US Government Sues Apple in Landmark Anti-Trust Lawsuit

Apple lawsuit

According to people familiar with the matter, the United States Justice Department is preparing a landmark antitrust lawsuit against Apple Inc. The suit, expected to be filed today in a New Jersey federal court, represents the latest in the Biden administration’s attempts to deal with monopolization in big tech.

Update March 21 at 8 AM PDT: The rumored lawsuit is official. The US Department of Justice and 16 state and district attorney generals have sued Apple on the basis that the tech giant operates an illegal monopoly in the smartphone market.

“Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others,” the DOJ argues in a press release.

Apple, saying the lawsuit would set a “dangerous precedent,” vows to vigorously defend itself against the lawsuit, which Apple calls “wrong on the facts and the law.”

The Justice Department alleges that Apple actively makes it harder for customers to switch away from using an iOS device, blocks cloud-streaming apps that could reduce the need for improved hardware, suppresses the quality of messaging between competing devices, limits the functionality of third-party devices, and blocks third-party developers from implementing certain financial and wallet features.

The original story follows below.

The Justice Department is already fighting against Alphabet Inc.’s Google for alleged antitrust violations. The Federal Trade Commission is actively pursuing antitrust cases against Meta Platforms Inc. — the parent company of Facebook, Instagram, and Threads — and Inc.

The U.S. government, echoing the sentiments consumers have levied against Apple for decades, believes Apple’s “walled garden” approach is stifling competition and violating antitrust laws.

This is now a two-front war for Apple, as the company already faces trouble in Europe. As Bloomberg reports, Apple was “hit with a €1.8 billion fine this month for shutting out music streaming rivals from offering cheaper deals.” Apple is currently appealing this penalty.

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Apple may also face a “full-blown investigation” in the EU as a result of the new Digital Markets Act. Competitors are complaining that Apple’s new App Store rules are problematic, a serious allegation given that the penalty for violations can reach up to 20% of a company’s annual global revenue — which would be upwards of $76 billion in Apple’s case based on its global revenue in 2023.

Returning to Apple’s legal woes on its home turf, this would not be the first time it was targeted by a federal lawsuit in the United States. It would mark Apple’s third bout with the Justice Department concerning antitrust violations in the last 14 years. However, the newest case would be the first time the U.S. government accused Apple of “illegally maintaining its dominant position,” per Bloomberg.

CNN suggests that the imminent legal action could impact Apple’s stock price and overall valuation, which currently sits at an eye-watering $3 trillion. So far, Apple’s stock price has taken only a minor hit, given that this landmark lawsuit has been widely anticipated.

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The outcome of pending legal action could force Apple to change its business strategies and policies or, in a particularly severe hypothetical scenario, divest some assets.

This is a developing situation. It will be fascinating to see if the lawsuit hits the legal wire today as expected, and if so, what allegations the Justice Department makes against Apple.

Image credits: Photos licensed via Depositphotos.