The United States Department of Justice has initiated an antitrust lawsuit against the tech giant Apple (AAPL), alleging that the smartphone manufacturer engages in monopolistic practices. According to the DOJ, Apple's business model restricts competition, resulting in harm to both developers and consumers.
Yahoo Finance's Tech Editor Dan Howley breaks down the details, providing insights into the details of the suit.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
[AUDIO LOGO]
RACHELLE AKUFO: The Department of Justice accusing Apple of violating antitrust laws by blocking its rivals from accessing both hardware and software features on its iPhone devices. Now this is the culmination of a five-year probe into one of the world's most valuable technology companies. Here's what Attorney General Merrick Garland had to say just moments ago.
MERRICK GARLAND: Monopolies like Apple's threaten the free and fair markets upon which our economy is based. They stifle innovation. They hurt producers and workers. And they increase costs for consumers. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.
RACHELLE AKUFO: Well, for more on this, Yahoo Finance Tech Editor Dan Howley is here with more. So Dan, give us your big takeaways here. What do we know?
- Yeah, Rachelle, I think the main thing that you would look at here is how broad the scope of this suit is. It really seems to go after virtually every part of Apple's business related to the iPhone and App Store.
They specifically call out Apple allegedly blocking access to things like digital wallet's ability to use the tap to pay feature so that would be if a third party wallet developer wanted to go ahead and give you the ability to not only use their app, but then go up to a payment terminal at your local store, you wouldn't be able to tap to pay. You would only be able to do that with Apple's wallet. And so they go after Apple for that.
They talk about how the Apple Watch is only compatible with the iPhone rather than Android devices. And how Apple makes it more difficult for users of third party watches, those that are not the Apple Watch, to use them on the iPhone by limiting functionality.
It also calls out the App Store and how it controls that and the App Store fees that it offers. It further calls out the limiting-- Apple limiting the use of super apps, so-called individual apps that let you control multiple different smaller apps within them, something that Elon Musk is trying to create with X.
They also refer to things like cloud gaming. Microsoft has been heavy on Apple with this where they want to get their Xbox Cloud Gaming app onto the iPhone and iPad but haven't been able to. So they forced users to go to a website instead of an actual app which would make it easier.
So it really seems as though they're going after a broad number of things with regards to the iPhone itself. And in fact, Merrick Garland talks about in a release the issue with the green and blue bubbles when it comes to messaging saying that Apple is basically doing that itself and making users less secure when they speak between iPhone users and Android users. And that they can change that on their own if they wanted to.
So you know, I think the main thing to look at is the potential impact that this could have on some of Apple's key businesses. That includes services through the App Store. That includes wearables through the Apple Watch. And then obviously, the iPhone because if they make-- if they're forced to make these changes, it may make Android phones more appealing to other users.
Now that all depends, right? There's the status symbol that the iPhone stands for a lot of consumers. There's also-- so many consumers are now used to it, the comfortability that people have with iPhones. So they may stick around because of that. There's also just the idea that you've already purchased so many goods that go along with the iPhone that seem to work better with it, which the lawsuit is basically calling out, that could be a reason why you may want to stick with Apple.
But you know, if there are options out there that look more attractive after this suit, then people may start to try those out, test the waters with Android devices. Maybe Android smartwatches. Maybe that means different app stores that they're able to access. So it could be a big change.
And just on the App Store front really quick, you know, this is already changing in the EU as a result of the Digital Markets Act. There's going to be third party app stores on iOS and Android, by the way. And Epic Games said that they're going to release their own App Store on iOS and Android in that region. So it's not something that isn't unheard of obviously within the EU. How long it takes, if it ever takes place in the US, we'll just have to wait and see.
RACHELLE AKUFO: Indeed. But clearly, Apple in the eye there of regulators that are on both sides-- both sides there. Appreciate you breaking that down for us, our very own Dan Howley.
