The US Justice Department and 16 attorneys general sued Apple Inc. for antitrust violations for prohibiting rivals from adopting its popular products' hardware and software.
A five-year investigation into the world's second-most valuable technology business ended with the suit filed Thursday in New Jersey federal court. Silicon Valley is a priority of the Biden administration's economic policy, which emphasizes competition. The European Commission is preparing to investigate Apple and Alphabet Inc.'s Google's compliance with the Digital Markets Act, the EU's new Big Tech gatekeeper.
The announcement sent Apple shares down 3.8%, their worst intraday drop since Feb. 2. The lawsuit says that Apple has exploited its iPhone app distribution power to block advancements that would have made switching phones easier. Apple blocks cross-platform messaging apps, third-party digital wallets, non-Apple wearables, and mobile cloud streaming.
The suit seeks to change Apple's practices to lower smartphone prices for consumers, reduce developer fees, and preserve innovation for the future.
At a press conference, US Attorney General Merrick Garland stated Apple has “consolidated its monopoly power not by making its own products better but by making other products worse.”
The business called the action “wrong on the facts and the law,” cautioned that it would “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology,” and promised to “vigorously defend against it.”
Apple said in a statement that it innovates every day to produce technology people love, designing devices that work seamlessly together, protect privacy and security, and offer a spectacular experience. “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”
Apple support cloud-based gaming and will introduce RCS cross-platform communications later this year. The attorneys general are from California, New Jersey, and DC.
Apple has made various modifications to its App Store policy in Europe to comply with the Digital Markets Act, but Bloomberg reported Thursday that Apple and Google may face full-blown EU probes in the coming days.
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