US sues Apple in antitrust lawsuit

In a news conference announcing the landmark lawsuit against Apple, US Attorney General Merrick Garland slammed Apple’s alleged anti-competitive conduct related to how the company handles messages from Android devices.

“For example, if an iPhone user messages a non-iPhone user in Apple messages, the text appears not only as a green bubble, but incorporates limited functionality,” Garland added. “The conversation is not encrypted. Videos are pixelated and grainy, and users cannot edit messages or see typing indicators. As a result, iPhone users perceive rival smartphones as being lower quality because the experience of messaging friends and family who do not own iPhones is worse.” 

The US Attorney General Merrick Garland has formally announced to reporters that the federal government is filing an antitrust lawsuit against tech giant Apple. 

Attorney General Merrick Garland is speaking about the US government's antitrust lawsuit against Apple.

You can watch the announcement in the video player at the top of this page, and we'll bring you updates on his comments as we get them.

Although the Justice Department is accusing Apple of running an illegal monopoly today, the courts have previously held that Apple is not a monopolist.

In a court case involving "Fortnite"-maker Epic Games, a federal judge and a US appeals court have both ruled Apple did not illegally monopolize the market for iOS app distribution.

In light of that ruling, the Justice Department could face a tough road as it seeks to prove its case. But there is a key distinction between the Epic Games case and this one: The Justice Department has accused Apple of monopolizing smartphone markets, a different allegation.

Shares of Apple fell 3.3% on Thursday morning after the US Justice Department announced a blockbuster antitrust lawsuit against the iPhone maker. The stock is down more than 10% so far this year.

Still, Wall Street had been anticipating the filing for some time and were prepared for the news, analysts said. The risk is prolonged scrutiny for Apple and what happens to other tech stocks in its wake, they said.

"The headline risk is added to the Apple story as this case will not be resolved in the short term and Cupertino will be under a further microscope both in the Beltway and Brussels as well as other Big Tech stalwarts caught in this complex spider web," wrote Dan Ives at Wedbush in a note to investors.

Shares of Google were trading 0.9% lower on Thursday. A DOJ antitrust case targeting the company's ad-tech business will go to trial in September.

Today's news that the US Justice Department filed a blockbuster antitrust lawsuit against Apple comes as CEO Tim Cook is making a high-profile visit to China.

The visit, which is timed with the opening of a huge new store in Shanghai, is part of a push by the company to reverse a decline in iPhone sales in its most important international market.

The new $11.6 million outlet — located in Shanghai’s central district of Jing’an, which is named after a historic temple — is the biggest in China and the second only to Apple’s flagship store on New York’s Fifth Avenue, Chinese state media reported.

“Nonghao Shanghai!” Apple CEO Cook said in a Weibo post on Wednesday, which means “hello” in Shanghainese. “I’m always so happy to be back in this remarkable city.”

In 2023, Apple grabbed the top spot in China’s smartphone market for the first time ever, with a record 17.3% market share, according to IDC Research.

Some context: The push in China comes as Apple (AAPL) tries to fend off competitors and revive sales in a rocky market with growing headwinds, ranging from an economic slowdown to geopolitical tensions and rising nationalist sentiment.

Now the Justice Department’s landmark suit is expected to challenge a broad range of Apple’s practices, and the legal action could weigh on the company's stock price.

Cook’s visit, his third to the country in a year, underscores China’s significance to Apple as its biggest overseas market and a critical part of its manufacturing supply chain.

The Department of Justice (DOJ) says that Apple "undermines apps, products and services that would otherwise make users less reliant on the iPhone,” in a press release.

After announcing it would bring a lawsuit against the tech giant under antitrust laws, the DOJ release said that Apple uses its "monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.”

The lawsuit also claims that Apple has illegally monopolized smartphone markets by using a complex web of contractual terms that harm everything from text messaging to mobile payments. Among other things, the DOJ says, Apple has used its control over iOS, the iPhone operating system, to block innovative new apps and cloud streaming services from the public; degrade how Android messages appear on iPhones; restricted how competing smartwatches can work with iPhones; and hindered rival payment solutions.

Apple responded to the lawsuit in a statement Thursday morning, defending its approach to innovation and claiming the government legal action would set a “dangerous precedent.” 

The statement continued: “It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”

Since its early days, Apple has pursued a reputation as an elite, high-design brand. It’s often focused on a premium user experience and design aesthetic, setting its products apart from rivals. That approach worked for years, until a wave of complaints by developers and consumers drew more attention to its potential downsides.

In the era led by founder Steve Jobs, “Apple was a cultural phenomenon that pitted wingtips against sandals; suits against t-shirts,” said James Bailey, a professor of leadership development at the George Washington University School of Business. “Apple relentlessly innovated. They were always steps ahead of the competition.”

Now, however, Apple’s advances are more “incremental” than earth-shattering, Bailey added, noting CEO Tim Cook “has been focused on financial management and expanding market share.”

“Apple’s financially healthy,” Bailey said, but their reputation for innovation is “dimming.”