Department of Justice Sues Apple Over iPhone Monopoly, Impacting $200 Billion Sales

On Thursday, the Department of Justice and 16 attorneys general filed a lawsuit against Apple, accusing the tech giant of maintaining a monopoly within its iPhone ecosystem, leading to what the lawsuit describes as an "astronomical valuation" at the expense of consumers, developers, and rival phone makers.

Expanding Anti-Competitive Practices

According to the lawsuit, Apple's anti-competitive behavior extends beyond the iPhone and Apple Watch businesses, encompassing its advertising, browser, FaceTime, and news offerings. The suit alleges that each step in Apple's conduct has fortified its smartphone monopoly.

Impact on Consumers

The Justice Department detailed various measures taken by Apple to maintain consumer loyalty, such as blocking cross-platform messaging apps, restricting third-party wallet and smartwatch compatibility, and disrupting non-App Store programs and cloud-streaming services.

Risk to Apple's Business Model

The lawsuit poses a significant risk to Apple's walled-garden business model, potentially necessitating changes in its most valuable businesses, including the iPhone, Apple Watch, and its profitable services line.

Government and Apple Responses

U.S. Attorney General Merrick Garland expressed concern about Apple's strengthening smartphone monopoly, while Apple issued a statement expressing disagreement with the premise of the lawsuit and vowing to defend against it.

History of Antitrust Cases

The lawsuit follows previous investigations and prior DOJ cases against Apple, including one related to e-book prices and another regarding alleged collusion with other technology companies to suppress salaries.

Technological Limitations

The lawsuit highlights instances where consumers have raised concerns about limitations in Apple's ecosystem, including difficulties in Android-to-iPhone messaging and the incompatibility of the Apple Watch with Android devices.

App Store and Antitrust Challenges

Apple's control over the iPhone App Store has been the subject of recent antitrust challenges, including a civil suit against Epic Games in 2021, which, despite a partial victory for Apple, led to some policy changes.

Global Antitrust Scrutiny

Apple is also contending with antitrust scrutiny from the European Commission, particularly regarding compliance with the new Digital Markets Act, which aims to open up the iPhone app store to rivals like Microsoft and Epic Games.

Market Share and Government Scrutiny

The lawsuit comes at a time when Apple holds a 64% market share for U.S. iPhones, facing ongoing government scrutiny similar to that encountered by other tech giants like Google and Microsoft in the past.