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PHILIP R. SELLINGER JONATHAN S. KANTER

United States Attorney Assistant Attorney General

By: J. ANDREW RUYMAN DOHA G. MEKKI

Assistant U.S. Attorney Principal Deputy Assistant Attorney General

402 East State Street, Room 430 HETAL J. DOSHI

Trenton, NJ 08608 MICHAEL B. KADES

Telephone: 609-989-0563 Deputy Assistants Attorney General

By: JONATHAN LASKEN

Assistant Chief, Civil Conduct Task Force

United States Department of Justice

Antitrust Division

450 Fifth Street NW, Suite 8600

Washington, DC 20530

Telephone: 202-598-6517

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA

U.S. Department of Justice, Antitrust Division

450 Fifth Street NW, Suite 8600

Washington, DC 20530

STATE OF NEW JERSEY

124 Halsey Street, 5th Floor

Newark, NJ 07102

STATE OF ARIZONA

2005 N. Central Avenue

Phoenix, AZ 85004

STATE OF CALIFORNIA

455 Golden Gate Avenue, Suite 11000

San Francisco, CA 94102

DISTRICT OF COLUMBIA

400 6th Street NW, 10

Floor

Washington, DC 20001

STATE OF CONNECTICUT

165 Capitol Avenue

Hartford, CT 06106

STATE OF MAINE

6 State House Statio

No.

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Augusta, ME 04333

STATE OF MICHIGAN

525 W Ottawa Street

Lansing, MI 48933

STATE OF MINNESOTA

445 Minnesota Street, Suite 1400

Saint Paul, MN 55101

STATE OF NEW HAMPSHIRE

33 Capitol Street

Concord, NH 03301

STATE OF NEW YORK

28 Liberty Street

New York, NY 10005

STATE OF NORTH DAKOTA

1720 Burlington Drive, Suite C

Bismarck, ND 58504

STATE OF OKLAHOMA

15 West 6th Street, Suite 1000

Tulsa, OK 74119

STATE OF OREGON

100 SW Market Street

Portland, OR 97201

STATE OF TENNESSEE

Post Office Box 20207

Nashville, TN 37202

STATE OF VERMONT

109 State Street

Montpelier, VT 05609

STATE OF WISCONSIN

Post Office Box 7857

Madison, WI 53707

Plaintiffs,

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APPLE INC.

One Apple Park Way

Cupertino, CA 95014

Defendant.

COMPLAINT

In 2010, a top Apple executive emailed Apple’s then-CEO about an ad for the new

Kindle e-reader. The ad began with a woman who was using her iPhone to buy and read books

on the Kindle app. She then switches to an Android smartphone and continues to read her books

using the same Kindle app. The executive wrote to Jobs: one “message that can’t be missed is

that it is easy to switch from iPhone to Android. Not fun to watch.” Jobs was clear in his

response: Apple would “force” developers to use its payment system to lock in both developers

and users on its platform. Over many years, Apple has repeatedly responded to competitive

threats like this one by making it harder or more expensive for its users and developers to leave

than by making it more attractive for them to stay.

For many years, Apple has built a dominant iPhone platform and ecosystem that has

driven the company’s astronomical valuation. At the same time, it has long understood that

disruptive technologies and innovative apps, products, and services threatened that dominance by

making users less reliant on the iPhone or making it easier to switch to a non-Apple

smartphone. Rather than respond to competitive threats by offering lower smartphone prices to

consumers or better monetization for developers, Apple would meet competitive threats by

imposing a series of shapeshifting rules and restrictions in its App Store guidelines and developer

agreements that would allow Apple to extract higher fees, thwart innovation, offer a less secure

or degraded user experience, and throttle competitive alternatives. It has deployed this playbook

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across many technologies, products, and services, including super apps, text messaging,

smartwatches, and digital wallets, among many others.

Apple’s conduct also stifles new paradigms that threaten Apple’s smartphone dominance,

including the cloud, which could make it easier for users to enjoy high-end functionality on a

lower priced smartphone—or make users device-agnostic altogether. As one Apple manager

recently observed, “Imagine buying a [expletive] Android for 25 bux at a garage sale and it

works fine . . . . And you have a solid cloud computing device. Imagine how many cases like

that there are.” Simply put, Apple feared the disintermediation of its iPhone platform and

undertook a course of conduct that locked in users and developers while protecting its profits.

