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Apple lawsuit: market cap drops $100bn, so what’s the good news?

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Anyone who holds Apple stock and did not sell today may be feeling queasy. We go over the highlights of the tech giant’s law suit and what if anything could be the silver lining in all of this

The U.S. Department of Justice, along with 16 state attorneys general, filed a major antitrust lawsuit against Apple on Thursday. The lawsuit accuses Apple of illegally monopolising the smartphone market through a series of anti-competitive practices.

Has it hurt the tech giant? You bet it did. News of the lawsuit hammered Apple’s stock price to fall 3.8%, wiping $100 billion off its market value.

The complaint, filed in New Jersey District Court, alleges that Apple maintains its dominance not through innovation, but by unfairly restricting app developers and hindering competing products and services.

“Consumers should not be forced to pay inflated prices due to a company’s violation of antitrust laws,” said Attorney General Merrick Garland. The lawsuit claims Apple leverages its market power to extract excessive profits from consumers, developers, and businesses.

“No company, regardless of size or popularity, is above the law,” said Deputy Attorney General Lisa Monaco. The Justice Department emphasizes its commitment to protecting consumers and fostering fair competition.

What’s the good news in all of this?

The case report, stated: “This case is about freeing smartphone markets from Apple’s anticompetitive and exclusionary conduct and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future.”

The lawsuit details several ways Apple allegedly stifles competition:

  • Blocking Innovative Apps: Apple is accused of hindering the development of “super apps” that could offer a wider range of functionalities and potentially entice users to switch from iPhones.
  • Limiting Cloud Services: The lawsuit alleges Apple restricts cloud-based gaming and application services, forcing users to rely on expensive iPhone hardware.
  • Stifling Messaging Apps: Apple is accused of making cross-platform messaging apps less functional and secure, discouraging users from switching to competing smartphones.
  • Restricting Smartwatch Functionality: The complaint alleges Apple limits the functionality of non-Apple smartwatches, pressuring users to buy Apple Watches alongside iPhones.
  • Curtailing Digital Wallets: Apple is accused of preventing third-party apps from offering tap-to-pay functions, hindering competition in the digital wallet space.

Just how far will this lawsuit go?

The lawsuit extends beyond these examples, claiming Apple’s practices affect web browsing, video communication, and other mobile services. The Justice Department says it seeks to rectify this “long-running, pervasive anticompetitive conduct” and restore competition to the smartphone market.

Apple Inc. is a publicly traded company incorporated in California and headquartered in Cupertino, California. In fiscal year 2023, Apple generated annual net revenues of $383 billion and net income of $97 billion. Apple’s net income exceeds any other company in the Fortune 500 and the gross domestic products of more than 100 countries.  

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