Apple sued by Biden administration over alleged iPhone ‘monopoly power’

The U.S. Department of Justice filed a landmark lawsuit against Apple on Thursday, accusing it of monopolizing the smartphone market.

The civil suit, joined by 16 state and district attorneys general, charges Apple with restricting its smartphone operating system in a way that drives up costs for consumers and prevents developers from successfully releasing products on other smartphone systems.

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” Attorney General Merrick Garland said in a news release.

Among the suit’s allegations:

• Apple prevents the successful deployment of what the DOJ calls “super apps” that would make it easier for consumers to switch between smartphone platforms.
• Apple blocks the development of cloud-streaming apps that would allow for high-quality video-game play without having to pay for extra hardware.
• Apple inhibits the development of cross-platform messaging apps so that customers must keep buying iPhones.

“If left unchallenged, Apple will only continue to strengthen its smartphone monopoly,” Garland added. “The Justice Department will vigorously enforce antitrust laws that protect consumers from higher prices and fewer choices. That is the Justice Department’s legal obligation and what the American people expect and deserve.”

In a statement, Apple denied the allegations and accused the government of overreach.

“At Apple, we innovate every day to make technology people love —designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users,” it said. “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. 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. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”

The case is part of President Joe Biden’s broader antitrust crackdown on Big Tech. The U.S. Justice Department is already suing Google for monopolizing digital advertising services, while the Federal Trade Commission has a long-running anti-monopoly case pending against Facebook parent Meta, as well as a more recent one against Amazon. And in December, the FTC sought to block Microsoft’s now-closed acquisition of game-maker Activision.

The suit against Apple represents the third attempt by an attorney general to go after the Cupertino, California-based tech behemoth — but the first to challenge Apple on such a broad basis.

“This clearly escalates the Biden Administration antitrust efforts against Big Tech giants and adds to the current ongoing antitrust case against Google and other various cases against Meta and Amazon,” Dan Ives, a managing director and senior equity research analyst at Wedbush Securities, said in an investor note.

The complaint goes on to allege that Apple’s monopoly also extends to web browsers, video communication, news subscriptions, entertainment, automotive services, advertising, location services and more.

“For years, Apple 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 to throttle competitive alternatives from rival technologies,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Today’s lawsuit seeks to hold Apple accountable and ensure it cannot deploy the same, unlawful playbook in other vital markets.”

Earlier this month, Apple was hit with a $2 billion fine by the European Union for restricting competition for music-streaming services in the app store. Apple said it would appeal.