Critically, Apple’s anticompetitive conduct not only limits competition in the smartphone

market, but also reverberates through the industries that are affected by these restrictions,

including financial services, fitness, gaming, social media, news media, entertainment, and more.

Unless Apple’s anticompetitive and exclusionary conduct is stopped, it will likely extend and

entrench its iPhone monopoly to other markets and parts of the economy. For example, Apple is

rapidly expanding its influence and growing its power in the automotive, content creation and

entertainment, and financial services industries–and often by doing so in exclusionary ways that

further reinforce and deepen the competitive moat around the iPhone.

This case is about freeing smartphone markets from Apple’s anticompetitive and

exclusionary conduct and restoring competition to lower smartphone prices for consumers,

reducing fees for developers, and preserving innovation for the future. The United States and the

States of New Jersey, Arizona, California, Connecticut, Maine, Michigan, Minnesota, New

Hampshire, New York, North Dakota, Oklahoma, Oregon, Tennessee, Vermont, Wisconsin, and

the District of Columbia, acting by and through their respective

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Attorneys General, bring this case to address Apple’s anticompetitive and exclusionary conduct

and alleviate harm to competition.

I. Introduction

1. The Apple Computer Company, as it was then called, was founded in 1976 to

make and market personal computers. From its inception, Apple had a knack for expensive,

high-end design and niche marketing relative to its competitors. But it struggled to compete

against rivals that offered lower prices and more programs. After two decades, Apple struggled

to compete against Windows personal computers and by the late 1990s, it was on the brink of

bankruptcy.

2. Apple’s fortunes changed around the time it launched the iPod in 2001.

Innovative design and savvy marketing had not been enough to drive a successful business

strategy. This time, the confluence of several factors made it a smash success. Apple’s iTunes

application allowed iPod users to organize their song library and update their iPod. A path-

clearing antitrust enforcement case, brought by the United States and state attorneys general,

against Microsoft opened the market and constrained Microsoft’s ability to prohibit companies

like Apple from offering iTunes on Windows PCs. Licensing agreements with the major music

labels allowed Apple to offer iPod/iTunes users a wide selection of music for a fee-per-

download. The iPod experience gave Apple a recipe for the future: a high-end device, a large

number of platform participants (i.e., music labels and consumers), and a digital storefront. More

importantly, it gave Apple a playbook: drive as many consumers and third-party participants to

the platform as possible and offer a wide selection of content, products, and services created by

those third parties to consumers. This structure put Apple in the driver’s seat to generate

substantial revenues through device sales in the first instance and subsequently the ancillary fees

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that it derives from sitting between consumers on the one hand and the products and services

they love on the other.

3. Apple’s experience with the iPod set the stage for Apple’s most successful

product yet. In 2007, Apple launched the iPhone, a smartphone that offered high-end hardware

and software applications, called “apps,” built atop a mobile operating system that mimicked the

functionality and ease of use of a computer. Apple initially offered only a small number of apps

that it created for the iPhone. But Apple quickly realized the enormous value that a broader

community of entrepreneurial, innovative developers could drive to its users and the iPhone

platform more broadly. So Apple invited and capitalized on the work of these third parties while

maintaining control and monetizing that work for itself. The value of third parties’ work served

an important purpose for Apple. Indeed, as early as 2010, then-CEO Steve Jobs discussed how to

“further lock customers into our ecosystem” and “make Apple[’s] ecosystem even more sticky.”

Three years later, Apple executives were still strategizing how to “get people hooked to the

ecosystem.”

4. That strategy paid off. Over more than 15 years, Apple has built and sustained the

most dominant smartphone platform and ecosystem in the United States by attracting third-party

developers of all kinds to create apps that users could download on their smartphones through a

digital storefront called the App Store. As developers created more and better products, content,

apps, and services, more people bought iPhones, which incentivized even more third parties to

develop apps for the iPhone. Today, the iPhone’s ecosystem includes products, apps, content,

accessories, and services that are offered by content creators, newspaper publishers, banks,

advertisers, social media companies, airlines, productivity developers, retailers and other

merchants, and others. As Apple’s power grew, its leverage over third parties reinforced its tight

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control over how third parties innovate and monetize on and off the smartphone in ways that

were anticompetitive and exclusionary.

