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US Files Antitrust Suit Against Apple, Accuses Tech Giant of iPhone Monopoly

The Justice Department sued Apple Thursday, accusing the tech giant of violating antitrust laws by maintaining a “chokehold” over competitors that prevents them from offering options like digital wallets and other apps that could reduce dependence on the iPhone maker’s products, hurting its customers and smaller companies that would otherwise compete with it.

“Consumers should not have to pay higher prices because companies break the law,” Attorney General Merrick Garland said during a press conference announcing the federal suit.

Garland outlined what it said was Apple’s “exclusionary anti-competitive conduct” including imposing “contractual restrictions and fees that limit the features and functionality that developers can offer iPhone users.” He also said the company “selectively restricts access to the points of connection between third party apps and the iPhone’s operating system, degrading the functionality of non-Apple apps and accessories.”

“As a result, for most of the past 15 years, Apple has collected a tax in the form of a 30% commission on the price of any app downloaded from the App Store, as well as in-app purchases,” Garland said.

The Justice Department, which is joined in its suit by attorneys general from 15 states and Washington D.C., alleged that Apple uses a strategy that “relies on exclusionary anti-competitive conduct that hurts both consumers and developers,” Garland said.

“For consumers, that has meant fewer choices, higher prices and fees, lower quality smartphones, apps and accessories and less innovation from Apple and its competitors,” the attorney general said. “For developers, that has meant being forced to play by rules that insulate apple from competition.”

Apple shares dropped as word of the suit hit Wall Street, giving up $6.18, or 3.5% to $172.41.

The case comes after years of regulators scrutinizing the operations of the Cupertino, California-based company, valued at about $2.67 trillion, and as the US government is also suing Google, Amazon and Facebook.

In particular, the suit takes aim at the iPhone – which the DOJ noted accounts for nearly seven of every 10 smartphone sales.

“Apple has stifled innovation in order to gain total control of the iPhone software ecosystem,” New Jersey Attorney General Matt Platkin said at the press conference. “As a result, iPhone users become dependent on Apple on its products and find the process of switching phones exceedingly costly and complex. The company has created a marketplace in which developers consumers and others must play by play only by rules established by Apple for Apple.”

Assistant Attorney General Jonathan Kanter said the suit “focuses on Apple’s core monopoly, which is the iPhone.”

“We have focused on a pattern of conduct that goes back over a decade, that Apple is engaged in, in order to reinforce its monopoly power by excluding rivals, by excluding technologies and stifling innovations that would threaten Apple’s stranglehold on its monopoly power,” Kanter said. “The extensiveness and the specificity in our complaint speaks for itself.”

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