Washington — Apple Inc., one of the world’s most valuable and influential companies, illegally engaged in anti-competitive behavior in an effort to build a “moat around its smartphone monopoly” and maximize its profits, the Justice Department alleged in a blockbuster antitrust lawsuit filed Thursday.
In the suit brought by federal prosecutors in New Jersey, the Justice Department accused the company of using app development rules, iPhone features and hardware that customers use every day — including iMessage, Apple Wallet and smartwatches — to thwart competition and expand its business by charging higher prices.
The company employed “a series of shapeshifting rules and restrictions in its App Store guidelines and developer agreements that would allow Apple to extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives,” the complaint alleged.
Specifically, investigators alleged the tech giant — which brought in nearly $400 billion last year — boxed out its smaller competitors by blocking the expansion of what are known as “super apps” that allow for multifunctional use, disrupting messaging formats and capabilities between Apple and non-Apple devices, and monopolizing the use of tap-to-pay functions on iPhones to only the Apple Wallet.
Discrepancies in sending messages between Apple and non-Apple products have long been a thorn in the side of users as media quality, edit capabilities and even the color of the messages themselves change depending on the devices being used.
According to prosecutors, “This signals to users that rival smartphones are lower quality because the experience of messaging friends and family who do not own iPhones is worse — even though Apple, not the rival smartphone, is the cause of that degraded user experience.”
Apple’s alleged anti-competitive practices did not stop there, however, according to investigators. They also allegedly worked to stifle the use of non-Apple smartwatches by limiting how users interacted with them on the iPhone and used cloud streaming, location services and web browsers on iPhones to snuff out smaller rivals.
“If left unchallenged, Apple will only continue to strengthen its smartphone monopoly,” Attorney General Merrick Garland said in a statement Thursday. Garland is set to speak later in the morning.
Apple is not the first behemoth in the tech space to face scrutiny from the Justice Department’s Antitrust department. Over the last few years, Google has faced two lawsuits — one during the Trump administration and another during President Biden’s administration — that alleged monopolistic business practices.