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US Government Sues Apple for Manipulating Market

Apple store lawsuit
US Department of Justice filed an antitrust lawsuit against Apple. Credit: Ed-Uthman-MD, Wikimedia Commons, CC BY-SA 2.5

In a shocking move, the US Department of Justice (DOJ), backed by a total of 16 US state district attorneys along with the District of Columbia, filed on Thursday an antitrust lawsuit against tech giant Apple.

This unprecedented –for Apple in the US– legal challenge that Apple has to face accuses the popular company of monopolising the smartphone market. This is a move that could potentially have far-reaching implications for the company and consumers as well as the tech industry as a whole.

What is the issue

At the heart of the US lawsuit against Apple is the allegation on behalf of the American government that Apple has been engaged in anti-competitive practices for some time. The US government accuses Apple of trying to maintain its dominance in the smartphone market.

The DOJ also claims that the strategies that Apple has been employing have not only stifled competition in the market but also harmed consumers by limiting their choices significantly and driving up prices. This lawsuit truly represents one of the most significant antitrust actions against a tech company in recent years in America. It is also signalling a new, more robust effort by the US authorities to regulate the power of major mega-tech firms, like Apple.

Key allegations against Apple

The US government lawsuit describes in detail several ways in which Apple is said to have maintained its monopoly in the smartphone market.

Among these, we can find the allegation that Apple has been imposing contractual restrictions as well as fees that limit the functionality of third-party apps on iPhones. Additionally, Apple is being accused of selectively restricting access to critical points of connection between these apps and the operating system of the iPhones, known as iOS.

Such actions, the DOJ argues, degrade the functionality of apps or accessories that are not made by Apple, something that directly impacts consumer choice and innovation in the wider market.

US Department of Justice.
US Department of Justice. Credit: flickr / Salticidae CC BY NC-SA 2.0

Additionally, the complaint against the tech giant highlights the control that the California-based company places over its App Store. Apple is known to be charging up to a 30 per cent commission on sales. This is a practice that has been at the centre of contention with app developers and competitors of the Android market alike. This practice, also known as the “Apple tax”, is seen now by the American authorities as a significant barrier to competition. As a result, developers are being forced to comply with Apple’s stringent rules or face exclusion from its important market.

It is also noted that earlier this month, the European Union fined Apple over €1.8 billion ($1.95 billion) for ”abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad users through its App Store.”

Potential impact on consumers

The outcome of this landmark lawsuit could have profound implications for consumers in the near future. If the DOJ’s efforts are successful, we might see a more increased competition in the smartphone market. As with every other market, competition might end up leading to lower prices, more innovation, and greater choice for everyone in the market.

Additionally, it could pave the way for more third-party apps and services to operate more freely and efficiently on iOS. This could potentially finally break down the “walled garden” that Apple has been accused of creating around its ecosystem in the last decade.

As this legal battle unfolds, it will be closely watched by industry observers, competitors, and consumers worldwide.

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