The US supreme court has now filed a landmark lawsuit against Apple, accusing the company of monopolising the smartphone market and crushing competition in America.
In the legal action, the justice department of the US alleges the company abused its control of the iPhone app store to “lock in” customers and developers a reference to the apple ecosystem.
It accuses the firm of taking illegal steps to delete apps seen as a threat and make rival products less appealing when advertised.
The company has now vowed to “vigorously” fight the lawsuit and denies all the claims.
The sprawling complaint was filed at a federal court in New Jersey along with the attorneys general of 16 states, marking one of the biggest challenges to date for the company.
It alleges that Apple used “a series of shapeshifting rules” and restricted access to its hardware and software, in an attempt to boost its own profits while raising costs for customers and slowing down innovation.
“Apple has maintained monopoly power in the market not simply by staying ahead of the competition on the merits but by violating federal antitrust law,” Attorney General Merrick Garland said at a press conference announcing the suit.
“Customers should not have to pay higher prices because companies break the law.”
The 88-page complaint focuses on five areas where Apple allegedly abused its power in the industry.
The US alleges that the company used its app review process to stump development of super apps and streaming apps, because it was worried such apps would provide less incentive for customers to stick with iPhones.
It also says the company has made it difficult to connect iPhones to smart watches made by rivals and blocked banks and other financial firms from accessing its tap-to-pay technology, allowing Apple to earn billions in fees from processing Apple Pay transactions.
apple said customers were loyal to the company because they were happy and that under US law it was free to choose its business partners and who it showcased. It has pointed to privacy and security concerns to justify its rules regarding suppressing a few apps.
Apple’s Perspective
“We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,” the company said.
“Anti-trust laws and the courts’ interpretation of them suggest that once you’re a monopolist,” he said, “if you do engage in behaviours that have no legitimate business justification other than to limit competition and cement your monopoly, then that is problematic.”
It is the third legal action the company has faced from the US government since 2009 and the first antitrust challenge was filed against the company under President Joe Biden’s administration.
If the government wins the case, it could force the company to make changes to its current contracts and practices or even lead to a break-up of the company that many fans fear.
Shares in the company fell more than 4% as investors digested the negative implications of the legal battle.
Last month, it was fined €1.8bn by the EU for breaking competition laws over music streaming.
The company had prevented streaming services from informing users of payment options outside the Apple app store, the EU said.
Anat Alon-Beck is a business law professor at Case Western Reserve University in Ohio,she made the following statements
“It’s not just about the 30% app store fee, but about the core unfair practices of Apple,” she said, adding that it was “about time” that the DOJ took action.
“Apple systematically excludes rivals from the Apple ecosystem. By doing that, Apple is hurting so many startup businesses, stakeholders, customers and, in my opinion, its shareholders,” she said.
According to the justice department, Apple’s share of the US smartphone market exceeds 70% which is a basic monopoly.
