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The US has filed a landmark lawsuit against Apple, accusing the tech giant of monopolising the smartphone market and crushing competition.
In the legal action, the Justice Department alleged that the company abused its control of the iPhone app store to “lock in” customers and developers.
It accused the firm of taking illegal steps to thwart apps seen as a threat and make rival products less appealing, according to media reports from BBC and CNN.
The sprawling complaint, filed at a federal court in New Jersey along with the Attorneys General of 16 states, marks one of the biggest challenges to date for Apple, which had been fending off mounting complaints about its practices in recent years.
It alleges that Apple used “a series of shapeshifting rules” and restricted access to its hardware and software, in a bid to boost its own profits while raising costs for customers and stifling innovation.
“Apple has maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits but by violating federal anti-trust law,” Attorney General Merrick Garland said at a press conference announcing the suit.
Garland stated that customers should not have to pay higher prices because companies break the law.
The 88-page complaint focused on five areas where Apple allegedly abused its power.
The US alleged that Apple used its app review process to thwart development of so-called super apps and streaming apps, because it was worried such apps would provide less incentive for customers to stick with iPhones.
It also said Apple had made it difficult to connect iPhones to smart watches made by rivals and blocked banks and other financial firms from accessing its tap-to-pay technology, allowing Apple to earn billions in fees from processing Apple Pay transactions.
The complaint also focused on the way Apple treats messages sent from rival phones, distinguishing them with green bubbles and limiting videos and other features.
It stated that Apple’s moves have created “social stigma” that has helped the tech giant maintain its grip on the market.
Apple has however vowed to “vigorously” fight the lawsuit and denies the claims.
The tech-giant said customers were loyal because they were happy and that under US law it was free to choose its business partners, pointing to privacy and security concerns to justify its rules.
The company said it would ask the court to dismiss the lawsuit, which it predicted would fail.
“We believe this lawsuit is wrong on the facts and the law and we will vigorously defend against it,” the company said.
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The BBC reported that it was the third legal action Apple had faced from the US government since 2009 and the first anti-trust challenge filed against the company under President Joe Biden’s administration.
If the government wins its case, it could force Apple to overhaul its current contracts and practices- or even lead to a break-up of the company.
Shares in Apple fell more than four percent as investors digested the implications of the legal battle and any potential changes would take years to materialise as the case made its way through the courts.
According to the Justice Department, Apple’s share of the US smartphone market exceeds 70 percent and its share of the broader smartphone market exceeds 65 percent.
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