The US is suing Apple, accusing the company of maintaining an iPhone monopoly

The Justice Department and 16 attorneys general filed an antitrust lawsuit against Apple on Thursday, the federal government’s main challenge to the reach and influence of the company that has put iPhones in the hands of more than a billion people.

The government argued that Apple had violated antitrust laws by preventing other companies from offering applications that compete with Apple products such as its digital wallets, which could reduce the value of the iPhone. Apple’s policies harm consumers and smaller businesses that compete with certain Apple services, according to excerpts from the lawsuit released by the government and filed in the U.S. District Court for the District of New Jersey.

“Every step in Apple’s course of action built and strengthened the moat around its smartphone monopoly,” the government said in the lawsuit.

The lawsuit ends years of regulatory scrutiny of Apple’s wildly popular suite of devices and services, which fueled its growth into a nearly $2.75 trillion publicly traded company that was for years the most valuable in the world. It takes direct aim at the iPhone, Apple’s most popular device and most powerful business, and attacks the way the company has made the billions of smartphones it has sold since 2007 the centerpiece of its empire.

By tightly controlling the user experience on iPhones and other devices, Apple has created an uneven playing field, where critics grant its own products and services access to core features that competitors deny.. Over the years, it has restricted financial companies’ access to the phone’s payment chip and Bluetooth trackers by using its location service feature. It is also easier for users to connect Apple products, such as smartwatches and laptops, to iPhone than to products from other manufacturers.

The company says this makes its iPhones more secure than other smartphones. But app developers and rival device makers say Apple is using its power to crush the competition.

“This lawsuit threatens who we are and the principles that distinguish Apple products in fiercely competitive markets,” an Apple spokeswoman said. “If this succeeds, it would hinder our ability to create the kind of technology people expect from Apple – at the intersection of hardware, software and services. It would also set a dangerous precedent, giving the government the power to take a heavy hand in designing people’s technology.”

Apple has effectively fought other antitrust challenges. In an App Store policy lawsuit brought by Epic Games, the maker of Fortnite, in 2020, Apple convinced a judge that customers could easily switch between its iPhone operating system and Google’s Android system. It has presented data showing that the reason few customers switch phones is their loyalty to the iPhone.

It also has has defended its business practices in the past saying that the approach has “always been to make the pie bigger” and “create more opportunities, not just for our company, but for artists, makers, entrepreneurs and anyone who is ‘crazy’ with a big idea.”

Every modern tech giant now faces a major federal antitrust challenge. The Justice Department is also pursuing a case against Google’s search operations, and another focuses on Google’s power over advertising technology. The Federal Trade Commission has filed a lawsuit accusing Facebook owner Meta of thwarting competition when it bought Instagram and WhatsApp. Another committee accused Amazon of abusing its power over online retail. The FTC also tried unsuccessfully to prevent Microsoft from acquiring video game publisher Activision Blizzard.

The lawsuits reflect an effort by regulators to increase scrutiny of companies’ role as gatekeepers of commerce and communications. In 2019, the agencies under President Donald J. Trump opened antitrust investigations into Google, Meta, Amazon and Apple. The Biden administration has put even more energy into these efforts, appointing critics of the tech giants to lead both the FTC and the Justice Department’s antitrust division.

In Europe, regulators recently punished Apple for preventing music streaming competitors from communicating with users about promotions and options to upgrade their subscriptions, with a fine of 1.8 billion euros. App makers have also called on the European Commission, the European Union’s executive arm, to investigate claims that Apple is violating a new law requiring the company to open iPhones to third-party app stores.

In South Korea and the The NetherlandsThe company is facing possible fines due to the fees app developers charge for using alternative payment processors. Other countries, including Britain, Australia and Japan, are considering rules that would undermine Apple’s grip on the app economy.

The Justice Department, which began its investigation into Apple in 2019, has chosen to build a broader and more ambitious case than any other regulator has brought against the company. Rather than focusing solely on the App Store, as European regulators have done, the app focused on Apple’s entire ecosystem of products and services.

The lawsuit filed Thursday targets a group of practices that the government says Apple has used to strengthen its dominance.

The company is “undermining” the ability of iPhone users to send messages to owners of other types of smartphones, such as those running the Android operating system, the government said. That gap — epitomized by the green bubbles showing an Android owner’s messages — sent a signal that other smartphones were of lower quality than the iPhone, according to the lawsuit.

Apple has similarly made it difficult for the iPhone to work with smartwatches other than its own Apple Watch, the government argued. Once an iPhone user owns an Apple Watch, it becomes much more expensive for them to throw the phone away.

The government also said that Apple had tried to maintain its monopoly by not allowing other companies to build their own digital wallets. Apple Wallet is the only app on the iPhone that can use the chip, also called NFC, that allows a phone to tap at checkout to pay. While Apple encourages banks and credit card companies to make their products work in Apple Wallet, it prevents them from accessing the chip and creating their own wallets as an alternative for customers.

The government also said that Apple refuses to allow game streaming apps that could make the iPhone a less valuable piece of hardware or provide “super apps” that allow users to perform various activities from a single application.