The Justice Department and 16 state attorneys general filed an antitrust lawsuit against Apple on Thursday.
via: CNN
It’s the largest in a recent string of Big Tech companies to face antitrust complaints from the US government, which is cracking down on the massive industry whose power has gone largely unchecked over the past several decades.
The long-anticipated lawsuit comes after years of allegations by critics that Apple has harmed competition with restrictive app store terms, high fees and its “walled-garden” approach to its hardware and software: Apple famously makes its tech easy to use, but it achieves that by tightly controlling – and in some cases, restricting – how third-party companies can interact with the tech behemoth’s products and services. In some cases, Apple may give its own products better access and features than its competitors. The company said it denied the lawsuit’s allegations and would fight them.
“Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone,” the Justice Department said in a press release. “Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.”
For example, Apple allows iPhone customers to send high-quality photos and videos seamlessly to one another, but multimedia texts to Android phones are slower and grainy. The company late last year relented and agreed to improve the quality standard it uses to interact with Android phones via text message – but it still maintains those messages in green bubbles, creating a kind of class divide, critics argue.
The company also gives its own products the ability to access certain parts of its hardware that it restricts other companies from using. That unleashes an almost magical experience for how iPhones interact with AirTags, when competitors’ products are far more limited in their capabilities.
This year, European regulations forced Apple to give other companies access to the iPhone’s tap-to-pay hardware chip, enabling the creation of competing digital wallets. But those rules are limited to the European Union.
And Apple maintains a large 30% commission on most sales through its app store – a frequent complaint from companies that try to sell subscriptions, saying Apple’s enormous share of the smartphone market forces them to pay what they argue is an unnecessarily high commission.
“We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it,” Apple said in a statement.
Thursday’s suit claims Apple has illegally monopolized smartphone markets by using a complex web of contractual terms that harm everything from text messaging to mobile payments. Among other things, the DOJ says, Apple has used its control over iOS, the iPhone operating system, to block innovative new apps and cloud streaming services from the public; degrade how Android messages appear on iPhones; restricted how competing smartwatches can work with iPhones; and hindered rival payment solutions.
“By stifling these technologies, and many others,” Thursday’s complaint says, “Apple reinforces the moat around its smartphone monopoly not by making its products more attractive to users, but by discouraging innovation that threatens Apple’s smartphone monopoly.”
Apple, in a statement, said the lawsuit would set a “dangerous precedent” and hinder its ability to make the compelling and consumer-friendly technology that have made the company one of the most valuable in the world.
“At Apple, we innovate every day to make technology people love – designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users,” the company said in its statement. “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”
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