Apple May Soon Face Antitrust Lawsuit From Department of Jusice: Report

Apple Inc AAPL could soon become the next major tech company to face a federal antitrust lawsuit. 

According to a report from the New York Times, the U.S. Department of Justice (DOJ) is in the late stages of an investigation into Apple’s business practices and could file a wide-ranging antitrust lawsuit against the company as early as the first half of 2024.

What Happened: The New York Times report stated the DOJ investigation specifically targeted the compatibility of the Apple Watch with the iPhone versus smartwatches from other brands, the inaccessibility of its iMessage service on competitor’s devices and the Apple Pay payments system which blocks other firms from offering similar services. Investigators also examined how cloud gaming apps are blocked from being offered in Apple’s App Store.

According to sources, senior officials at the DOJ are reviewing the results of the investigation to determine if Apple has used its control over its hardware and software to make it more difficult for other companies to compete and prevent users from switching to similar devices.

According to the report, Justice Department investigators have spoken with executives at Tile, a location-tracking service provider, about Apple’s restrictions on iPhone location services to outside parties. Investigators also spoke with executives at Beeper, the company that made Apple’s iMessage service available on Android devices, regarding the tactics Apple used to block access to the service from competing mobile operating systems.

The report also stated investigators consulted with financial service providers and banks regarding the lack of access to the Apple Pay functions on iPhones.

Why It Matters: The potential lawsuit could be the broadest Apple has faced and came as the company faced increasing scrutiny from regulators around the world.

European regulators passed the Digital Markets Act in 2022 which would require Apple to accommodate competing app stores on its devices, and similar regulations are being considered in Japan and South Korea. The European Commission has an ongoing investigation into possible antitrust violations stemming from fees imposed by Apple on competitors to its Apple Music service.

Related News: Don't Worry About Short-Term Headwinds, Apple Is Positioned For Long-Term Success, Analyst Says

Apple was previously sued by the DOJ in 2012 for conspiring with publishers to raise the prices of electronic book downloads. Apple lost the case and paid a $450 million settlement to e-book purchasers and their associated attorneys.

AAPL Price Action: According to Benzinga Pro, Apple shares were down 0.40% at $181.18 at market close Friday.

Image: succo from Pixabay