Apple Inc. (NASDAQ: AAPL) stock dropped 4% on Thursday following news that the U.S. Department of Justice filed a lawsuit against the company, alleging monopolistic practices in the smartphone market.
The U.S. Justice Department and 17 states have filed an antitrust lawsuit against Apple (AAPL), accusing the tech giant of imposing restrictive rules on its app store to extract higher fees, stifle innovation, and suppress competition.
Attorney General Merrick Garland emphasized the importance of upholding antitrust laws to protect consumers from paying higher prices due to anti-competitive behavior. Garland expressed concerns that Apple’s actions could strengthen its smartphone monopoly if left unchallenged.
The lawsuit marks the latest in a series of legal challenges against prominent tech firms, including Meta Platforms, Google, and Amazon.com, by U.S. regulators.
The antitrust suit alleges that Apple maintains an unlawful monopoly in the smartphone market by imposing contractual restrictions and withholding critical access from developers.
Specifically, the antitrust suit argues that Apple’s practices limit the growth of various apps, suppress mobile cloud streaming services, exclude certain messaging apps, and limit the functionality of non-Apple smartwatches.
In response to the lawsuit, Apple defended its position, stating,
“We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”
Analysts at Evercore ISI perceive the antitrust lawsuit as posing more of a headline risk than a significant financial threat to Apple in the United States. They suggest unless new legislation is passed, Apple is unlikely to face pressure to alter its App Store fee structure or its policies regarding third-party app stores.
Apple (NASDAQ: AAPL) Stock Movement
AAPL stock fell 4.09% to close at $171.37 on Thursday. The traders had exchanged hands with 105,661,198 (105.66 million) shares compared to the average daily trading volume of 59.09 million.
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