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Department of Justice and 15 States Sue Apple Over iPhone Monopoly

by | Mar 26, 2024 | Firm News

On March 21, 2024, the U.S. Department of Justice, joined by fifteen states and the District of Columbia, filed suit against Apple Inc. in the U.S. District Court of New Jersey.  In their  six-count Complaint, the plaintiffs allege that Apple violated antitrust laws under Section 2 of the Sherman Act and different state statutes through its monopolization of the smart phone market.  Specifically, the plaintiffs allege that Apple accomplishes its monopoly by imposing contractual obligations on and withholding critical access points from developers.  Apple also allegedly undermines apps, products, and services that would make consumers less reliant on the iPhone.  By doing so, the plaintiffs allege that Apple creates a monopoly with the objective to minimize alternatives to the iPhone and quarry more money from its users, developers, and content creators, among others.

In support of their allegations, the plaintiffs provide multiple examples of how Apple creates a dependency on their iPhone products.  First, it disrupted the expansion of “super” apps with broad functionality that would make it easier for consumer to switch to competing smartphone products.  Second, it suppresses its own mobile cloud streaming services that would allow consumers to enjoy high-quality content and cloud-based applications without paying for Apple’s expensive smartphone hardware.  Third, Apple intentionally made the quality of cross-platform messaging apps less secure for users in order to motivate them to keep buying iPhones.  Furthermore, the Apple Watch is made to only be compatible with the iPhone, and the functionality of third-party cross-platform smart watches is significantly reduced.  Finally, Apple prevents third-party apps from offering the tap-to-pay function, which inhibits the creation of cross-platform digital wallets offered by non-Apple entities.

The Complaint opens with a story from 2010 when an unnamed Apple executive emailed Apple’s co-founder and then-CEO Steve Jobs about an ad for the new Kindle e-reader.  There, the ad showed a woman use the Kindle app on her iPhone to buy and read books before switching to an Android to use the same app.  The executive pointed out the clear message about how easy it was to switch between products which he found quite displeasing.  Since then, the story goes that Steve Jobs made it his business to coerce developers to use its payment system to lock in developers and users to its own platform.  After Jobs’ passing, Apple continues its mission against competitive threats by making it more difficult or expensive for users and developers to use other platforms, rather than making its own platform more attractive.

After filing the Complaint, U.S. Attorney General and former Supreme Court nominee Merrick Garland issued a statement.  “Consumers should not have to pay higher prices because companies violate the antitrust laws….If left unchallenged, Apple will only continue to strengthen its monopoly.  The Justice Department will vigorously enforce antitrust laws that protect consumers from higher prices and fewer choices.”