US gov. sues Apple for building an anti-competitive 'moat'
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The Department of Justice, alongside 16 attorney generals, filed a lawsuit against Apple alleging that it has maintained monopoly power in the smartphone market by violating federal antitrust law.
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Attorney General Merrick Garland speaks during a news conference at the Department of Justice headquarters in Washington, Thursday, March 21, 2024. (AP)
The US government is suing US tech giant Apple for allegedly creating an anti-competitive “moat” around its monopolizing iPhone ecosystem.
The Department of Justice (DOJ) filed its lawsuit on March 21 in New Jersey federal court, claiming that Apple had utilized “broad-based, exclusionary conduct” to make it difficult for Americans to change smartphones and for companies to supply applications, products, and services to iPhone users.
16 state attorneys general joined the federal government in putting forward the civil claim.
A monopoly manipulating the market
In a statement, US Attorney General Merrick Garland said "Consumers should not have to pay higher prices because companies violate the antitrust laws."
"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," Garland added.
The lawsuit stated that the iPhone monopoly has driven Apple’s “astronomical valuation” at the cost of consumers and other technology companies as the company’s market capitalization of over $2.6 trillion is second only to Microsoft’s $3.2 trillion.
After the lawsuit was revealed, Apple's stock decreased 4.1%, erasing over $100 billion in market value.
The case criticizes Apple’s so-called "walled garden" business model, which makes the company’s products widely unreachable to competitors.
Apple monopolized the smartphone app market by obstructing advances from competitors as the lawsuit said, “By stifling these technologies, and many others, Apple reinforces the moat around its smartphone monopoly not by making its products more attractive to users, but by discouraging innovation that threatens Apple’s smartphone monopoly."
Apple's response
Apple has rejected the DOJ lawsuit's claims, as a company spokesperson informed media outlets that this lawsuit could “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 the government to take a heavy hand in designing people’s technology," they added.
This lawsuit is only weeks after the EU fined Apple €1.84 billion ($2 billion) for breaching the bloc’s competition laws, as it allegedly blocked providers of rival streaming services, such as Spotify, from letting iPhone users know about cheaper music subscription substitutions.
As revealed on February 18, the European Commission initiated an antitrust investigation to examine whether Apple utilized its platform to prioritize its services at the expense of competitors, prompted by a formal complaint filed by audio streaming company Spotify in 2019, as per the Financial Times report.
It recognized Apple's conduct as unlawful and in violation of the European Union's regulations aimed at enhancing competition in the market, according to sources as cited by the Financial Times.
