US DOJ sues Apple accusing it of antitrust violations

The United States Department of Justice, as well as 15 states, are suing Apple for violating antitrust law, specifically Section 2 of the Sherman Antitrust Act. According to the DOJ, Apple has managed to maintain its lead in the US by violating antitrust law rather than on its merits alone.

In its announcement, the DOJ said that it believes Apple uses exclusionary, anticompetitive conduct that hurts consumers and developers. It went on to explain that Apple has consolidated its power not by making its own products better but by making other products worse.

The DOJ said that consumers are being hurt by Apple because they have fewer choices, higher prices and fees, lower quality smartphones, apps, and accessories as well as less innovation from Apple and its competitors. It also alleged that developers have been forced to play by rules which “insulate Apple from competition.”

Explaining how Apple carries out its anticompetitive conduct, the DOJ wrote:

“First, Apple imposes contractual restrictions and fees that limit the features and functionality that developers can offer iPhone users.

 

Second, Apple selectively restricts access to the points of connection between third-party apps and the iPhone’s operating system, degrading the functionality of non-Apple apps and accessories.

 

As a result, for most of the past 15 years, Apple has collected a tax in the form of a 30% commission on the price of any app downloaded from the App Store as well as on in-app purchases. Apple is able to command these fees from companies of all sizes.”

Apple was also accused of suppressing the emergence of new app categories, including cloud streaming apps and super apps, that could reduce the reliability of Apple’s ecosystem. The DOJ also brought up iMessage and said that Apple purposefully makes it difficult to chat with Android users by reducing the functionality of its own messaging app and the functionality of third-party messaging apps.

Another area of concern is Apple Wallet. The DOJ said that Apple encourages parts to participate in Apple Wallet but then forbids them from developing other payment products and services for iPhone users. It said that Apple has blocked third-party developers from making digital wallets that use tap-to-pay functionality, which is a major drawback.

The DOJ said that this type of monopolistic behaviour hurts free and fair markets upon which it believes the US economy is based. It said this type of behaviour hurts producers, workers, and customers and that it plans to enforce antitrust law vigorously.

Source: US DOJ via Reuters

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