DOJ, 16 states sue Apple for monopolizing smartphone market

The Justice Department sued Apple on Thursday, alleging the company illegally maintained a monopoly over smartphones in a wide-ranging lawsuit.

The DOJ was joined by 16 bipartisan state attorneys general in the lawsuit filed in New Jersey , which alleges that Apple limits competition and hurts consumers, developers and small businesses through its operation of the company’s App Store, limiting the functions of third-party smart watches and hurting the quality of cross-platform messaging.

“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,” Jonathan Kanter, DOJ assistant attorney general of the antitrust division, said in a statement.

“Today’s lawsuit seeks to hold Apple accountable and ensure it cannot deploy the same, unlawful playbook in other vital markets,” Kanter added.

Apple defended itself against the allegations and said the lawsuit “threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”

“If successful, [this lawsuit] 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. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,” Apple said in a statement.

The complaint alleges that Apple built a “dominant iPhone platform and ecosystem” and “rather than respond to competitive threats by offering lower smartphone prices to consumers or better monetization for developers” Apple imposed a “series of shapeshifting rules and restrictions” in its App Store, it alleged.

“It has deployed this playbook across many technologies, products, and services, including super apps, text messaging, smartwatches, and digital wallets, among many others,” the complaint states.

The complaint alleges Apple has used anticompetitive measures to keep users buying iPhones by limiting interoperability with devices and services by other companies.

For example, the government alleges Apple makes “third-party messaging apps on the iPhone worse generally and relatively” to Apple’s own default messaging app.

The complaint alleges Apple “undermines the quality of rival smartphones,” because if an iPhone user messages a non-iPhone user in Apple’s default messaging app, the text appears as a green bubble and has limited functionality, including displaying pixelated and grainy photos and keeping users from editing messages.

Similarly, the lawsuit accuses Apple of anticompetitive behavior by making its Apple smartwatch only compatible with an iPhone. It also accuses Apple of limiting third party digital wallets by preventing third-party apps from offering tap-to-pay functionality and not allowing the creating of cross-platform third-party digital wallets.

It also accuses Apple of limiting third-party digital wallets by preventing third-party apps from offering tap-to-pay functionality and not allowing the creation of cross-platform third-party digital wallets.

Part of the complaint centers on allegations of how Apple has blocked innovative “super apps,” defined as apps that can serve a platform for smaller or “mini” programs.

The complaint alleges Apple has “arbitrarily imposed exclusionary requirements” that restrict mini programs and super apps since at least 2017, and “selectively enforced its contractual rules with developers to prevent developers from monetizing mini programs,” hurting both users and developers.

The complaint also alleges Apple has suppressed cloud-streaming game apps, which harms users by “denying them the ability to play high-compute games” and harms developers by preventing them from selling them to users.

The lawsuit is the latest the government has launched against a tech giant in recent years. The DOJ has two ongoing lawsuits against Google, and the Federal Trade Commission sued Meta, the parent company of Facebook and Instagram.

Updated at 11:26 a.m. ET

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