Recent news has seen the Department of Justice file an unprecedented lawsuit against Apple, accusing the tech company of illegally monopolizing the smartphone market, thereby excluding competition, inhibiting innovation and maintaining artificially high prices.
That lawsuit, filed in federal court in New Jersey, claims that Apple exercises monopoly power in the smartphone market and uses control over the iPhone to “engage in broad and sustained unlawful conduct.”
According to Deputy Attorney General Lisa Monaco, “Apple locked its consumers into the iPhone while excluding its competitors from the market.” By putting a brake on the advancement of the market that it revolutionized, it “stifled an entire industry”.
Apple called the lawsuit “false on the facts and the law” and said it “will vigorously defend it.”
The lawsuit seeks to expose how Apple shapes its technology and business relationships to “extort more money from consumers, developers, content creators, artists, publishers, small businesses and traders, among others.
This includes reducing the functionality of non-Apple smartwatches, limiting access to contactless payment for third-party digital wallets, and refusing to allow its iMessage app to exchange encrypted messages with competing platforms.
The action specifically aims to prevent Apple from compromising technologies competing with its own applications, including in the areas of streaming, messaging and digital payments, and to prevent it from continuing to enter into contracts with developers , accessory manufacturers and consumers allowing it to “obtain, maintain, extend or anchor a monopoly”.
The lawsuit, jointly led by 16 state attorneys general, is part of aggressive antitrust enforcement by an administration that has also taken on Google, Amazon and other tech giants in the declared goal of making the digital universe more equitable, innovative and competitive.
President Joe Biden has called on the Justice Department and the Federal Trade Commission to vigorously enforce antitrust laws. Although its increased scrutiny of corporate mergers and questionable business practices met resistance from some business leaders, who accused the Democratic administration of overreach, it was hailed by others as long overdue. .
The deal seeks to breach the digital fortress that Apple Inc., based in Cupertino, California, has meticulously built around the iPhone and other popular products such as the iPad, Mac and Apple Watch to create what is often called a “walled garden” allowing its hardware and software to seamlessly deliver user-friendly harmony.
The strategy helped Apple achieve annual revenue of nearly $400 billion and, until recently, a market value of more than $3 trillion. However, Apple shares are down 7% this year as much of the stock market has hit new highs, helping longtime rival Microsoft become the world’s most valuable company.
Apple has championed the walled garden as a must-have feature popular with consumers who want the best protection available for their personal information. She described the barrier as a way for the iPhone to distinguish itself from devices running Google’s Android software, which is not as restrictive and is licensed to a wide range of manufacturers.
“Apple claims to be a champion of protecting user data, but its app fee structure and partnership with Google search erode privacy,” Consumer Reports senior researcher Sumit Sharma said in a statement.
The lawsuit complains that Apple charges up to $1,599 for an iPhone and that the high margins it makes on the App Store…
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