The Justice Department on Thursday announced a sweeping antitrust lawsuit against Apple, accusing the tech giant of engineering an illegal monopoly in smartphones that boxes out competitors, stifles innovation and keeps prices artificially high.
The lawsuit, filed in federal court in New Jersey, alleges that Apple has monopoly power in the smartphone market and leverages control over the iPhone to “engage in a broad, sustained, and illegal course of conduct.”
“Apple has locked its consumers into the iPhone while locking its competitors out of the market,” said Deputy Attorney General Lisa Monaco. Stalling the advancement of the very market it revolutionised, she said, it has "smothered an entire industry.”
Apple called the lawsuit “wrong on the facts and the law” and said it “will vigorously defend against it.”
'Monopoly'
The suit takes aim at how Apple allegedly molds its technology and business relationships to “extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others."
That includes diminishing the functionality of non-Apple smartwatches, limiting access to contactless payment for third-party digital wallets and refusing to allow its iMessage app to exchange encrypted messaging with competing platforms.
It specifically seeks to stop Apple from undermining technologies that compete with its own apps – in areas including streaming, messaging and digital payments – and prevent it from continuing to craft contracts with developers, accessory makers and consumers that let it “obtain, maintain, extend or entrench a monopoly.”
The lawsuit — filed with 16 state attorneys general — is just the latest example of aggressive antitrust enforcement by an administration that has also taken on Google, Amazon and other tech giants with the stated aim of making the digital universe more fair, innovative and competitive.
'Dangerous precedent'
Apple said the lawsuit, if successful, would “hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect” and would "set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”
“At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users,” the company said in a statement.
“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”
The lawsuit complains that Apple charges as much as $1,599 for an iPhone and that the high margins it earns on each is more than double what others in the industry get.
'Anticompetitive practices'
And when users run an internet search, Google gives Apple a “significant cut” of the advertising revenue those searches generate.
The company’s app store also charges developers up to 30% of the app’s price for consumers.
Critics of Apple’s alleged anticompetitive practices have long complained that its claim to prioritise user privacy is hypocritical when profits are at stake.
While its iMessage services is sheathed from prying eyes by end-to-end encryption, that protection evaporates the moment someone texts a non-Apple device.
'High quality argument'
The Justice Department said its lawyers have built a “high-quality" argument of harm in the 88-page indictment with “impressive excerpts from the firm's own documents.”
But don't expect a verdict until 2026 — which means the case could easily drag on with appeals.
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