DOJ Targets Apple's iPhone Monopoly in Pivotal Antitrust Challenge

📝 SUMMARY: The U.S. Department of Justice (DOJ) has initiated a landmark antitrust lawsuit against Apple ($AAPL), alleging that the tech giant's iPhone ecosystem constitutes a monopoly. This case, supported by 16 attorneys general, could lead to unprecedented changes for Apple, possibly including the breakup of one of the world's largest companies. The lawsuit accuses Apple of anti-competitive practices not only within its smartphone and Apple Watch businesses but also across its advertising, browser, FaceTime, and news offerings, effectively building a "moat" around its smartphone monopoly.

Apple's shares fell more than 4% following the announcement, reflecting the market's reaction to what could be one of the most significant legal challenges under the Sherman Act since the breakup of the Bell System in 1982. The government's case points to Apple's efforts to block cross-platform apps, limit third-party accessory compatibility, and obstruct non-App Store programs, alleging these actions are designed to maintain its monopoly power while maximizing revenue.

The lawsuit could compel Apple to alter its business practices in key areas, including the lucrative iPhone, which generated over $200 billion in sales in 2023, and the Apple Watch, part of a $40 billion wearables business. U.S. Attorney General Merrick Garland emphasized that Apple's monopoly power in the smartphone market, if unchallenged, would only continue to solidify.

Apple has defended its business model, arguing that the lawsuit threatens its core identity and could hinder its ability to innovate. The company has faced previous DOJ actions over e-book prices and salary collusion allegations but now confronts a broader examination of its business practices. The outcome of this lawsuit could have far-reaching implications for Apple's operations, its approach to product and service development, and the broader tech industry's regulatory landscape.

🔍 SOURCE: https://www.cnbc.com/2024/03/21/doj-sues-apple-over-iphone-monopoly.html