Justice Department to sue Apple for antitrust violations

Apple loses $113 billion as shares fall after regulators close

Regulators on both sides of the Atlantic are setting their sights on Apple Inc., unnerving investors with fears about fines and threatening its market dominance.

In the United States, the Department of Justice and 16 attorneys general are suing the iPhone maker for violating antitrust laws. And in Europe, the company is said to face investigations into whether it complies with the region's Digital Markets Act.

The company's shares fell 4.1% on Thursday, erasing about $113 billion in market value and bringing its year-to-date loss to 11%.. Apple, once the world's most valuable company at more than $3 trillion, has underperformed both the Nasdaq 100 and S&P 500 in 2024.

This is not the first time Apple has come under regulatory scrutiny. The company and its peers have for years faced accusations of enriching themselves by suppressing competitors. QBut as Apple products have become increasingly popular and established themselves as part of daily life around the worldauthorities have also become more combative and cautious about their power.

The US lawsuit, filed Thursday in federal court in New Jersey, accuses Apple of preventing rivals from accessing hardware and software features of its popular devices.. The potential investigations in Europe, which also target some of Apple's rivals, will focus on the company's new fees, terms and conditions for app store developers.

There comes a point where the avalanche of cases and the scrutiny that accompanies them become a real drag on the way these companies operate.”said Bill Kovacic, an antitrust professor at George Washington University Law School. “Even if they win, in an important sense they have lost.”

Apple responded to the US lawsuit by calling it “factually and legally wrong.”It warned that the action would “set a dangerous precedent, empowering the government to take a heavy hand in the design of popular technology” and promised to “vigorously defend against it.” The company did not respond to a request for comment on the possible European investigations. .

The US lawsuit alleges that Apple has used its power over app distribution on the iPhone to thwart innovations that would have made it easier for consumers to switch phones. According to the Department of Justice, the company has refused to support cross-platform messaging apps, limited third-party digital wallets and non-Apple smartwatches, and has blocked mobile cloud streaming services.

It highlights five examples of technologies where it claims Apple is suppressing competition: super apps, cloud gaming apps, messaging apps, smart watches and digital wallets. The company recently added support for cloud-based gaming services and said it would add RCS cross-platform messaging later this year.

At Apple, we innovate every day to make people love technology: we design products that work seamlessly together, protect people's privacy and security, and create a magical experience for our users.” the company said in a statement. “This lawsuit threatens who we are and the principles that distinguish Apple products in fiercely competitive markets.”

The Digital Markets Act, which sets out a series of do's and don'ts for some of the world's largest tech platforms, allows the European Commission to impose heavy sanctions of up to 10% of total annual global revenue of a company, and up to 20% for companies that repeatedly break the rules. After launching formal investigations into Apple, as well as Alphabet Inc.'s Google, regulators aim to make their final decisions within 12 months.

Apple, which was just fined 1.8 billion euros ($2 billion) by the European Union for preventing music streaming apps from informing users about cheaper deals, has been under intense scrutiny since the DMA went into full effect on March 7.