The Department of Justice sued Apple on Thursday, saying its iPhone ecosystem is a monopoly that drove its “astronomical valuation” at the expense of consumers, developers and rival phone makers.
Federal antitrust enforcement and 16 attorneys general also say that Apple’s anti-competitive practices extend beyond the iPhone and Apple Watch businesses, citing Apple’s advertising, browser, FaceTime and news offerings.
“Each step in Apple’s course of conduct built and reinforced the moat around its smartphone monopoly,” the complaint filed in the District of New Jersey said.
Apple shares fell over 2% during trading on Thursday.
The Justice Department said in a release that to keep consumers buying iPhones, Apple moved to block cross-platform messaging apps, limited third-party wallet and smartwatch compatibility and disrupted non-App Store programs and cloud-streaming services.
The challenge represents a significant risk to Apple’s walled-garden business model. The company says that complying with regulations costs the company money, could prevent it from introducing new products or services, and could hurt customer demand.
The lawsuit could force Apple to make changes in some of its most valuable businesses: The iPhone, in which Apple reported over $200 billion in sales in 2023, the Apple Watch, part of the company’s $40 billion wearables business, and its profitable services line, which reported $85 billion in revenue.
“If left unchallenged, Apple will only continue to strengthen its smartphone monopoly,” Attorney General Merrick Garland said in the release.
Apple said in a statement that it disagreed with the premise of the lawsuit and that it would defend against it.
“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect,” an Apple spokesperson told CNBC. “It…
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