Apple, one of the world's most powerful companies, is now under fire from the U.S. government. The Department of Justice along with 15 states and the District of Columbia filed a lawsuit against the Silicon Valley giant on Thursday, accusing the company of abusing its power as a monopoly to edge out rivals and ensure customers keep using its products.
The heart of the 88-page lawsuit centers around claims that Apple stopped smaller companies from accessing the hardware and software in its iPhones, which led to fewer options and higher prices for customers.
The government also alleges that Apple has designed various features of its iPhone, like iMessage and Apple Pay, to keep users dependent on the devices and to stop them from switching to products made by other suppliers.
"Each step in Apple's course of conduct built and reinforced the moat around its smartphone monopoly," the government wrote in the lawsuit.
Apple is worth nearly $3 trillion, making it one of the highest valued companies in the world. And its iPhone is one of the most popular phones on earth, dominating the global market, according to market analyst firm IDC. The Justice Department alleges it's no coincidence that Apple was able to ensure its place at the top.
"Consumers should not have to pay higher prices because companies violate the antitrust laws," said Attorney General Merrick B. Garland. "If left unchallenged, Apple will only continue to strengthen its smartphone monopoly."
U.S. says Apple restricts others from iMessage and Apple Pay
The Justice Department says that because Apple imposes contract restrictions on developers, it means new innovation is kept within its ecosystem. The government says this allows Apple to take more money from consumers, developers, content creators, publishers, small businesses and more.
Because of these restrictions, the Justice Department says Apple has been able to block innovation in products like super apps that have a broad functionality. And with iMessage, it has created a system keeps people from using cross-platform messaging apps. With Apple Pay, the government says the company has blocked developers from creating other digital wallets.
The government also says that Apple has thrown around its power to suppress innovation in streaming services for video games, non-Apple smartwatches, and third-party party digital wallets that let users tap-to-pay.
In essence, the Justice Department says Apple controls the iPhone user experience every step of the way, which has created an anti-competitive environment.
Apple says it creates technology people expect from it
Apple says the restrictions around its software and hardware are to protect people's privacy and security.
"This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets," said a company spokesperson. "If successful, it would 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 government to take a heavy hand in designing people's technology."
Apple says it will vigorously defend itself against this lawsuit. In the lead up to the suit, Apple reportedly met with Justice Department officials multiple times, according to the New York Times. The company declined to answer questions about whether it negotiated any sort of settlement with the government.
Under the Biden administration, the Justice Department and the Federal Trade Commission have filed antitrust lawsuits against several leading tech companies.
The Department of Justice went to trial against Google parent Alphabet last fall over allegations that it stomped out competing search engines. And the FTC, is working on a massive suit against Amazon.
Several of these lawsuits use similar arguments to case that the Justice Department brought against Microsoft in the late 1990's, which centered on claims that Microsoft illegally grouped its various products together in a way that both stifled competition and compelled people to use its products. The judge ruled in favor of the Justice Department in that case.
This is the third lawsuit the Justice Department has brought against Apple over antitrust violations in the past two decades. European regulators have also targeted the company over anticompetitive behavior, including claims of boxing out rivals with its music streaming service.
The outcome of the Justice Department's new case is still a long way off. Apple has 60 days to respond and it's expected to be a lengthy legal battle over the next few years.
"No matter how powerful, no matter how prominent, no matter how popular — no company is above the law," said Deputy Attorney General Lisa Monaco.
