DOJ has filed a lawusit against Apple on antitrust grounds over its lock-in and other practices, alleging monopolistic behavior in the US smartphone market.
After years of investigations and complaints from competitors alleging Apple has abused its dominant market position in smartphones, the United States Department of Justice (DOJ) has filed a far-reaching antitrust lawsuit against the company.
It alleges Apple abused its position in the smartphone market by locking in customers and running an illegal monopoly. Interestingly, the filing doesn’t mention Apple’s management of the App Store and fees imposed on developers.
Apple characterized the lawsuit as “wrong” in a statement to The Verge, saying it “threatens who we are” and promising to “vigorously defend” itself against it.
DOJ sues Apple on antitrust grounds
“Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses and merchants, among others,” DOJ antitrust division chief Jonathan Kanter said in a statement.
“For years, Apple responded to competitive threats by imposing a series of ‘Whac-A-Mole’ contractual rules and restrictions that have allowed Apple to extract higher prices from consumers, impose higher fees on developers and creators and to throttle competitive alternatives from rival technologies.”
Ways DOJ thinks Apple violated antitrust laws
DOJ points to five ways Apple has violated section two of the Sherman Antitrust Act:
Super apps
Apple has willfully imposed restrictions on so-called “super apps” from third-party developers as a stagey to limit their growth because the company’s own apps compete with those developers on the App Store.
Cloud-streaming services
Apple does not allow cloud-streamed gaming, which uses the power of the cloud to deliver gameplay over the internet.
Messaging apps
Apple has crippled texting between iPhone and Android users in the Messages app to increase the stickiness of the iOS platform and make switching platforms more complicated than necessary. RCS is coming to iPhone this year to solve this problem.
Smartwatches
Apple has restricted the functionality of non-Apple smartwatches by limiting access to software and hardware features, creating compatibility issues that discourage Apple Watch owners from switching from their iPhones.
Digital wallets
Apple has blocked developers from accessing the iPhone’s NFC chip, preventing them from developing competing digital wallets with tap-to-pay functionality.
Appel’s response to DOJ’s lawsuit
Apple spokesperson Fred Sainz:
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.
I don’t see how this lawsuit “threatens who we are.”
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.
Governments around the world have been investigating the company over similar accusations, led by the European Union, which emerged victorious in forcing Apple to relax its policies when dealing with EU customers and developers.
This process will take years
But Apple is a US company, and its iPhone enjoys a dominant position in the US smartphone market, making this lawsuit a massive problem for the company. The DOJ filed the case in the US District Court for the District of New Jersey.
Grab some popcorn and arm yourself with lots of patience. Even though this monster lawsuit is not on the level of the landmark Microsoft case at the turn of the century, it’s going to be decided in years to come.