Apple's Days of Smartphone Monopoly Are Coming To An End

On Thursday, U.S. the US Justice Department, along with 17 states and districts, filed a blockbuster lawsuit against Apple Inc AAPL. Apple has been accused of illegally monopolizing the smartphone market by violating federal antitrust law to stay ahead of its rivals. As a reminder, Apple ended 2023 by dethroning Samsung as the world’s biggest smartphone seller. Samsung led for 12 years, but Apple got the crown after releasing its iPhone 15 in the fall. Apple is well established as the largest smartphone maker in terms of revenue and profits, but this was the first time it led in terms of volume. The success of Huawei in China also contributed to the fall of Samsung, with the Android market being divided between Xiaomi, Google and Honor.

How did Apple illegal monopolize the smartphone market?

The Thursday’s lawsuit suggests that Apple used a complex web of contractual terms that harm everything from text messaging to mobile payments. It has used its control over the iPhone operation system iOS to keep innovative apps and cloud streaming services away, as well as to degrade the quality of Google-developed Android messages that are received on iPhones, along with restricting how competing smartwatches work with the iPhone and even forbid the offering of rival payment solutions.

In simple words, Apple has been accused of making barriers that make it difficult to venture out outside its ecosystem.

The largest antitrust complaint in a recent wave against Big Tech.

Regulators are doing their best to crack the power Big Tech has been enjoying for quite a while as over the past few decades, its actions were largely unchecked. First, the European regulators kicked off the new year by forcing Apple to give other companies in the EU access to the iPhone’s tap-to-pay hardware chip which enables the creation of digital wallets other than Apple Pay.

Now, the Justice Department is asking the court to forbid Apple to block innovative apps in its store. Also, it demands the court to make Apple remove the restrictions it imposed to prevent other messaging apps, smartwatches, digital wallets and other applications from integrating smoothly with the iPhone, just like Apple’s apps. It also asked demanded the court to disable Apple from using contractual terms to protect the monopoly it established.

Apple finds the lawsuit unfair, stating that it compromises its ability to make the compelling and consumer-friendly technology with which it became one the world’s most valuable companies. Like its Big Tech peers, Apple has been shrugging off legal criticism for years. But this year’s suits from EU and US regulators challenge its very ID. Regulators are determined in making Big Tech accountable for its actions and ongoing antitrust cases against Apple and Google show things are getting more serious. What is certain is that long gone are the days of Steve Jobs’ era when Apple was a cultural phenomenon due to its relentless pursuit of earth-shattering innovation. Now, Apple is no longer several steps ahead of its rivals and instead of innovating, it is milking Jobs’ legacy while fighting for market share with its CEO focused on financial management. For now, it is financially healthy, but it is a lot more vulnerable than it used to be, with regulators and Chinese rivals, such as Huawei and Xiaomi, biting off its power and dominance. Even Huawei is a competitive threat to Apple at the world's largest smartphone market, China. Meanwhile, Samsung is releasing models with AI features while Apple is lagging its rivals in that race, promising to add AI features this year with Bloomberg having recently reported that it is in talks with Google to power its new iPhone with the Gemini generative AI model.

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