SAN FRANCISCO, California – In a significant antitrust lawsuit filed on Thursday, the United States government accused Apple of betraying its own “think different” slogan. The lawsuit alleges that the tech giant has created a powerful monopoly that has locked millions of users into its ecosystem, making it one of the most valuable companies worldwide.
This lawsuit marks a turning point for Apple, which had managed to avoid major antitrust action until now while other Big Tech companies faced scrutiny. The company now faces intense scrutiny from regulators in both the US and the EU, indicating a possible existential battle ahead.
Apple responded to the case, stating that it threatens their identity and the principles that set them apart in competitive markets. The company warned that a loss would set a “dangerous precedent” by allowing the government to influence the development of technology markets.
The comprehensive lawsuit paints a detailed picture of a company that has systematically thwarted competitive threats to its ecosystem over the years. The alleged scheme is claimed to have originated from the vision of Apple’s iconic founder, Steve Jobs. The US government alleges that Jobs sought to maintain a monopolistic grip, even directing executives to enforce the use of Apple’s payment system, thus ensuring customers remained locked into their ecosystem.
At the core of the claim is the accusation that Apple leverages its market-leading device to generate a growing share of services revenue from users, effectively excluding competitors from accessing that revenue. Services revenue, which includes the App Store, Apple Pay, and TV and music streaming, has become increasingly vital for the company as its hardware sales face challenges.
The lawsuit is not only seeking to hold Apple accountable for past violations but also aims to prevent the stifling of innovation and competition in future product categories, such as in-car systems and financial services.
This legal battle comes at a difficult time for Apple. Global smartphone sales have slowed, and the company is facing a decline in device sales in China, causing investor concern. As the US unveiled the lawsuit, Apple’s CEO, Tim Cook, was in Shanghai. Industry experts expect the company to fiercely contest the case and believe settlement is unlikely.
Apple representatives argue that the US government is distorting the facts to fit its theory. The company points out that it holds a 20 percent share of the global smartphone market, far from a monopoly. However, the government contends that Apple’s dominance in the US market is more significant, with a revenue share of around 70 percent in the high-end smartphone market and over 65 percent of all smartphones.
While Apple faces deepening problems in Europe, where it has recently been forced to make business model changes due to EU regulator intervention, the US legal fight is not entirely unfamiliar. In 2020, Epic Games sued Apple over its App Store policies, claiming the company imposed an unfair 30 percent “tax” on certain transactions – a case Epic largely lost. However, the US attorney-general echoed similar claims in the current case against Apple.
Antitrust cases can be lengthy and subject to appeals, and even if Apple were to lose, the enforcement of any ruling would likely be delayed. Additionally, there is a possibility that the outcome could be influenced by the upcoming US election, as Joe Biden’s antitrust enforcers may be replaced if he fails to secure a second term. However, it is uncertain whether a potential Donald Trump presidency would improve Apple’s situation since the investigation began under his previous administration.
The outcome of this lawsuit could have far-reaching implications for Apple and the broader technology industry, with the potential to shape future competition and innovation.