us-justice-department-sues-apple-alleging-illegal-monopolisation-of-smartphone-market

The Justice Department in the United States has taken legal action against Apple, alleging that the technology giant has unlawfully monopolised the smartphone market. 

The company's shares experienced a significant decline of 4.1 per cent on March 21, resulting in a loss of approximately US$113 billion (S$151.8 billion) in market value.

 

This decline has brought its year-to-date losses to 11 per cent. Once valued at over US$3 trillion, Apple's performance in 2024 has lagged behind both the Nasdaq 100 and the S&P 500 indices.

 

The lawsuit, filed in federal court in New Jersey, claims that Apple's dominance in smartphones restricts competition, stifles innovation, and maintains artificially high prices.

 

Deputy Attorney General Lisa Monaco stated, "Apple has monopolised the smartphone market by locking consumers into the iPhone while excluding competitors." 

 

She added that this conduct has hindered industry advancement.

 

Apple has refuted the accusations, asserting that the lawsuit is unfounded both factually and legally, and it intends to vigorously defend against it.

 

The lawsuit targets Apple's practices such as limiting the functionality of non-Apple smartwatches, restricting access to contactless payment for third-party digital wallets, and preventing its iMessage app from exchanging encrypted messages with competing platforms.

 

The lawsuit, filed jointly with 16 state attorneys general, reflects the current administration's aggressive stance on antitrust issues, aiming to foster fair competition and innovation in the digital sector.

 

Antitrust researcher Dina Srinavasan likened the lawsuit's significance to the government's previous actions against Microsoft, suggesting that challenging Apple's dominance is a significant move.

 

President Joe Biden has urged the Justice Department and the Federal Trade Commission to enforce antitrust laws vigorously. While this approach has faced criticism from some business leaders, it has been praised by others as necessary.

 

The case seeks to address Apple's stronghold over its products, notably the iPhone, to ensure a more competitive marketplace.

 

Apple's "walled garden" strategy, which tightly integrates hardware and software to provide a seamless user experience, has been a key factor in its success. 

 

However, the lawsuit alleges that this strategy stifles competition and allows Apple to charge high prices.

 

Critics argue that Apple's emphasis on user privacy is contradicted by its business practices, such as charging high fees to developers and receiving significant revenue from Google for search referrals.

 

The lawsuit also highlights concerns about Apple's market dominance hindering innovation and potentially leading to higher prices for consumers.

 

The legal proceedings are expected to be protracted, with a verdict not likely until 2026. This lawsuit is part of a broader antitrust crackdown by the Biden administration on major tech companies, including Google and Amazon.

 

Apple's business interests are also entangled in other antitrust cases, such as the Justice Department's lawsuit against Google over its search engine dominance.