5. Today, Apple charges as much as $1,599 for an iPhone and earns high margins on

each one, more than double those of others in the industry. When developers imagine a new

product or service for iPhone consumers, Apple demands up to 30 percent of the price of an app

whose content, product, or service it did not create. Then when a consumer wants to buy some

additional service within that app, Apple extracts up to another 30 percent, again for a service

Apple does not create or develop. When customers buy a coffee or pay for groceries, Apple

charges a fee for every “tap-to-pay” transaction, imposing its own form of an interchange fee on

banks and a significant new cost for using credit cards. When users run an internet search,

Google gives Apple a significant cut of the advertising revenue that an iPhone user’s searches

generate.

6. Apple keenly understands that while a community of developers and accessory

makers is indispensable to the success of the iPhone, they also pose an existential threat to its

extraordinary profits by empowering consumers to “think different” and choose perfectly

functional, less-expensive alternative smartphones.

7. Apple’s smartphone business model, at its core, is one that invites as many

participants, including iPhone users and third-party developers, to join its platform as possible

while using contractual terms to force these participants to pay substantial fees. At the same

time, Apple restricts its platform participants’ ability to negotiate or compete down its fees

through alternative app stores, in-app payment processors, and more.

8. In order to protect that model, Apple reduces competition in the markets for

performance smartphones and smartphones generally. It does this by delaying, degrading, or

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outright blocking technologies that would increase competition in the smartphone markets by

decreasing barriers to switching to another smartphone, among other things. The suppressed

technologies would provide a high-quality user experience on any smartphone, which would, in

turn, require smartphones to compete on their merits.

9. Apple suppresses such innovation through a web of contractual restrictions that it

selectively enforces through its control of app distribution and its “app review” process, as well

as by denying access to key points of connection between apps and the iPhone’s operating

system (called Application Programming Interfaces or “APIs”). Apple can enforce these

restrictions due to its position as an intermediary between product creators such as developers on

the one hand and users on the other.

10. This complaint highlights five examples of Apple using these mechanisms to

suppress technologies that would have increased competition among smartphones. Suppressing

these technologies does not reflect competition on the merits. Rather, to protect its smartphone

monopoly—and the extraordinary profits that monopoly generates—Apple repeatedly chooses to

make its products worse for consumers to prevent competition from emerging. These examples

below individually and collectively have contributed to Apple’s ability to secure, grow, and

maintain its smartphone monopoly by increasing switching costs for users, which leads to higher

prices and less innovation for users and developers. Apple has used one or both mechanisms

(control of app distribution or control of APIs) to suppress the following technologies, among

others:

 Super apps provide a user with broad functionality in a single app. Super apps can

improve smartphone competition by providing a consistent user experience that can

be ported across devices. Suppressing super apps harms all smartphone users—

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including Apple users—by denying them access to high quality experiences and it

harms developers by preventing them from innovating and selling products.

 Cloud streaming game apps provide users with a way to play computing intensive

games in the cloud. Cloud streaming games (and cloud streaming in general) can

improve smartphone competition by decreasing the importance of expensive

hardware for accomplishing high compute tasks on a smartphone. Suppressing cloud

streaming games harms users by denying them the ability to play high-compute

games, and it harms developers by preventing them from selling such games to users.

 Messaging apps are apps that allow users to communicate with friends, family, and

other contacts. Messaging apps that work equally well across all smartphones can

improve competition among smartphones by allowing users to switch phones without

changing the way they communicate with friends, family, and others. Apple makes

third-party messaging apps on the iPhone worse generally and relative to Apple

Messages, Apple’s own messaging app, by prohibiting third-party apps from sending

or receiving carrier-based messages. By doing so, Apple is knowingly and

deliberately degrading quality, privacy, and security for its users and others who do

not have iPhones. Apple also harms developers by artificially constraining the size of

their user base.

 Smartwatches are an expensive accessory that typically must be paired to a

smartphone. Smartwatches that can be paired with different smartphones allow users

to retain their investment in a smartwatch when switching phones thereby decreasing

the literal cost associated with switching from one smartphone to another, among

other things. By suppressing key functions of third-party smartwatches—including

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the ability to respond to notifications and messages and to maintain consistent

connections with the iPhone—Apple has denied users access to high performing

smartwatches with preferred styling, better user interfaces and services, or better

batteries, and it has harmed smartwatch developers by decreasing their ability to

innovate and sell products.

