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The Justice Department and a group of state attorneys general filed a sweeping antitrust case against Apple on Thursday, accusing the $2.7 trillion company of violating antitrust law by illegally monopolizing smartphone markets and raising costs for consumers, developers, artists and others.
Attorneys general in 15 states including California, New Jersey, Oklahoma, North Dakota and the District of Columbia joined the complaint, filed in New Jersey federal court.
“For years, Apple responded to competitive threats by imposing a series of ‘Whac-A-Mole’ contractual rules and restrictions that have allowed Apple to extract higher prices from consumers, impose higher fees on developers and creators, and to throttle competitive alternatives from rival technologies,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division.
Apple disputed the allegations in a statement. “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” the company said. “It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”
The Biden administration has made confronting corporate power a key part of its domestic economic policy and the suit is just the latest major legal problem besetting the country’s biggest tech companies. The DOJ also has two ongoing lawsuits against Google, targeting both its search and advertising businesses. And the Federal Trade Commission is both accusing Amazon of illegally inflating the cost of goods sold on its platform and suing to force Meta to sell Instagram and WhatsApp. The investigations all began during the Trump Administration.
Apple’s App Store and its 30 percent commissions on many purchases have drawn the bulk of the criticism from companies like Epic Games, Spotify and Match Group. In Thursday’s case though, the DOJ is accusing the company of antitrust violations across its mobile business. The government is attacking the entirety of its so-called walled garden, which Apple allegedly uses to keep customers tied to its products and services at the expense of rival developers and hardware makers like Samsung.
“Apple props up its monopoly through contractual provisions with software developers and by withholding key features of its iPhone from rivals,” the DOJ and states said in the complaint.
“The cumulative effect of [Apple’s] course of conduct has been to maintain and entrench [its] smartphone monopoly at the expense of the users, developers, and other third parties who helped make the iPhone what it is today,” according to the complaint. “Despite major technological changes over the years, Apple’s power to control app creation and distribution and extract fees from developers has remained largely the same, unconstrained by competitive pressures or market forces.”
Among the effects of Apple’s conduct, according to the lawsuit, has been to limit cloud streaming services and apps that allow easy messaging between iPhones and phones using Google’s Android operating system, giving users the dreaded green chat bubbles. Apple has also made it harder for competing smartwatches to work with iPhones, and imposed obstacles for other payment providers to compete with its digital wallet, according to the complaint.
In recent weeks lawyers and executives for Apple met with senior DOJ officials including antitrust head Jonathan Kanter in an unsuccessful effort to avoid a lawsuit.
Apple is facing antitrust trouble around the world. The European Commission recently fined the company nearly $2 billion for blocking music streaming competitors from offering cheaper deals outside their apps, and EU officials are scrutinizing how Apple is complying with Europe’s recently enacted Digital Markets Act. Elsewhere, countries including South Korea are also coming for Apple and other tech companies.
As recently as Wednesday, companies including Meta, Microsoft, Match, X and Spotify told a federal judge that Apple is not complying with a separate U.S. court ruling, in a case brought by Epic Games. That 2021 ruling required Apple to allow developers to inform customers of cheaper options available off its platforms like the App Store, but the tech companies bringing the complaint say Apple created “dozens of requirements and limitations to which developers must adhere to be eligible to include an external purchase link within their apps.”
The DOJ’s case on Thursday is the third antitrust suit the DOJ has filed against Apple since 2010. It previously settled accusations that Apple colluded with other tech companies to suppress worker salaries, and won a trial accusing the company of facilitating a conspiracy to fix prices of e-books. The most recent case, though, is by far the most wide-ranging in scope.
