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WASHINGTON (AP) – The Justice Department announced Thursday a wide-ranging antitrust case against Apple, accusing the tech giant of an illegal smartphone monopoly that excludes competitors, stifles innovation and keeps prices artificially high. He accused him of orchestrating it.
The lawsuit, filed in federal court in New Jersey, alleges that Apple has monopoly power in the smartphone market and uses its dominance of the iPhone to engage in “pervasive, persistent and illegal conduct.”
“Apple has locked consumers into the iPhone and shut competitors out of the market,” said Deputy Attorney General Lisa Monaco. It slowed the development of the very market it was revolutionizing and “stifled the entire industry,” she said.
Apple said the lawsuit is “false on the facts and the law” and will “vigorously defend itself.”
This far-reaching action will see Apple change its technology and business relationships to “extract more money from consumers, developers, content creators, artists, publishers, small businesses, retailers, and more,” among others. The purpose is to form it like this.
This includes reducing functionality on non-Apple smartwatches, restricting third-party digital wallets’ access to contactless payments, and allowing the company’s iMessage app to exchange encrypted messages with competing platforms. This includes refusing to do so.
Specifically, it will prevent Apple from infringing technology that competes with its apps in areas such as streaming, messaging, and digital payments, and will engage in “get and keep” deals with developers, accessory manufacturers, and consumers. They are trying to prevent them from continuing to enter into contracts that allow them to do so. , extend or establish a monopoly. ”
The lawsuit, filed before 16 state attorneys general, also took on Amazon, Google and other tech giants with the stated goal of making the digital world more fair, innovative and competitive. It’s just the latest example of aggressive antitrust enforcement by the Justice Department. .
“The Department of Justice has an enduring legacy of taking on the largest and toughest monopolies in history,” Assistant Attorney General Jonathan Cantor, head of the antitrust division, said at a press conference announcing the lawsuit. “Today, we stand here again to foster competition and innovation in next-generation technologies.”
Dina Srinavasan, a Yale University fellow and antitrust researcher, compared the significance of the case to the government’s actions against Microsoft a quarter century ago, when it waged a “hard fight” against the world’s most prosperous company. .
“It’s really hard to walk up to someone who is acting like a bully and pretending they’re not a bully and hit them,” she said.
President Joe Biden called on the Justice Department and the Federal Trade Commission to vigorously enforce antitrust laws. The tougher crackdown on mergers and questionable business practices has been met with resistance from some business leaders who accuse the Democratic administration of overreach, but others have praised it as long overdue. has been done.
The lawsuit alleges that Cupertino, Calif.-based Apple has worked hard to build what is often referred to as a “walled garden” around popular products such as the iPhone, iPad, Mac, and Apple Watch. They are trying to poke holes in the digital fortress they have built. So all a consumer has to do is turn on their device, and the meticulously designed hardware and software work seamlessly together.
This strategy has helped Apple reach nearly $400 billion in annual revenue and, until recently, a market value of more than $3 trillion. But even as much of the stock market hit new highs, Apple’s stock price fell 7% this year, dethroning longtime rival Microsoft as the world’s most valuable company. .
Apple said that if the lawsuit were successful, it would “impede our ability to develop the kind of technology people expect from Apple at the intersection of hardware, software, and services” and “set a dangerous precedent and create a government-designed “It will give strong authority to the.” People’s technology. ”
“At Apple, we innovate every day to make technology people love, and design products that work together seamlessly, protect people’s privacy and security, and create magical experiences for users. ” the company said in a statement. “This lawsuit threatens who we are and the principles that make Apple products stand out in a fiercely competitive market.
Apple defended the walled garden as an essential feature that will be appreciated by consumers who want maximum protection for their personal information. The company describes the barrier as a way to differentiate the iPhone from devices that run on Google’s Android software. Android software is less restrictive and licensed to a wide range of manufacturers.
“Apple claims to be a champion of user data protection, but its app store pricing and partnership with Google Search violate privacy,” said Sumit Sharma, senior researcher at Consumer Reports. said in a statement.
The lawsuit alleges that Apple charges as much as $1,599 for each iPhone and has high profit margins per unit that are more than twice that of other companies in the industry. And when users perform Internet searches, Google gives Apple a “significant cut” of the advertising revenue generated by those searches.
The company’s app store also charges developers up to 30 percent of the consumer app price.
Critics of Apple’s anticompetitive behavior have long complained that Apple’s claims to prioritize user privacy when profits are at stake are hypocritical. The company’s iMessage service is protected from prying eyes with end-to-end encryption, but that protection evaporates the moment someone sends a text message to a non-Apple device.
Prominent commentator Cory Doctorow says that while Apple prevents Facebook from spying on its users, Facebook has “its own surveillance advertising empire” that collects the same kind of personal data for its own use. He complained that he was running a
Concerns over antitrust enforcement of Apple’s business model aren’t the only factors contributing to the company’s stock decline. There are also concerns that the company is lagging behind Microsoft and Google in developing products that utilize artificial intelligence technology.
Antitrust regulators say in the complaint that Apple’s walled garden is primarily a weapon to avoid competition, creating market conditions that allow it to charge higher prices and stifle innovation. However, he made it clear that he sees the company as promoting high profit margins.
“Consumers don’t have to pay higher prices just because a company breaks the law,” said Attorney General Merrick Garland. At this rate, Apple “will only continue to strengthen its smartphone monopoly,” he added.
In an effort to curb Apple’s dominance, the Biden administration has escalated its antitrust siege, already suing Google and Amazon for engaging in illegal anticompetitive tactics, as well as Microsoft and MetaPlatform. Attempts to block the takeover have also failed. , formerly Facebook.
Apple’s business interests are also intertwined with the Justice Department’s lawsuit against Google, which went to trial last fall and is headed to closing arguments scheduled to begin in Washington, D.C., on May 1. In this case, regulators claim that Google stifled competition by paying for the acquisition. Already, the dominant online search engine has won the rights to be the place to automatically process queries on iPhones and various web browsers, a deal expected to bring him between $15 billion and $20 billion a year in revenue. It is.
Now, with the Justice Department launching a direct attack on its entire business, Apple could lose even more.
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Liedtke reported from San Francisco.
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