Apple Monopolizes Smartphone Market, Biden Admin Charges

 

The U.S. Department of Justice, 15 states and the District of Columbia claim in a lawsuit filed Thursday that Apple maintains an illegal monopoly in the smartphone market. 

“We allege that Apple has employed a strategy that relies on exclusionary, anticompetitive conduct, that hurts both consumers and developers,” U.S. Attorney General Merrick Garland said Thursday morning.

The 88-page complaint includes allegations that Apple degrades or restricts other companies' apps or products, effectively hindering consumers from leaving the Apple ecosystem, and thwarting developers' ability to offer competing services.

“To protect its smartphone monopoly -- and the extraordinary profits that monopoly generates -- Apple repeatedly chooses to make its products worse for consumers to prevent competition from emerging,” the officials allege in a complaint filed in U.S. District Court in New Jersey.

The complaint focuses on several examples of Apple's alleged suppression of technologies that, according to the officials, “would have increased competition among smartphones.”

For instance, according to the complaint, Apple prevents other companies' messaging apps from operating in the background when the app is closed, which “impairs functionality like message delivery confirmation.”

Also, Apple allegedly degrades other companies' smartwatches in several ways -- including by preventing iPhone users from responding to messages or accept calendar invites via another manufacturer's smartwatch.

The complaint also says Apple's digital wallet is the only iPhone app capable of using near-field communication, which allows consumers to pay by tapping their phones.

“By denying iPhone users the ability to choose their trusted banking apps as their digital wallet, Apple retains full control both over the consumer and also over the stream of income generated by forcing users to use only Apple-authorized products in the digital wallet,” the complaint alleges.

“If third-party developers could create cross-platform wallets, users transitioning away from the iPhone could continue to use the same wallet, with the same cards, IDs, payment histories, peer-to-peer payment contacts, and other information, making it easier to switch smartphones,” the officials add.

Apple stated Thursday that it plans to “vigorously defend” itself.

The lawsuit “threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” the company stated, adding that if successful, the suit would “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.” 

Apple isn't the only tech company facing antitrust accusations.The federal government has also accused Google, Amazon and Meta of acting anticompetitively.The lawsuits against those companies are ongoing.

Apple previously defeated antitrust claims by Fornite developer Epic Games, which alleged that Apple monopolizes the iOS app distribution market, and unlawfully forces developers to use its payment processing system.

U.S. District Court Judge Yvonne Gonzalez Rogers in the Northern District of California ruled after a trial that Epic hadn't proven its antitrust claims, but also found that Apple's anti-steering policies -- which prohibited developers from offering in-app links to outside payment platforms -- violated California's unfair competition law.

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