Apple Antitrust Suit Marks Broad US Attack on iPhone Dominance

The US Justice Department’s sweeping lawsuit against Apple Inc. levels antitrust allegations against the tech giant’s entire ecosystem, departing from other litigation targeting narrow aspects of the iPhone maker’s business model.

The department, along with 15 states and the District of Columbia, filed a suit on Thursday in the US District Court for the District of New Jersey, accusing Apple of illegally blocking rivals from accessing hardware and software features on its devices.

The DOJ highlighted a range of allegedly illegal practices the company has employed to maintain a smartphone monopoly, pushing its legal arguments beyond lawsuits by Epic Games Inc. and other Apple rivals that focus on specific components of operations.

Government officials allege Apple has refused to support cross-platform messaging apps, limited third-party digital wallets and non-Apple smartwatches, and blocked mobile cloud streaming services, among other tactics, to preserve its dominance over the smartphone market.

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“It’s fundamentally re-framing all of these as jigsaw puzzle pieces and looks at the entirety of the package,” said John Kwoka, an economics professor at Northeastern University and former Federal Trade Commission chief economist under agency chair Lina Khan. “It’s the entirety of what Apple does that, according to the complaint, is really the problem.”

Most of the individual practices identified in the DOJ’s complaint have been scrutinized before, whether in the US or Europe, Kwoka said. But this case is different, he said, because it draws a link between each tactic and connects them to Apple’s overarching goal of protecting the iPhone’s market position.

The department’s broad approach tees up an ambitious battle against the tech giant using decades-old antitrust law. Government lawyers are aiming to persuade the New Jersey court that the broad range of Apple’s conduct to bolster its smartphone dominance—rather than any individual practice—runs afoul of competition rules.

“DOJ’s challenge is going to be to show it’s not just one thing—it’s the whole gateway,” said Megan Gray, a former FTC attorney and the founder of GrayMatters Law & Policy.

Legal Hurdles

The complaint encompasses, among other issues, concerns about App Store restrictions and a lack of interoperability with non-Apple devices.

The lawsuit “is distinct from cases that have been brought elsewhere, which focus on narrow products and services,” DOJ antitrust chief Jonathan Kanter said Thursday.

Apple said it will “vigorously” defend itself against the government’s allegations. The complaint sets a “dangerous precedent, empowering government to take a heavy hand in designing people’s technology,” the company said.

Apple will likely try to defeat the case by pointing out defects in each individual component, Gray said. To win their case, DOJ lawyers will need to ensure the judge “doesn’t spend too much time with blinders on,” looking at each allegation in isolation, she said.

“It is the collection that’s really important, and the Apple defenders are going to try to focus on individual silos,” Gray said.

The Justice Department is taking a different approach against Apple than it did in a pair of narrower antitrust cases against another Big Tech giant: Alphabet Inc.'s Google. The DOJ went to trial last fall in an antitrust case accusing Google of monopolizing online search, and the agency has filed a separate antitrust suit over Google’s advertising technology practices.

The DOJ’s suit against Apple’s platform as a whole marks a shift in approach that mirrors the philosophy animating the European Union’s Digital Markets Act, Gray said. That law, which entered into force last year, offers EU regulators a more expansive toolkit to rein in the power of Big Tech players.

Apple and Google are set to face EU investigations into their compliance with the Digital Markets Act, Bloomberg News reported Thursday.

Beyond App Store

In its own antitrust suit against the iPhone maker, Epic argued Apple’s online marketplace policies violate federal antitrust law by banning third-party app marketplaces on its operating system. An appeals court largely rejected Epic’s claims, but ruled Apple did flout California’s Unfair Competition Law—forcing it to open its US App Store to outside payment options.

The European Union fined Apple $2 billion this month over allegations the company shut out music-streaming rivals, including Spotify Technology SA, on its platforms.

These existing actions against Apple underscore a “fair amount of recent thinking and experience about the App Store,” Kwoka said. Other issues such as interoperability, on the other hand, have not been the focus of recent litigation.

The App Store restrictions brought forth in the Epic case amount to “one arrow in the quiver” of the DOJ’s complaint, said Abiel Garcia, a partner at Kesselman Brantly Stockinger LLP focused on antitrust. The DOJ’s case identifies App Store restrictions, which have already been litigated, as just one of the many steps Apple has taken to allegedly entrench its monopoly power, Garcia added.

“It’s a broader range than the Epic case, because they’re now saying these practices are an issue not just in the App Store, but generally in the smartphone market,” Garcia said.

The case is US v. Apple, Inc., D.N.J., No. 24-cv-04055, 3/21/24.