Apple sued by US Department of Justice, accused of anti-competitive practices

Apple has been sued by the US Department of Justice, which has accused the Cupertino-based tech titan of adopting unlawful monopolistic practices in relation to its iPhone business. Apple is one of the most valuable companies in the world and in its latest quarterly earnings report raked in $119.6 billion in the period ending 30 December, with iPhone sales accounting for $65.7 billion of total revenue. However, the DOJ suit contends that Apple has monopolized or attempted to monopolize smartphone markets.

Specifically, the DOJ contends that has transgressed the Sherman Antitrust Act and that its anticompetitive conduct includes:

• Blocking Innovative Super Apps. Apple has disrupted the growth of apps with broad functionality that would make it easier for consumers to switch between competing smartphone platforms.

• Suppressing Mobile Cloud Streaming Services. Apple has blocked the development of cloud-streaming apps and services that would allow consumers to enjoy high-quality video games and other cloud-based applications without having to pay for expensive smartphone hardware.

• Excluding Cross-Platform Messaging Apps. Apple has made the quality of cross-platform messaging worse, less innovative, and less secure for users so that its customers have to keep buying iPhones.

• Diminishing the Functionality of Non-Apple Smartwatches. Apple has limited the functionality of third-party smartwatches so that users who purchase the Apple Watch face substantial out-of-pocket costs if they do not keep buying iPhones.

• Limiting Third Party Digital Wallets. Apple has prevented third-party apps from offering tap-to-pay functionality, inhibiting the creation of cross-platform third-party digital wallets.

The suit also ranges beyond these concerns and also argues that Apple has engaged in anticompetitive conduct across other areas of its business including web browsers, video communication, news subscriptions, entertainment, advertising, and location services among other areas. In effect, the DOJ posits that virtually the entirety of Apple’s business model has been set up to stymie competition and it is aiming to “redress Apple’s long-running, pervasive anticompetitive conduct.”

In a statement shared with the media, Apple responded claiming that the facts and the law are on its side:

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. 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 lawsuit is expected to drag out over several years, but it has already impacted Apple’s stock price with the company’s shares trading down around 4.1% and shedding about $113 billion in market value, as reported by Bloomberg. Apple has been facing lawsuits on multiple fronts including from the European Union which has forced the company to open up its iPhone to alternative browser engines and alternative app stores.