The iPhone, produced by Apple Inc., is known for several qualities that have contributed to its popularity and success. It’s high-performance, user-friendly, seamless, comprehensive, durable, premium, and innovative. It’s everyone’s favourite. Everyone’s but the US Department of Justice, which, after a years-long investigation into the company’s business practices, has finally filed iPhone monopoly lawsuit.
On Thursday, the US Department of Justice and 15 US states sued Apple, claiming it has "maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits but by violating federal antitrust law." Apple stock fell roughly 4% on Thursday following the US lawsuit filing.
Apple joins a list of major tech companies sued by US regulators, including Alphabet's Google (NASDAQ:GOOG), Meta Platforms (NASDAQ:META), and Amazon (NASDAQ:AMZN). Moreover, the company has already faced antitrust probes and orders in Europe, Japan, and Korea, as well as lawsuits from corporate rivals such as Epic Games.
The Department of Justice alleges that Apple leverages its market power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants. The civil lawsuit accuses Apple of maintaining its monopoly by imposing contractual restrictions on developers and withholding critical access.
While Apple is known for making its technology easy to use, it does so by tightly controlling – and sometimes restricting – how third-party companies can interact with its products and services. Apple may provide its own products with better access and features than its competitors in certain cases.
One of Apple's most profitable ventures is its App Store, which charges developers commissions of up to 30%. Companies that attempt to sell subscriptions frequently complain, arguing that Apple's significant share of the smartphone market compels them to pay an unreasonably high commission.
Apple creates barriers that make it extremely difficult and costly for both users and developers to explore beyond the Apple ecosystem. Therefore, theDepartment of Justice seeks a court order to prevent Apple from using its app store to hinder innovative new apps. It also aims to block Apple-imposed restrictions preventing integration with the iPhone for other messaging apps, smartwatches, digital wallets, and other technologies.
The company said it denied the lawsuit’s allegations and vowed to contest them, asserting that the lawsuit could enable the government “to take a heavy hand in designing people’s technology.” Apple controls 70% of the mobile phone market in the US. If the court rules in favor of the Department of Justice, Apple could be compelled to undergo divestiture.
