2024-03-21 22:16:59
The United States Department of Justice sued Apple this Thursday for illegally maintaining a monopoly on its iPhones, by stifling competition and imposing high costs on consumers.
“If the situation does not change, Apple will only continue to strengthen its monopoly on smartphones,” Attorney General Merrick Garland said in a statement after filing the case in federal court in New Jersey.
“Consumers should not have to pay higher prices because companies violate antitrust laws,” Garland said.
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Apple warned on its part that, if successful, the lawsuit could “set a dangerous precedent, giving the government power to strongly influence the design of the technology people use,” according to a statement.
This widely anticipated case pits the company founded by Steve Jobs against Washington after evading federal government scrutiny for nearly half a century. Apple has been widely criticized in recent years for forcing other companies to use its app store and pay significant commissions on all transactions.
The company is accused of imposing restrictive conditions on firms that offer services on iPhone and preventing them, in particular, from creating their own application boutique to directly monetize (make money) their content.
But this judicial action also covers other aspects of the iPhone ecosystem, according to the document published by the Department of Justice.
“All the decisions taken by Apple established and reinforced the defenses that protect its monopoly in the field of smartphones,” argues the government, which partnered with prosecutors from several states in this case.
With this procedure, Apple harmed “users, developers and other parties who contributed to making the iPhone what it is today,” the court document adds.
– Internal documents –
According to the lawsuit, the rules and decisions made by Apple were designed to force users to stay in its ecosystem and buy the company’s expensive hardware, that is, the iPhone.
The Justice Department argues that the group prevented or disrupted the creation and offering of services that could be used on competing smartphones, and even easily switched from one to another.
It evokes, for example, streaming services on iPhone, but also digital wallets that could be used on various platforms.
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Apple also, always according to the official presentation, hindered the development of messaging services that could be used on various media.
The attorney general gave the example of Apple’s messaging system, iMessage, where conversations with smartphones of other brands were not encrypted, unlike what happened with exchanges between two iPhones.
Consequently, “iPhone users have the impression that competing phones are of lower quality (…) when Apple is responsible” for these degraded functionalities.
The government points out that it relied on internal documents that show that the Californian company acted consciously to limit competition and innovations that could threaten its economic model.
– Threat –
The case points out practices that, according to the Department of Justice, make Apple richer to the detriment of innovation.
Apple denies the charges and claims that it is a case “wrong on the facts” and on its legal basis. “We will defend ourselves vigorously.”
“This legal action threatens who we are and the principles that distinguish Apple products in a fiercely competitive market,” the company reacted in a statement transmitted to AFP.
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The European Regulation for Digital Markets (DMA), which came into force in mid-March, forces six of the largest technology companies, including Apple, to open their platform to competition.
Apple responded that it will soon allow its users in the European Union to download applications directly through websites, without going through its famous App Store.
In the United States, the video game giant Epic Games took Apple to court in 2020 to question the obligation that all application creators must go through the App Store on their iPhone.
In September 2021, a federal judge in Oakland (California) considered that Apple did not exercise a monopoly, but ordered the company to stop preventing other firms from using its own payment system for purchases made through its own applications.
Apple proposed an alternative option that authorizes external purchases, but would continue to receive a commission of 12% to 27% for each transaction, compared to the 30% it charges in the App Store.
On Wednesday, Microsoft, Meta, Apple took a hit on Wall Street with a drop of 4.09% to $171.37 at the close.
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