Heejin Yu
Apple (NASDAQ:AAPL) was sued by the US Department of Justice in a landmark antitrust case against the tech giant.
The Justice Department has filed a civil lawsuit in federal court in New Jersey alleging that Apple violated the Sherman Act using their iPhone to block other companies from offering competitive services such as digital wallets. The lawsuit also claims that Apple limits the functionality of the hardware and makes it difficult for users to switch and communicate with competing devices, such as Android phones.
“Apple’s anticompetitive tactics also make it more difficult for non-iPhone users to message iPhone users,” said US Attorney General Merrick Garland, in a press conference late Thursday morning. “We believe Apple is violating the law by creating barriers that make it extremely difficult for developers to exit Apple’s operating system.”
The Justice Department was joined by 16 other state and district attorneys general. The complaint alleges that Apple holds monopoly power in the smartphone and performance smartphone markets.
“For years, Apple has responded to competitive threats by imposing a series of ‘Whac-A-Mole’ contractual rules and restrictions that have allowed Apple to extract higher prices from consumers, impose higher fees on developers and creators, and limit competitive alternatives from rival technologies,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s antitrust division.
“This lawsuit threatens who we are and the principles that distinguish Apple products in a fiercely competitive marketplace,” Apple said in a statement to Seeking Alpha.
“If successful, it would hinder our ability to create the kind of technology people expect from Apple, where hardware, software and services intersect,” Apple added. “It would also set a dangerous precedent, giving the government the power to exercise heavy-handed control in the design of people’s technology. We believe this lawsuit is wrong in fact and in law, and we will vigorously defend ourselves.”
Seeking Alpha Investing Group leader The Quantamental Investor said the lawsuit is another “headwind” for Apple, while the timing “couldn’t have been worse”, given the sense that the company has been “left behind in the AI gold rush”.
“While the Justice Department will likely fail to prove Apple’s monopoly in court, the matter will create further negative sentiment toward the stock,” The Quantamental Investor said.
Other Justice Department allegations regarding Apple’s “anticompetitive course of conduct” include blocking innovative super apps, suppressing mobile cloud streaming services, excluding cross-platform messaging apps, and diminishing the functionality of non-Apple smartwatches .
Read the full complaint here from 9to5Mac.
(This story has been updated to include comments from The Quantamental Investor.)