US accuses Apple of illegal smartphone monopoly

The Justice Department lawsuit claims the tech giant unlawfully restricted competition by limiting access to its software and hardware

On Thursday, the US government filed an extensive antitrust case against Apple, accusing the tech giant of unlawfully impeding competition through limitations on access to its software and hardware. The case directly challenges fundamental aspects of the company’s products and practices, including its iMessage service and the connectivity between devices like the iPhone and Apple Watch.

The lawsuit, filed in federal court in New Jersey, claims that Apple holds a monopoly in the smartphone market and utilizes its control over the iPhone to “engage in a broad, sustained, and illegal course of conduct.” The complaint aims to “free smartphone markets” from Apple’s anticompetitive actions, asserting that the company has stifled innovation to retain market dominance.

“Apple has maintained its power not due to its excellence, but because of its illegal exclusionary practices,” stated US Attorney General Merrick Garland during a press conference on Thursday. “Monopolies like Apple’s jeopardize the free and fair markets that underpin our economy.”

The US Department of Justice’s lawsuit against Apple is a significant case targeting the world’s most valuable publicly traded company. It is part of a series of antitrust suits aimed at major tech firms. Amazon, Apple, Meta, and Google have all been under investigation by regulators in the United States and Europe over accusations of consolidating power and unlawfully suppressing competition. Each of these companies has a market capitalization exceeding a trillion dollars.

Apple has denied the allegations in the lawsuit, stating that they pose a threat to the company’s fundamental operations.

“This lawsuit jeopardizes our identity and the principles that distinguish Apple products in highly competitive markets. If successful, it would impede our ability to innovate and deliver the type of technology that users anticipate from Apple, where hardware, software, and services converge,” an Apple spokesperson stated. “It would also establish a troubling precedent, granting the government significant influence over the design of technology. We firmly believe that this lawsuit is unfounded both in fact and law, and we will vigorously defend against it.”

At the heart of the case is whether Apple’s strategy of preventing rival companies from accessing various proprietary features, such as its iMessage instant messaging service and Siri virtual assistant, constitutes anticompetitive behavior. The case will also explore whether Apple’s approach of ensuring its devices seamlessly integrate with each other, while not easily connecting with non-Apple products, creates unfair hardware limitations that hinder competitors’ access to the market.

The Department of Justice’s complaint alleges that Apple has engaged in several anticompetitive practices, including blocking innovative apps, reducing the functionality of non-Apple smartwatches, restricting third-party digital wallets, and suppressing cross-platform messaging. The complaint argues that these actions have led to higher prices for consumers by stifling meaningful competition.

Garland stated, “Apple erects barriers and makes it exceedingly challenging and costly for both users and developers to explore outside the Apple ecosystem.” The complaint alleges that these practices have been ongoing for over a decade and are part of a longstanding strategy by the company to combat technologies that threaten its market dominance.

The lawsuit seeks several changes to Apple’s business practices and demands an unspecified monetary penalty for its conduct. It requests the court to prohibit Apple from using terms and conditions in its contracts to solidify its monopoly and to cease using its app store and private APIs to impede the distribution of cross-platform technologies.

Apple commands a significant share of the smartphone market, surpassing Samsung last year to become the industry’s leading phone manufacturer, and frequently highlights the seamless compatibility among its products. Rival tech companies, with Google being prominent among them, have portrayed Apple’s features as creating a closed environment to the detriment of consumers and have urged regulators to investigate these practices. Apple agreed to enhance texting between iPhones and Androids in November.

A recent episode that caught the regulators’ attention was Apple’s engagement with the messaging startup Beeper. Beeper had introduced a product last year that enabled non-iPhone users to send and receive iMessages. In December, Beeper launched its “Beeper Mini” app, but shortly after, Apple seemingly disabled the app’s features and issued a vague statement citing privacy and security reasons. Beeper attempted to restore its services, leading to a series of exchanges between the two companies that concluded with Apple blocking external access to its iMessage capabilities.

“We are passionate about advocating for what we believe is a fantastic product that deserves to exist. However, the reality is that we cannot win a cat-and-mouse game with the largest company on earth,” said Eric Migicovsky, Beeper’s CEO, in a statement on the company’s blog.

According to the New York Times, executives from Beeper and the tracking service Tile have spoken with investigators in recent months. Tile has raised concerns about Apple’s AirTags product, which offers similar functionality to Tile, and has urged regulators and lawmakers to investigate potential antitrust violations.

Speculation and anticipation in the media regarding the antitrust lawsuit have been mounting since the beginning of the year, with numerous reports suggesting that the government was nearing the final stages of filing. Bloomberg reported that Apple’s lawyers met with Assistant Attorney General Jonathan Kanter in February in a final effort to dissuade the Justice Department from pursuing the case.

The Justice Department has been investigating whether Apple violated antitrust laws since at least 2019, when the bureau initiated a broader inquiry into big tech’s anticompetitive practices. This effort has resulted in several prominent antitrust cases, including one against Google’s search engine that went to trial in 2023, and another concerning Google’s advertising business scheduled for later this year. The Federal Trade Commission has also filed antitrust lawsuits against Facebook’s parent company Meta and Amazon, both of which are pending trial.

European regulators are also exerting pressure on Apple, with the European Commission imposing a €1.8 billion ($1.95 billion) fine for violating antitrust laws. This investigation was initiated after Spotify lodged a complaint with regulators, alleging that Apple was imposing restrictions on its app store that disadvantaged other music streaming services in favor of Apple Music.