Justice Dept., 34 states and Microsoft accuse Apple of stifling competition

“Apple‘s conduct has harmed and is harming mobile app developers and millions of citizens,” attorneys general for 34 states and the District of Columbia said. Getty Images

The Justice Department, Microsoft and a bipartisan group of attorneys general from 34 states and the District of Columbia all accused Apple of stifling competition through its app store on Thursday and threw their weight behind a legal challenge to the company.

The three groups filed third-party briefs with a federal court that is considering an appeal from Fortnite maker Epic Games in its ongoing legal fight against Apple.

Epic and other critics say that the mandatory 15% to 30% commissions Apple charges developers that distribute apps through its store are evidence the company holds an illegal monopoly.

A lower-level federal judge in California previously rejected Epic’s argument that Apple’s app store is a monopoly — a decision that the Justice Department on Thursday said was rife with “legal errors that could imperil effective antitrust enforcement, especially in the digital economy.”

The 35 attorneys general, for their part, wrote that “Apple’s conduct has harmed and is harming mobile app developers and millions of citizens.”

“Apple continues to monopolize app-distribution and in-app payment solutions for iPhones, stifle competition, and amass supra-competitive profits within the almost trillion-dollar-a-year smartphone industry,” said the states, which were led by Utah and also included New York, Texas and Florida.

The groups filed third-party briefs with a federal court that is hearing an appeal from Fortnite maker Epic Games in its ongoing legal fight against Apple.

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Both the Justice Department and the attorneys general argued that upholding the lower court’s ruling in the Epic Games case would unfairly narrow the scope of the Sherman Act, the US’s landmark anti-monopoly law.

An appeals court ruling against Apple could blow a multibillion-dollar hole in the company’s balance sheet. Apple took in $85.1 billion in revenue from the app store in 2021.

Microsoft — which has long pushed for antitrust crackdowns on its Big Tech rivals — also submitted a scathing third-party brief on Thursday.

“If Apple is allowed to step between any company with online services and users of iPhones, few areas of the vast mobile economy will be safe from Apple’s interference and eventual dominance,” Microsoft said. “Consumers and innovation will suffer – indeed, they already have.”

Microsoft said “consumers and innovation” have suffered due to Apple’s actions.

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“The district court’s reasoning failed to give sufficient weight to these immense competitive risks and, if broadly affirmed, could insulate Apple from meritorious antitrust scrutiny and embolden further harmful conduct,” the company added.

Microsoft’s anti-Apple salvo comes as the company potentially faces its own antitrust probe over its $69 billion acquisition of Activision Blizzard, one of the biggest tech deals in history.

Apple shares were trading up 4% on Friday morning after the company reported strong fourth quarter earnings. The iPhone maker did not immediately respond to a request for comment.