The U.S. Department of Justice has accused Apple of having an illegal monopoly on the smartphone market in a new major antitrust lawsuit that aims to significantly change the Apple iPhone.
The Justice Department, along with 16 state and district attorneys general, accuses Apple of unreasonably raising prices for consumers and developers because users tend to trust its phones. The parties claim that Apple selectively imposes contractual restrictions on developers and hides important ways to access the phone to prevent competition.
«Apple is using its monopoly to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, including», — the Department of Justice said.
The government points to several ways in which Apple illegally maintains its monopoly:
- Suppressing «super apps» that span many different apps and break iOS lock-in, making it easier for iPhone users to switch to other devices
- Blocking cloud-based streaming applications, including gaming, which reduces the need for a more expensive device
- Disruption of the quality of messaging between iPhone and competitive platforms such as Android
- Restricting the functionality of third-party smartwatches using the iPhone and making it difficult for Apple Watch users to switch from the iPhone due to compatibility issues
- Prohibition of third-party developers to create alternative digital wallets with a one-time payment function for iPhone
«Over the years, Apple has responded to competitive threats by imposing a series of contractual rules and restrictions that have allowed Apple to impose higher prices on consumers, impose higher fees on developers and creators, and stifle competitive alternatives», — said Jonathan Kanter, head of the Justice Department’s Antitrust Division.
The law enforcement agencies are asking the court to prohibit Apple from using its control over app distribution to hinder cross-platform technologies such as super apps and cloud streaming apps, to prohibit it from using closed APIs to undermine cross-platform messaging, smartwatch and digital wallet technologies, and to prevent it from using the terms of contracts with developers, accessory manufacturers, consumers or others to obtain, maintain, expand or consolidate a monopoly. They also require the court to take any other measures necessary to restore competition.
At a press conference on Thursday announcing the lawsuit, Justice Department Deputy Secretary Lisa Monaco said that Apple has «strangled an entire industry» by going from «revolutionizing the smartphone market to stopping it from growing». Kanter added that Apple was a «substantial beneficiary of the Justice Department’s» lawsuit against Microsoft more than 20 years ago, and that the case is aimed at «protecting competition and innovation for the next generation of technology».
U.S. Attorney General Merrick Garland has recognized the imbalance of resources the government faces when facing a company worth trillions of dollars. «When you have an institution with large resources that we believe is doing harm to the American economy and the American people, it’s important for us to allocate our resources to protect the American people,» Garland said. «And this is certainly a case where individual Americans do not have the ability to protect themselves».
In a statement, Apple spokesperson Fred Saines said that the «lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the technology that people expect from Apple — where hardware, software, and services intersect. It would also set a dangerous precedent by allowing the government to take a heavy hand in developing technology for people. We believe that this lawsuit is not in accordance with the facts and the law, and we will vigorously defend against it».
Apple plans to drop the case, an Apple spokesperson told reporters during a briefing in several media outlets on Thursday.
Source: The Verge