Oregon and California are among 15 states and the District of Columbia in a federal antitrust lawsuit against Apple, claiming the company has attempted to distort the high-tech market to maintain a monopoly.
The civil lawsuit, filed Thursday in the U.S. District Court in New Jersey, points a finger at Steve Jobs, the late founder of Apple, indicating that the company’s monopolistic tendencies date to its beginning. The suit says that Apple has repeatedly tried to snuff competition by imposing restrictions on applications and service developers, making them reliant on Apple products.
“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,” the complaint said.
The suit claims Apple has used the iPhone, one of the company’s most popular and lucrative products, to drive up its bottom line while making customers pay higher prices.
“For many years, Apple has built a dominant iPhone platform and ecosystem that has driven the company’s astronomical valuation,” the suit says. “At the same time, it has long understood that disruptive technologies and innovative apps, products and services threatened that dominance by making users less reliant on the iPhone or making it easier to switch to a non-Apple smartphone.”
Apple did not immediately respond to a request for comment. A company spokesman, Fred Sainz, said in a statement to the Washington Post that the suit was factually wrong and that the company would “vigorously defend against it.”
“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” Sainz said. “If successful, it would hinder our ability to create the kind of technology people expect from Apple – where hardware, software, and services intersect.”
The suit comes amid mounting scrutiny of the California-based company, which was fined nearly $2 billion earlier this month by the European Union over allegations of abusing its music-streaming services.
Apple also came under scrutiny in Oregon during this year’s legislative session. It was the only company to oppose a “right to repair” bill to give consumers and independent shops the ability to repair their own phones, computers and other devices. Senate Bill 1596, which awaits Gov. Tina Kotek’s signature, would require manufacturers to provide the necessary parts, manuals and other material to enable individuals and shops to repair their devices.
Ellen Rosenblum, Oregon’s attorney general, indicated in a release that Oregon joined the suit as a plaintiff to protect consumers.
“This action is about protecting consumers and the integrity of the marketplace. Big Tech companies must play by the same rules as everybody else, and Apple is no exception,” Rosenblum said.
The suit seeks a court order forcing Apple to stop its monopolistic practices. Rosenblum’s statement cited several examples:
- Disrupting the growth of apps that would make it easier to switch to a competing smartphone platform.
- Blocking the development of cloud-streaming apps and services that offer consumers high-quality video games and other cloud-based applications that don’t depend on expensive smartphone hardware.
- Making cross-platform messaging difficult and less secure than iPhone messaging so customers stick with iPhones.
- Limiting the functionality of third-party watches to deter customers who’ve purchased an Apple watch from switching.
- Limiting third-party tap-to-pay options to inhibit the creation of cross-platform digital watches.
“If left unchallenged, Apple will only continue to strengthen its smartphone monopoly,” said U.S. Attorney General Merrick Garland.
At stake, the complaint says, is not only the smartphone market but also related industries, and that Apple’s practices have a cascading effect on a wider market.
“Unless Apple’s anticompetitive and exclusionary conduct is stopped, it will likely extend and entrench its iPhone monopoly to other markets and parts of the economy,” the suit says. “For example, Apple is rapidly expanding its influence and growing its power in the automotive, content creation and entertainment and financial services industries – and often by doing so in exclusionary ways that further reinforce and deepen the competitive moat around the iPhone.”
The company is one of the richest in the world, with a market capitalization of $2.7 trillion, making it second after Microsoft’s $3.1 trillion, according to Forbes. And last year it netted $97 billion in income, more than any other company in the Fortune 500, according to a release by the Oregon attorney general’s office.
The other states joining the suit are Arizona, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Dakota, Oklahoma, Tennessee, Vermont and Wisconsin.
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