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Apple Nears Antitrust Lawsuit Amid Allegations of Market Restrictions

 |  January 17, 2024

Tech behemoth Apple is on the brink of confronting an antitrust lawsuit in the United States, with the Justice Department reportedly gearing up to take legal action against one of the world’s most valuable companies.

According to Bloomberg, the lawsuit could be filed as early as March, highlighting concerns surrounding Apple’s alleged imposition of software and hardware restrictions on its iPhones and iPads to stifle competition.

Antitrust enforcers argue that Apple’s practices have hindered rivals, echoing complaints from prominent companies such as Spotify Technology SA, Life360 Inc.’s Tile, and messaging service Beeper. The Justice Department has engaged in three meetings with Apple lawyers to discuss the potential suit, as revealed by anonymous insiders, shedding light on an ongoing probe.

While the Justice Department aims to initiate the legal proceedings in the first quarter of the year, uncertainties remain as the most senior antitrust officials have yet to endorse the complaint. The agency commenced its investigation into Apple back in 2019 but prioritized cases against Google, leaving the Apple probe on the back burner.

If the lawsuit proceeds, it would mark the fourth case pursued by US antitrust enforcers under the Biden administration’s intensified scrutiny of technology giants, with Meta Platforms and Amazon.com also under investigation.

Read more: EU Regulators Probe Deeper Into Apple Pay

Recently, the Supreme Court declined to hear appeals from Apple and Fortnite maker Epic Games Inc. related to an antitrust suit concerning the App Store. The trial judge concluded that while Apple’s App Store rules did not violate federal antitrust law, the company’s restrictions on developer communications breached California’s state antitrust law.

The Justice Department had been awaiting the Supreme Court’s decision before taking its next steps, insiders say.

Enforcers have also been closely monitoring Apple’s actions in Europe, where new digital gatekeeper rules are set to take effect on March 7. The Digital Markets Act in the European Union restricts powerful tech firms from favoring their services over competitors and mandates the allowance of app downloads from competing platforms. Apple’s App Store falls under this regulation, although the company is appealing.

In response to the Supreme Court’s decision, Apple has announced its intention to permit developers to use alternative payment systems, albeit with a substantial fee attached. Developers will face a 27% charge for most digital purchases or a 12% fee on subscriptions. This move has sparked criticism from Epic Games, which plans to contest Apple’s proposed remedy, claiming it is insufficient and will effectively prevent developers from lowering consumer prices. Apple, however, has expressed its expectation to implement changes to the App Store in compliance with the impending regulations, despite the ongoing appeal.

Source: BNN Bloomberg