Moments After Getting Slapped With a $1.95 Billion Fine In Europe, Apple Faces a US Department of Justice Lawsuit Over Smartphone Monopolistic Practices

Apple DoJ lawsuit
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Apple DoJ lawsuit
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Photo Credit: Zhiyue

The United States Department of Justice alleges Apple is operating an illegal monopoly in the smartphone market in a new antitrust lawsuit. Europe’s Digital Markets Act was designed to prevent Apple from being a gatekeeper—now Apple faces antitrust action in its home turf.

The DoJ alongside 16 state and district attorneys allege Apple drives up prices for consumers and developers by making users more reliant on its smartphones. They allege Apple ‘selectively’ imposes its contractual restrictions on developers (something Spotify has complained about very recently). The lawsuit says Apple engages in this behavior as a way to prevent competition from arising.

“Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others,” the DoJ press release reads. The lawsuit defines several ways in which Apple maintains its illegal monopoly including:

  • Blocking Innovative Super Apps | The DoJ alleges Apple has disrupted the growth of apps with broad functionality that would make it easier for consumers to switch between competing platforms. (Why switch to another streaming service when all of your playlists are on Apple Music?)
  • Suppressing Mobile Cloud Streaming Services | Apple has blocked the development of cloud-streaming apps and services to allow consumers to enjoy high-quality video games and other cloud-based applications. (This argument is the core of Epic’s complaints versus Apple.)
  • Excluding Cross-Platform Messaging | The notorious Android ‘green bubbles’ are coming back to haunt Apple as the DoJ alleges Apple intentionally makes cross-platform messaging worse, less innovative, and less secure so its customers continue to buy iPhones.
  • Diminished Smartwatch Functionality | Apple limits the functionality of third-party watches so that users who purchase the Apple Watch face substantial out-of-pocket costs if they do not keep buying iPhones.
  • Limiting Third-Party Digital Wallets | Apple has prevented third-party apps from offering tap-to-pay functionality, inhibiting the creation of cross-platform third-party digital wallets.

While these are the major points outlined in the lawsuit, the DoJ also highlights that Apple’s monopolistic conduct extends beyond just these examples. It affects web browsers, video communication, news subscriptions, entertainment, automotive services, advertising, location services, and more.

The case was filed in U.S. District Court for the District of New Jersey. Attorneys general from New Jersey, Arizona, California, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New York, North Dakota, Oklahoma, Oregon, Tennessee, Vermont, Wisconsin, and the District of Columbia have joined the DoJ in its complaint against Apple.

One area of address is to keep Apple from “using the terms and conditions of its contracts with developers, accessory makers, consumers, and others to obtain, maintain, extend, or entrench its monopoly.” This is something Spotify has complained about recently after issuing updates to its apps in the EU after the Digital Markets Act took effect.

The DoJ’s complaint also addresses a longstanding issue between iPhone and Android users—one in which Tim Cook’s previous comments may come back to haunt the company. During a Q&A session at the 2022 Code Conference for the iPhone 14 lineup unveiling, Tim Cook told a journalist asking about cross-platform messaging difficulty to just “buy your mom an iPhone.