Apple stock experienced a significant drop of over 3.6% on Thursday following a lawsuit filed by the Justice Department against the tech giant. The suit alleges that Apple holds a monopoly in the smartphone market, leading to anticompetitive practices that harm consumers and developers. As a result, shares of Apple have declined by approximately 7% year-to-date.
The lawsuit, filed in the US District Court in New Jersey, accuses Apple of engaging in practices that maintain and reinforce its smartphone monopoly, ultimately harming users, developers, and other third parties in the industry. The Justice Department, along with more than a dozen state attorneys general, claim that Apple's anti-competitive behavior extends beyond its products to its advertising and news businesses.
Apple's iPhone business continues to grow, approaching a $300 billion annualized run rate. The company has been accused of undermining apps, products, and services that could potentially reduce reliance on the iPhone, promote interoperability, and lower costs for consumers and developers.
This latest legal action against Apple is part of the Biden Administration's broader efforts to address the power of Big Tech companies, following antitrust cases against Google, Amazon, and Meta. In response to the lawsuit, Apple has vehemently denied the allegations, stating that the lawsuit threatens the core principles that differentiate Apple products in competitive markets.
Apple has vowed to vigorously defend itself against the lawsuit, arguing that the allegations are incorrect both in terms of facts and the law. The company maintains that the lawsuit sets a dangerous precedent by allowing the government to heavily influence the design of technology products. The legal battle between Apple and the Justice Department is likely to continue as both sides stand firm in their positions.