In a significant move targeting Big Tech, the U.S. Department of Justice and 15 states have filed a lawsuit against Apple on Thursday, accusing the tech giant of monopolizing the smartphone market, harming smaller competitors, and inflating prices for consumers.
Apple is the undisputed leader in the smartphone market in the United States with around 55 percent share in Q3 2023, according to Canalys. Samsung, Motorola, TCL, Google, among others, are the other leading phone brands in the US.
The lawsuit comes amidst a broader crackdown on major tech companies, with regulators also targeting competitors such as Alphabet’s Google, Meta Platforms, and Amazon.com in recent years, spanning the administrations of both former President Donald Trump and President Joe Biden, Reuters news report said.
Attorney General Merrick Garland emphasized the importance of challenging monopolistic practices, stating, “Consumers should not have to pay higher prices because companies violate the antitrust laws.”
The Justice Department alleges that Apple’s pricing strategies, which can see iPhone prices soar up to $1,599, contribute to larger profits for the company at the expense of consumers.
Revenue of Apple was $119.6 billion for its quarter ended December 30, 2023. Apple generated profit of $33.91 billion during the same period. Apple paid $6.4 billion towards income tax.
According to the Justice Department, Apple’s business model, which has historically centered around dictating the functionalities and usage of its devices, warrants scrutiny. The lawsuit aims to push Apple, with its staggering market value of $2.7 trillion, to offer users more options regarding how apps interact with the hardware designed by the company.
Apple has denied the allegations, with the company’s spokesperson stating, “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.” Additionally, White House assistant press secretary Michael Kikukawa affirmed President Biden’s support for enforcing antitrust laws to ensure fair competition.
The Justice Department’s lawsuit seeks to implement changes within Apple, potentially involving measures to reduce the company’s size or restructure its operations. The lawsuit aims to foster competition in smartphone markets, reduce fees for developers, and enhance innovation in the sector.
In response, Apple representatives have indicated they will argue for the global smartphone market to be considered, where the iPhone holds a smaller share compared to its dominance in the United States.
The latest IDC report indicates that the global market share of Apple has reached 24.7 percent in 2023 worldwide. Samsun, Xiaomi, Transsion, Vivo, among others, are the leading smartphone makers in the top positions.
The lawsuit highlights instances where Apple allegedly hindered competitors by suppressing technologies that could have increased competition, such as messaging apps, smartwatches, and digital wallets. The complaint also references communications from the late Apple co-founder Steve Jobs, suggesting efforts to lock in developers and consumers to Apple’s ecosystem.
Apple has faced antitrust scrutiny and legal challenges in various regions, including Europe, Japan, and Korea. In Europe, Apple’s App Store business model has faced regulatory intervention, with the Digital Markets Act recently coming into effect, aiming to promote competition by allowing developers to offer their own app stores without paying commissions to Apple.
The outcome of the lawsuit against Apple could have significant implications not only for the tech giant but also for the broader landscape of competition within the smartphone market.
Baburajan Kizhakedath
