The USA sues Apple

Samuel Buchmann

22/3/2024

Translation: machine translated

According to the US Attorney General's Office, Apple is violating antitrust law by maintaining a monopoly position on the smartphone market. The authority has filed a comprehensive lawsuit.

The US Department of Justice (DOJ) has accused Apple of abusing its market power. It filed a very comprehensive lawsuit on Thursday. The iPhone manufacturer is operating an illegal monopoly, to the detriment of consumers. Apple rejects the allegations.

"Apple has built its monopoly position in the smartphone market in part by violating antitrust laws," says Attorney General Merrick Garland. "It does not consolidate them by making its own products better - but by making other products worse." Such monopolies threaten the free and fair market and stifle innovation. Apple is thus harming other manufacturers and increasing costs for consumers.

At the centre of the allegations are Apple's lock-in strategies, with which the company binds customers to its own ecosystem. Specifically, according to the DOJ, Apple broke the law with the following practices:

• Making it more difficult to exchange messages between the iPhone and other platforms
• Restriction of iPhone compatibility with non-Apple smartwatches
• Blocking third-party access to the Apple Wallet to use it for tap-to-pay
• Suppression of "super apps" that would make it easier to switch from iPhone to other devices
• Blocking cloud streaming, for example for games, which would reduce the need for expensive hardware
• Exorbitant prices for the distribution of apps in the App Store

Deputy Attorney General Lisa Monaco claims that Apple initially revolutionised the smartphone market - and has now moved to stop progress. "The company has tied its customers to the iPhone and pushed the competition out of the market."

Apple: "Lawsuit is factually and legally wrong"

Apple vehemently defends itself against the accusations. Company spokesperson Fred Sainz writes in a statement: "We believe this lawsuit is factually and legally wrong." If successful, it would make it more difficult for Apple to produce the technology its customers expect. "It would also set a dangerous precedent that would allow the government to influence the technology."

"At Apple, we innovate every day to make technology that people love. We build products that work together seamlessly, that protect people's privacy and security, and that provide a magical experience for our users. This lawsuit threatens what makes us different and the principles that set Apple products apart in highly competitive markets," Sainz said. Apple will file a motion with the court to dismiss the lawsuit.

What the prosecution is asking

The DOJ is asking for three things that would significantly change the company's business model:

• The court should prohibit Apple from suppressing innovative new apps
• Apple should open up its Messages app, smartwatch system and Wallet to other suppliers
• Apple should not be allowed to use contract terms to maintain, expand or consolidate its alleged monopoly

The public prosecutor's office is not explicitly calling for Apple to be broken up into several sub-companies, but is not ruling it out either. This measure is often demanded when a company has allegedly achieved a monopoly position.

The DOJ's chances of success are questionable. It must prove that the negative effects of Apple's business practices for customers outweigh the positive effects. That won't be easy. Lawsuits against Apple's App Store fee have already been rejected by several courts in the past. In the EU, on the other hand, the Californians recently suffered a defeat - and are still under pressure from the regulatory authorities.

In the USA, Apple is not the first tech giant to be sued by the DOJ for monopolistic business practices. A similar lawsuit is currently underway against Google, in which a verdict is expected this autumn. It is also likely to take several months before the lawsuit against Apple goes to court - and even years before a judgement is reached.

You can find my personal assessment of the lawsuit here:

Samuel Buchmann

Senior Editor

Samuel.Buchmann@digitecgalaxus.ch

My fingerprint often changes so drastically that my MacBook doesn't recognise it anymore. The reason? If I'm not clinging to a monitor or camera, I'm probably clinging to a rockface by the tips of my fingers.