US tech giant Apple has been sued by President Joe Biden's administration for allegedly building an anti-competitive "fence" around its proprietary iPhone ecosystem.
The US Department of Justice (DOJ) filed a lawsuit in New Jersey federal court, alleging that Apple uses “broad exclusionary practices” to make it harder for Americans to switch smartphones and for companies to offer apps, products, and services to iPhone users. The federal government, along with 16 state attorneys general, joined in filing the civil lawsuit.
The US government sued Apple.
“Consumers should not pay higher prices because companies violate antitrust laws,” said US Attorney General Merrick Garland. “We allege that Apple has maintained monopoly power in the smartphone market, not only by undercutting its competitors on value, but also by violating federal antitrust law. If left unchallenged, Apple will continue to consolidate its smartphone monopoly.”
The lawsuit argues that the iPhone monopoly has given the company an “unrealistic” valuation – its market capitalization is more than $2.6 trillion, second only to Microsoft’s $3.2 trillion – at the expense of consumers and other tech companies. The company’s stock fell 4.1% after the DOJ lawsuit was announced, wiping out more than $100 billion in market value.
The case comes just weeks after the EU fined Apple 1.84 billion euros ($2 billion) for violating the bloc's competition laws. The company was accused of blocking rival service providers such as Spotify from informing iPhone users about cheaper music subscription alternatives.
Apple is also said to monopolize the smartphone app market by blocking advances from competitors.
The company has denied the Justice Department's claims. A company spokesperson told the media that the lawsuit could "impede our ability to create the kind of technology people expect from Apple - where hardware, software and services intersect. It would also set a dangerous precedent, empowering the government to interfere deeply in the design of human technology."
If successful, the lawsuit could force Apple to change some of its most profitable products, including the iPhone and Apple Watch. It could even lead to the company selling off some of its businesses to boost competition. According to Counterpoint Research, the iPhone accounted for 64% of the US smartphone market in the fourth quarter of last year, far exceeding Samsung's 18%.
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