Trump administration.
Apple largely won a US lawsuit from Epic Games, maker of Fortnite, which has been pursuing Apple in jurisdictions around the world over the rules and fees it imposes on the iPhone.
In a case brought by Spotify, the EU this month fined Apple 1.8 billion euros ($1.9 billion) for preventing European users from accessing information about cheaper, alternative music streaming services.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated channel.)