The US Department of Justice is suing Apple for monopolizing the market with its iPhone by stifling competition and imposing excessive costs on consumers.
The lawsuit, also filed by multiple US states, attacks the iPhone for making hundreds of billions of dollars by making it harder for consumers to switch to cheaper smartphones and devices.
The long-awaited case against Apple sees the company, founded by Steve Jobs in 1976, on a collision course with Washington after largely escaping US government scrutiny for nearly half a century.
The company joins Amazon, Google and Facebook owner Meta also facing antitrust lawsuits in the United States.
News of the lawsuit sent Apple shares down as much as 3.75% on Wall Street today.
At the heart of the lawsuit are Apple's alleged exclusionary practices, which impose strict and sometimes opaque conditions on companies and developers seeking to reach the 136 million iPhone users in the US.
According to the lawsuit, these rules and decisions are designed to force Apple users to stay in the company's ecosystem and buy more expensive hardware.
"Consumers should not have to pay higher prices because companies violate antitrust laws," said Attorney General Merrick Garland.
"If left, Apple will only continue to strengthen its smartphone monopoly," he added.
Apple is fighting back
The massive investigation uncovered practices that prosecutors say make Apple richer at the expense of advancing innovation and technology for consumers.
In a statement, Apple rejected the merits of the lawsuit, saying it was "incorrect in fact and law."
If successful, the lawsuit would "set a dangerous precedent by empowering the government to take a heavy hand in designing people's technology," the company added.
The lawsuit accuses Apple of creating an obstacle to the creation of Super Apps, web portals that could exist on the iPhone and give users other ways to get services, such as music, photos or movies.
Other big tech giants like Meta have long dreamed of opening such super-apps on the iPhone, which accounts for roughly half of the smartphone market in the United States.
The allegations also target Apple Wallet, which is the only app allowed on the iPhone to access the technology to make contactless payments in stores.
Messaging apps are also under scrutiny, with prosecutors accusing Apple of making it difficult for users to easily interact with Android phone users, forcing them to buy the more expensive iPhone device.
It's also about smartwatches, with the Apple Watch only available through the iPhone and competing smartwatches having very limited functionality.
The complaint alleges that these unfair practices are spreading to other services such as web browsers, entertainment and even car services.
In recent years, Apple has invested heavily in promoting services as well as hardware as it looks for ways to make money beyond the iPhone, which was introduced in 2007 and changed the world of consumer technology.
But iPhone sales growth has slowed in recent years, increasing pressure on the company to find other sources of revenue.
The Justice Department pointed out that Apple's profits exceed those of any other company in the Fortune 500 and that they exceed the gross domestic product of more than 100 countries.
In 2023, Apple posted global sales of $383 billion and net profit of $97 billion.
The investigation into Apple began in 2019 during the Trump administration. /BGNES
