The Justice Department and several states sued Apple on Thursday, accusing the tech company of illegally maintaining a monopoly over the smartphone market, according to multiple reports.
Sixteen states and district attorneys general joined the Justice Department’s sprawling civil suit, which was filed in the U.S. District Court for the District of New Jersey, according to The Washington Post. In the suit, officials accused Apple of using its control over the iPhone to “engage in a broad, sustained, and illegal course of conduct,” The Associated Press reported.
“Over many years, Apple has repeatedly responded to competitive threats ... by making it harder or more expensive for its users and developers to leave than by making it more attractive for them to stay,” according to the lawsuit.
“Rather than respond to competitive threats by offering lower smartphone prices to consumers or better monetization for developers, Apple would meet competitive threats by imposing a series of shapeshifting rules and restrictions in its App Store guidelines and developer agreements that would allow Apple to extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives.”
Authorities said Apple used the tactics “across many technologies, products, and services, including super apps, text messaging, smartwatches, and digital wallets, among many others.”
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In a statement obtained by Reuters, Apple said the lawsuit “threatens who we are and the principles that set Apple products apart in fiercely competitive markets.”
“If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect,” the statement read.
“It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”
U.S. Attorney General Merrick Garland said that, driven by the success of the iPhone, Apple has secured a more than 65% share of the U.S. smartphone market, earning the company revenues that exceed the gross domestic product of more than 100 countries.
“As our complaint alleges, Apple has maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits but by violating federal antitrust law,” he said. “Consumers should not have to pay higher prices because companies break the law.”
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He outlined Apple’s alleged “anticompetitive conduct,” including the way it handles text messaging between iPhone users and users of non-Apple products. Apple has made cross-platform messaging “more difficult” purposefully to keep users on their iPhones, the attorney general said.
“Apple knowingly and deliberately degrades quality, privacy and security for its users,” he said.
“For example, if an iPhone user messages a non-iPhone user in Apple messages, the text appears not only as a green bubble, but incorporates limited functionality. The conversation is not encrypted, videos are pixelated and grainy and users cannot edit messages or see typing indicators. As a result, iPhone users perceive rival smartphones as being lower quality because the experience of messaging friends and family who do not own iPhones is worse even though Apple is the one resposible for breaking cross-platform messaging. And it does so intentionally.”
The lawsuit filed Thursday was joined by Arizona, California, the District of Columbia, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Dakota, Oklahoma, Oregon, Tennessee, Vermont and Wisconsin.
The case marks the third time the Justice Department has sued Apple for antirust violations in the last 14 years, Bloomberg News reported.
In 2010, Apple, Adobe Systems Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar agreed to settle allegations that they agreed not to poach each other’s employees, which “restrained competition between them for highly skilled employees,” according to the Justice Department.
Two years later, the Justice Department sued Apple and several book publishers for conspiring to fix the prices of e-books. After the government won at trial, Apple was required to pay $400 million to reimburse people who bought e-books and accept a monitor to work with the company to “improve its antitrust compliance and training programs,” officials said.