Is Apple an Illegal Monopoly?

Does Apple have an illegal monopoly in the United States?  That’s what the US Department of Justice thinks!

It’s been a rough year already for tech giant Apple.  And to top it off, the US Department of Justice is suing the company for breach of Antitrust laws.

Antitrust laws are designed to ensure fair competition and prevent monopolistic behaviour in the marketplace.

Essentially, they don’t want one player controlling the market. Similar lawsuits have been filed against Meta, which owns Facebook, WhatsApp, Instagram, Threads and more. 

In court documents, the DOJ says Apple controls too much of the tech market, especially the smartphone market.

According to Forbes, the US is the world’s third-biggest smartphone market after China and India, but it’s also the least competitive. The country has an HHI score above 4,300, compared to China’s 1,600 and India’s 1,100.

HHI stands for the Herfindahl-Hirschman Index.  It’s a commonly accepted scale used to measure market concentration. The higher the number, the less number of companies operate in a market. According to the DOJ, Apple has maintained a “broad, sustained and illegal” monopoly over the tech market by violating federal laws. 

The company is accused of practices that limit choices for consumers and make it difficult for other companies to compete fairly. 

For example, the suit notes that Apple controls cloud streaming apps such as Spotify, Netflix and Google Photos.  It accuses Apple of suppressing other mobile cloud streaming services.

The suit also claims that Apple diminishes the functionality of non-Apple smartwatches if owners don’t continue purchasing Apple products.  They also force developers to pay 30% commission using the in-App payment system or face expulsion from the App Store.

Essentially, using unfair practices to maintain their dominance.

And this is not the first time Apple has been investigated by regulators for breach of antitrust laws. Just last month, in March 2024, Apple was slapped with a US$2 billion fine by the European Union for breaking their competition law. 

In their defence, Apple responded saying the US case would set a dangerous precedent if it went the way of the DOJ. They argued that it could lead to more intense government scrutiny of tech companies. 

Not to mention how it would also affect the company’s bottom line. Apple said that a ruling against them could lead to changes in the App Store ecosystem that result in a change in prices. 

And that’s the bottom line.