After a coalition of U.S. attorneys general and the Department of Justice (DOJ) accused Apple of using allegedly anticompetitive practices, the company’s value has taken a beating.
The Cupertino, California-based technology giant saw its stock slide 4.1% Thursday, slashing about $113 billion in market value. Apple, once the world’s most valuable firm with a more than $3 trillion market capitalization, has underperformed the S&P 500 and Nasdaq 100 this year. The company’s stock has shed about 11% since the year began.
The lawsuit, filed in federal court in New Jersey by the U.S. DOJ and 16 state attorneys general, alleges that Apple uses its control over the iPhone platform to “extract higher fees, thwart innovation,” and “throttle” competition through its App Store. It also repeats familiar claims that Apple’s so-called “walled garden” has made it more difficult for consumers to switch to competing products.
“We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law,” U.S. Attorney General Merrick Garland said in a statement. “If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”
Apple vs. antitrust
Apple has refused to support limited third-party digital wallets, non-Apple smartwatches, and cross-platform messaging apps, while blocking mobile cloud streaming services and “Super Apps,” according to the DOJ’s lawsuit.
Although the bulk of the lawsuit focuses on Apple’s iPhone and Apple Watch businesses, the DOJ has also cited the company’s dominance beyond those services, pointing to its advertising, news subscription, and FaceTime services.The Justice Department highlights Apple’s presence in the auto industry, which was recently undercut by the company’s shutdown of its electric vehicle project. But Apple retains a strong foothold with its CarPlay infotainment system currently featured in more than 800 car models, according to the company.
That makes for a long list of charges. The Justice Department has filed “a kitchen-sink case built up against Apple, although we believe this case will last for years and ultimately a settlement will be reached in some form likely over the next 12 to 18 months,” Wedbush analysts wrote in a note to investors Friday.
European probes
Apple is also facing challenges on the other side of the Atlantic Ocean, as the European Commission reportedly probes the company — along with other tech giants including Meta and Google — over potential violations of the European Union’s Digital Markets Act (DMA), a law aimed at protecting open markets. The law allows the commission to fine companies as mc much as 10% of a company’s total annual global revenue, and up to 20% for repeat offenders.
On March 4, the European Commission slapped Apple with a $1.95 billion fine, accusing the company of abusing its dominant position on the market for the distribution of music streaming apps, such as Spotify or Apple Music. Since the DMA went into effect on March 7, the company has been under intense scrutiny.