DoJ, States Sue Apple Over Smartphone Market Monopoly

(RTTNews) - The U.S. Department of Justice, along with various state and district attorneys general, sued Apple Inc. for allegedly maintaining monopolization or attempted monopolization of smartphone markets.

The complaint alleges that in violation of Section 2 of the Sherman Act, the iPhone maker illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers.

Following the news, Apple shares lost around 4.1 percent to close Thursday's trading at $171.37. However, the shares edged up 0.2 percent in the after-hours trading.

The monopolization lawsuit was filed in the U.S. District Court for the District of New Jersey by the Justice Department, joined by 16 other state and district attorneys general.

Responding to the filing, Apple spokesperson Fred Sainz reportedly said, "This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it."

The DoJ complaint alleged that the Cupertino, California -based company has monopoly power in the smartphone and performance smartphones markets, and it uses its control over the iPhone to engage in a broad, sustained, and illegal course of conduct.

In a statement, the Justice Department noted that the tech major's broad-based, exclusionary conduct makes it harder for Americans to switch smartphones. It also undermines innovation for apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers.

As per the filing, Apple further exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.

Attorney General Merrick Garland said, "We allege that Apple 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. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly. The Justice Department will vigorously enforce antitrust laws that protect consumers from higher prices and fewer choices."

Apple, which generated fiscal 2023 net revenues of $383 billion and net income of $97 billion, has been involved in many legal fights in recent times mainly over its App Store rules. The company used to charge 30 percent commission on App Store purchases, but later due to a court ruling in the U.S. and Digital Markets Act in the European Union, it was forced to allow third-party payments.

In a recent court filing, tech majors Meta Platforms and Microsoft, social networking site X, and dating app Match Group accused Apple of planning to charge an extra fee on third-party payments from outside the App Store.

In early March, the European Commission had fined Apple over 1.8 billion euros for abusing its dominant position through its App Store on the market for the distribution of music streaming apps to iPhone and iPad users or iOS users.