Apple sued by DOJ over iPhone monopoly allegations

The U.S. Department of Justice filed a lawsuit this morning accusing Apple of monopolizing smartphones. Seventeen state attorneys general joined federal agencies in the massive lawsuit.

“Consumers should not have to pay higher prices because companies violate antitrust laws,” U.S. Attorney General Merrick Garland said in a statement announcing the news. “If unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

Thursday’s lawsuit cited Apple’s longstanding ecosystem behavior as evidence of anticompetitive behavior, including the Messages app’s long-standing use of a green/blue bubble binary to differentiate between iOS and Android users.

The suite states: “Apple will not address competitive threats by offering lower smartphone prices to consumers or better monetization for developers, but by establishing clear guidelines in its App Store Guidelines and Developer Agreement. Implements a series of rule changes and restrictions to address competitive threats. Allows Apple to charge higher fees, hinder innovation, provide a less secure or degraded user experience, and stifle competitive alternatives. It has been implemented in many technologies, products, and services This book is deployed in a wide variety of applications, including super apps, text messages, smart watches, digital wallets, and more.”

The indictment also accuses Apple of “stifling” competition, adding, “Apple strengthens the moat of its smartphone monopoly not by making its products more attractive to users but by blocking innovation that threatens Apple’s smartphone monopoly.”

The lawsuit specifically targets the iPhone maker’s share of the premium smartphone segment. It accuses the company of adding friction for those looking to move to competition. These include things like “contractual restrictions” and the review process the company has long employed in its app store.

The regulator singled out the clampdown on five categories: “super apps” (which combine a wide range of functionality in a single app), cloud streaming gaming apps, messaging apps, digital wallets and smartwatch cross-platform compatibility . That last bit is a travesty of the company’s long-standing practice of ensuring that certain features only work when paired with other Apple devices.

Apple quickly countered that such a lawsuit, if successful, would limit its ability to compete in the crowded smartphone market. In a statement provided to TechCrunch, the company noted,

At Apple, we innovate every day to build technology people love—designing products that work seamlessly together, protect people’s privacy and security, and create amazing experiences for their users. This lawsuit threatens our identity and the principles that make Apple products stand out in a fiercely competitive marketplace. If successful, it will prevent us from creating the technology that people expect Apple to deliver—technology at the intersection of hardware, software, and services. It would also set a dangerous precedent that would allow governments to take drastic measures when designing human technology. We believe the lawsuit is wrongful on both facts and law, and we will vigorously defend it.

The lawsuit comes after a raft of international regulatory scrutiny in markets including the European Union, which has targeted the company over antitrust concerns. At the same time, Apple is also involved in a lawsuit from Epic Games, questioning its App Store revenue practices. At the same time, the Biden administration has pledged to take more aggressive action against anti-competitive behavior.

From New Jersey, Arizona, California, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New York, North Dakota, Oklahoma, Oregon, Tennessee Attorneys general from the state, Vermont, Wisconsin and the District of Columbia participated in Thursday’s filing.

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