Apple, the technology giant once crowned as the world’s most valuable firm with a market capitalization surpassing $3 trillion, finds itself embroiled in legal battles on both sides of the Atlantic. The company’s stock has taken a significant hit, shedding about 11% since the beginning of the year and underperforming both the S&P 500 and Nasdaq 100 indices.
The catalyst for this recent downturn was a sweeping antitrust lawsuit filed in federal court in New Jersey by the Department of Justice (DOJ) and a coalition of 16 state attorneys general. The lawsuit alleges that Apple has been engaging in anticompetitive practices, leveraging its control over the iPhone platform to extract higher fees, stifle innovation, and throttle competition through its App Store.
Attorney General Merrick Garland minced no words in his statement, asserting that Apple has maintained its monopoly power in the smartphone market not by staying ahead of the competition on merit, but by violating federal antitrust law. The lawsuit also echoes familiar claims that Apple’s “walled garden” approach has made it more difficult for consumers to switch to competing products.
The DOJ’s lawsuit goes beyond just the iPhone and Apple Watch businesses, citing the company’s dominance in advertising, news subscription, and FaceTime services. It also highlights Apple’s strong presence in the auto industry, with its CarPlay infotainment system featured in over 800 car models.
Wedbush analysts believe this case will likely drag on for years, ultimately resulting in a settlement within the next 12 to 18 months. They describe the lawsuit as a “kitchen-sink case” built up against Apple.
Across the pond, Apple faces further challenges as the European Commission probes the company, along with other tech giants such as Meta and Google, over potential violations of the European Union’s Digital Markets Act (DMA). This law, aimed at protecting open markets, allows the commission to fine companies up to 10% of their total annual global revenue, with repeat offenders facing fines of up to 20%.
Apple has already felt the sting of the European Commission’s authority, having been slapped with a $1.95 billion fine on March 4 for allegedly abusing its dominant position in the music streaming app distribution market. With the DMA in effect since March 7, the company finds itself under intense scrutiny in Europe.
As Apple navigates these legal challenges, the company’s stock has taken a beating, with its market value dropping by about $113 billion on Thursday alone following the announcement of the antitrust lawsuit. The road ahead appears rocky for the tech giant as it faces the combined forces of the U.S. Department of Justice, state attorneys general, and the European Commission.
