The US Department of Justice sued Apple for antitrust practices. The final sentence could change the Cupertino company forever.
Apple was hit by a major Department of Justice lawsuit on Thursday, paving the way for years of litigation involving hundreds of lawyers. Apple is one of the world’s largest and most influential companies, with a $2.65 trillion market capitalization.
The DOJ filed an 88-page complaint accusing Apple of violating the Sherman Antitrust Act. The lawsuit targets Apple’s ecosystem, alleging that it creates hostile market conditions for smaller players and enhances its monopoly in the smartphone sector.
The document accuses Apple of worsening the consumer experience by forcing them to use proprietary apps and products. “As any iPhone user who has ever seen a green text message or received a grainy, tiny video can attest,” Attorney General Merrick Garland said, “Apple’s anti-competitive conduct also includes making it more difficult for iPhone users to message with users of non-Apple products.”
Apple controls roughly 64% of the US smartphone market.
But the government complaint doesn’t stop at smartphones, presenting evidence that Apple’s smartwatches are also more difficult to use with non-Apple products. Moreover, the document accuses the tech behemoth of exploiting its Apple Store to reinforce its dominant position, closing access to third-party apps.
A year of lawsuit
The DOJ’s lawsuit comes a few weeks after the European Commission issued a $500 million fine against Apple. The sentence accused Apple of violating the bloc’s antitrust rules in the music streaming segment.
The company forces third-party apps to charge subscriptions through the Apple Store rather than an in-app payment system. According to the Commission, this increases consumer prices and encourages the use of Apple Music instead. The EU watchdogs deemed this an “unfair market condition”.
Apple can appeal the sentence, but will require years of legal work and will likely result in a similar verdict.
Similarly, Wednesday’s lawsuit will also be a thorn in Apple’s side. The US government will start investigating Apple’s confidential documents, exposing them to the public. The iPhone maker is usually very secretive about its internal strategies and business model.
It also means Apple’s chief executives will be distracted by lengthy and difficult legal battles. A similar DOJ case against Microsoft in 1998 took three years just to go to trial.
Although it’s too early to make predictions, this lawsuit can end very badly for Apple. The complaint offers some options to reduce Apple’s market dominance, including splitting up its business model into separate divisions. Such a sentence would mark the end of Apple’s signature ecosystem and revolutionize the company completely.
