US justice department sues Apple over smartphone monopoly power

The department has been probing Apple since 2019 and alleged the company has imposed software and hardware limitations on its iPhones and iPads to impede rivals from competing effectively

Apple is appealing the penalty but faces more scrutiny under the eurozone's Digital Markets Act. Picture: AP Photo/Jeff Chiu

Apple has been sued by the US department of justice, the latest antitrust action against Big Tech firms accused by regulators of operating monopolies and abusing their power.

The case is the fifth by the US government aimed at reining in tech giants.

The US justice department has been probing Apple since 2019 and alleged that the company has imposed software and hardware limitations on its iPhones and iPads to impede rivals from competing effectively.

The California-based firm is also under regulatory scrutiny in Europe and was earlier this month hit with a €1.8bn fine for thwarting competition from music streaming rivals through restrictions on its App Store.

Apple is appealing the penalty but faces more scrutiny under the eurozone's Digital Markets Act — new rules for Big Tech that came into effect earlier this month.

Other lawsuits include a class action filed on March 1 in San Jose, California, federal court accusing the company of monopolising the market for cloud storage in its mobile devices.

"Consumers should not have to pay higher prices because companies violate the antitrust laws," attorney general Merrick Garland said in a statement.

If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.

Dating back to its time as a marginal player in the personal computer market, Apple's business model has long been based on charging users a premium for technology products where Apple dictates nearly all of the details of how the device works and can be used.

The justice department seeks to unwind that business model by forcing Apple to offer users more choices around how apps can tap into the hardware that Apple designs.

Apple shares were trading 3.6% lower.

Meanwhile, Apple chief executive Tim Cook opened an expansive new store in central Shanghai, signalling his company’s commitment to China as a market and production base.

Mr Cook emerged from the store to thunderous applause from the crowd, shaking hands and hugging fans. His appearance capped a much-publicised jaunt around the financial hub and comes at a delicate time for Apple and its place in the world’s No 2 economy.

The wider backdrop to Mr Cook’s outreach includes fraying relations between the US and China, and Beijing’s attempts to assuage foreign investors spooked by regulatory uncertainty.

The chief executive presided over the opening of Apple’s eighth location in the city after he spent time with a local celebrity, sampled Shanghainese treats, and chatted with the heads of suppliers, including electric car maker BYD and Lens Technology.

• Reuters and Bloomberg