The US Justice Department and 16 states have commenced a lawsuit against tech giant Apple for allegedly creating a “monopoly”. They allege Apple is engaging in anti-competitive behaviour by making people too reliant on iPhones.
Apple has responded to the lawsuit saying it “threatens who we are”.
Here’s what you need to know.
US lawsuit
The US Justice Department filed a lawsuit against Apple in the state of New Jersey last week. It accused Apple of violating the country’s antitrust laws, which try to ensure consumers get fair choices in all industries.
The suit alleges the $US2.66 trillion ($AU6.4t) company has a “monopoly power in the smartphone… markets”, which has drowned out competitors like Samsung.
Attorney General Merrick Garland said this practice “hurts both consumers and developers”.
Garland said Apple has safeguarded its position in the market “not by making its own products better, but by making other products worse”.
For example, the Justice Department alleges that Apple’s dominance has resulted in users of other smartwatch devices receiving poorer quality apps.
It also said messaging between Apple and non-Apple phones is poor – with messages not being encrypted, videos turning pixelated and grainy, and features like message editing not being possible.
Apple’s alleged “monopoly”
Merrick Garland said Apple has “monopoly power”, in that in controls prices and excludes competition.
The lawsuit points to examples of Apple products costing about $US1,599 for an iPhone, resulting in high profits for the company. In the 2023 financial year, Apple’s net income exceeded any other company in the Fortune 500 at $US383 billion.
As a result of Apple’s monopoly, Garland said: “They stifle innovation; they hurt producers and workers; and they increase costs for consumers.”
Apple response
In a statement provided to TDA, Apple said: “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.”
The company said it will “vigorously” defend itself against the claims. After the announcement of the lawsuit, Apple’s stocks were down 4%.
