Apple Sued by Feds and 16 States for Abusing Monopoly Power in Smartphone Industry

Apple, one of the world’s richest companies, is now under fire from the U.S. government. The Department of Justice and 16 states filed a lawsuit against the Silicon Valley giant on Thursday, accusing the company of abusing its power as a monopoly to edge out rivals and ensure customers keep using its products.

The heart of the lawsuit centers around claims that Apple stopped smaller companies from accessing the hardware and software in its iPhones, which led to fewer options for customers.

Apple is worth nearly $3 trillion, making it one of the highest-valued companies in the world. And its iPhone is one of the most popular phones on earth, dominating the global market, according to market analyst firm IDC. The Justice Department alleges it’s by no coincidence that Apple was able to ensure its place at the top.

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” Attorney General Merrick B. Garland says. “If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

The Justice Department says that because Apple imposes contract restrictions on developers, it means new innovation is kept within its ecosystem. The government says this allows Apple to take more money from consumers, developers, content creators, publishers, small businesses and more.

Because of these restrictions, the Justice Department says Apple has been able to block innovation in super apps with a broad functionality and has ensured its iMessage system keeps people from using cross-platform messaging apps.

The government also says that Apple has thrown around its power to suppress innovation in streaming services for video games, non-Apple smartwatches, and third-party digital wallets that let users tap-to-pay.

Apple says the restrictions around its software and hardware are to protect people’s privacy and security.

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” a company spokesperson says. “If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”

Apple says it will vigorously defend itself against this lawsuit. In the lead-up to the suit, Apple reportedly met with Justice Department officials multiple times, according to the New York Times.

Under the Biden administration, the Justice Department and the Federal Trade Commission have filed antitrust lawsuits against several leading tech companies.

The Department of Justice went to trial against Google parent Alphabet last fall over allegations that it stomped out competing search engines. The FTC is working on a massive suit against Amazon.

This is the third lawsuit the Justice Department has brought against Apple over antitrust violations in the past two decades. European regulators have also targeted the company over anti-competitive behavior, including claims of boxing out rivals with its music streaming service.

“No matter how powerful, no matter how prominent, no matter how popular — no company is above the law,” Deputy Attorney General Lisa Monaco says.

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