The American tech giant Apple has been sued by the administration of President Joe Biden for allegedly building an anti-competitive "barrier" around its proprietary iPhone ecosystem.
The U.S. Department of Justice (DOJ) has filed a lawsuit in federal court in New Jersey, alleging that Apple uses “widespread exclusionary practices” to make it more difficult for Americans to switch smartphones and to make it harder for companies to provide apps, products, and services to iPhone users. The federal government, along with 16 state attorneys general, joined the civil lawsuit.
The US government is suing Apple.
U.S. Attorney General Merrick Garland stated: “Consumers should not pay higher prices because companies violate antitrust laws. We allege that Apple has maintained a monopoly power in the smartphone market, not only by outselling competitors but also by violating federal antitrust laws. If left unchallenged, Apple will continue to consolidate its smartphone monopoly.”
The lawsuit argues that the iPhone's monopoly has resulted in the company's "sky-high valuation"—its market capitalization is over $2.6 trillion, second only to Microsoft's $3.2 trillion—harming 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 incident comes just weeks after the EU fined Apple €1.84 billion ($2 billion) for violating the bloc's competition laws. The company was accused of blocking rival service providers, such as Spotify, from notifying iPhone users about cheaper music subscription alternatives.
Apple is also accused of monopolizing the smartphone app market by stifling progress from competitors.
The company has rejected the U.S. Department of Justice's claims. A company spokesperson told the media that the lawsuit could "hinder 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 deeply interfere 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. The case could even lead to the company being forced to sell off some of its businesses to boost competitiveness. According to Counterpoint Research, the iPhone held a 64% market share of smartphones in the US in the fourth quarter of last year, far exceeding Samsung's 18%.
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