Apple has been accused of monopolizing the smartphone market and stifling competition following the filing of a landmark lawsuit by the United States of America against the tech giant.
Within the context of the civil action, the Department of Justice asserts that the corporation exploited its influence over the iPhone app store in order to “lock in” app developers and customers.
It accuses the company of engaging in illegal activities in order to block applications that are perceived to be a danger and to make competing goods less enticing.
In addition to denying the allegations, Apple has stated that it will “vigorously” battle the lawsuit.
Apple has been facing an increasing number of complaints against its business practices over the past few years. The expansive case, which was filed at a federal court in New Jersey along with the attorneys general of sixteen states, represents one of the most significant obstacles that the company has faced and continues to face.
Apple is accused of employing “a series of shapeshifting rules” and restricting access to its hardware and software in an effort to increase its own profits while simultaneously increasing the expenses for its customers and inhibiting innovation according to the allegations.
“Apple has maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits but by violating federal anti-trust law,” Attorney General Merrick Garland said at a press conference announcing the action. “Apple has violated federal anti-trust law.”
“Customers should not have to pay higher prices because companies break the law.”
The case, which is 88 pages long, focuses on five different areas in which Apple is accused of abusing its power.
For instance, the United States of America asserts that Apple utilized its app approval process to impede the development of so-called super apps and streaming apps. The company was concerned that these types of apps would give users with less of an incentive to continue using iPhones.
It also claims that Apple has made it difficult for competitors to connect iPhones to smart watches and has prevented banks and other financial institutions from accessing its tap-to-pay technology. This has enabled Apple to generate billions of dollars in fees from the processing of Apple Pay transactions.
A further point of contention is the manner in which Apple handles messages that are sent from competing mobile devices, highlighting them with green bubbles and restricting the use of movies and other capabilities. As a result of Apple’s actions, a “social stigma” has been developed, which has enabled the computer giant to keep its hold on the market.
It was Apple’s assertion that its customers were loyal because they were satisfied, and that the company was free to choose its business partners in accordance with US law. For the purpose of justifying its policies, it has cited concerns over privacy and security.
The business said that it would submit a request to the court to dismiss the action, which it anticipated would be unsuccessful.
“We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,” according to the business spokesperson.
According to Bill Baer, a visiting fellow at Brookings who served as an anti-trust commissioner during the Obama administration, the issue will be decided by the question of motivation.
“Anti-trust laws and the courts’ interpretation of them suggest that once you’re a monopolist,” he explained to reporters, “if you do engage in behaviours that have no legitimate business justification other than to limit competition and cement your monopoly, then that is problematic.”
It is the first anti-trust lawsuit that has been launched against the corporation under the administration of President Joe Biden, and it is the third legal action that Apple has faced from the United States government since 2009.
If the government is successful in its case, it may compel Apple to perform a comprehensive review of its existing contracts and business procedures, or it may even result in the dissolution of the corporation.
During the time that investors were processing the consequences of the legal battle, Apple’s stock dropped by more than four percent.
Because the issue is currently being heard by the courts, it would take several years for any prospective modifications to become a reality.
Rebecca Allensworth, a professor at Vanderbilt University, referred to the case as “a blockbuster” in light of the fact that the Justice Department has filed further actions against the major technology companies. Similar legal actions are being taken against Google, Meta, and Amazon.
She explained that at its core, it was about extending the functionality across cellphones and making the technology and software more accessible to customers as well as other businesses.
“It’s not about breaking up Apple into small units or spinning off divisions,” she explained to reporters.
A growing number of legal challenges have been lodged against Apple in relation to its iOS environment and commercial activities.
It is facing Epic Games, the company that is responsible for making Fortnite, in a protracted court struggle.
Over music streaming, the European Union (EU) levied a fine of €1.8 billion (£1.5 billion) against it last month for violating competition laws.
It was reported by the European Commission that the company had prevented streaming services from informing users of payment options that were not available through the Apple app store.
Margrethe Vestager, the commissioner of competition, stated that Apple had been abusing its dominant position in the market for a decade, and she issued an order to the tech giant to remove all of the restrictions. Despite the verdict, Apple has stated that it will file an appeal.
For example, Anat Alon-Beck, a professor of commercial law at Case Western Reserve University in Ohio, stated that the latest case filed by the Department of Justice was “far more extensive” than the department’s past legal battles in the European Union.
“It’s not just about the thirty percent app store fee, but about the core unfair practices of Apple,” she added, adding that it was “about time” that the Department of Justice took action.
It is Apple’s policy to exclude competitors from the ecosystem that Apple has created. “By acting in this manner, Apple is causing harm to a great number of new businesses, stakeholders, customers, and, in my opinion, its shareholders,” she stated.
The Department of Justice reports that Apple’s dominance of the smartphone market in the United States is greater than 70 percent, and that its share of the overall smartphone market is greater than 65 percent.