 Digital wallets are an increasingly important way that smartphones are used and are a

product in which users develop a great deal of comfort and trust as they typically

contain users’ most sensitive information. Digital wallets that work across

smartphone platforms allow users to move from one smartphone brand to another

with decreased frictions, among other things. Apple has denied users access to digital

wallets that would have provided a wide variety of enhanced features and denied

digital wallet developers—often banks—the opportunity to provide advanced digital

payments services to their own customers.

11. By maintaining its monopoly over smartphones, Apple is able to harm consumers

in a wide variety of additional ways. For example, by denying iPhone users the ability to choose

their trusted banking apps as their digital wallet, Apple retains full control both over the

consumer and also over the stream of income generated by forcing users to use only Apple-

authorized products in the digital wallet. Apple also prohibits the creation and use of alternative

app stores curated to reflect a consumer’s preferences with respect to security, privacy, or other

values. These and many other features would be beneficial to consumers and empower them to

make choices about what smartphone to buy and what apps and products to patronize. But

allowing consumers to make that choice is an obstacle to Apple’s ability to maintain its

monopoly.

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12. Of course, this is not the story Apple presents to the world. For decades, Apple

branded itself a nimble, innovative upstart. In 1998, Apple co-founder Steve Jobs criticized

Microsoft’s monopoly and “dirty tactics” in operating systems to target Apple, which prompted

the company “to go to the Department of Justice” in hopes of getting Microsoft “to play fair.”

But even at that time, Apple did not face the same types of restrictions it imposes on third parties

today; Apple users could use their iPod with a Windows computer, and Microsoft did not charge

Apple a 30 percent fee for each song downloaded from Apple’s iTunes store. Similarly, when

Apple brought the iPhone to market in 2007, it benefited from competition among component

makers and wireless carriers.

13. While Apple’s anticompetitive conduct arguably has benefited its shareholders—

to the tune of over $77 billion in stock buybacks in its 2023 fiscal year alone—it comes at a great

cost to consumers. Some of those costs are immediate and obvious, and they directly affect

Apple’s own customers: Apple inflates the price for buying and using iPhones while preventing

the development of features like alternative app stores, innovative super apps, cloud-streaming

games, and secure texting.

14. Other costs of Apple’s anticompetitive conduct may be less obvious in the

immediate term. But they are no less harmful and even more widespread, affecting all

smartphone consumers. Apple’s smartphone monopoly means that it is not economically viable

to invest in building some apps, like digital wallets, because they cannot reach iPhone users. This

means that innovations fueled by an interest in building the best, most user-focused product that

would exist in a more competitive market never get off the ground. What’s more, Apple itself

has less incentive to innovate because it has insulated itself from competition. As Apple’s

executives openly acknowledge: “In looking at it with hindsight, I think going forward we need

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to set a stake in the ground for what features we think are ‘good enough’ for the consumer. I

would argue we’re already doing *more* than what would have been good enough. But we find

it very hard to regress our product features YOY [year over year].” Existing features “would

have been good enough today if we hadn’t introduced [them] already,” and “anything new

and especially expensive needs to be rigorously challenged before it’s allowed into the consumer

phone.” Thus, it is not surprising that Apple spent more than twice as much on stock buybacks

and dividends as it did on research and development.

15. Moreover, Apple has demonstrated its ability to use its smartphone monopoly to

impose fee structures and manipulate app review to inhibit aggrieved parties from taking

advantage of regulatory and judicial solutions imposed on Apple that attempt to narrowly

remedy harm from its conduct.

16. Apple wraps itself in a cloak of privacy, security, and consumer preferences to

justify its anticompetitive conduct. Indeed, it spends billions on marketing and branding to

promote the self-serving premise that only Apple can safeguard consumers’ privacy and security

interests. Apple selectively compromises privacy and security interests when doing so is in

Apple’s own financial interest—such as degrading the security of text messages, offering

governments and certain companies the chance to access more private and secure versions of app

stores, or accepting billions of dollars each year for choosing Google as its default search engine

when more private options are available. In the end, Apple deploys privacy and security

justifications as an elastic shield that can stretch or contract to serve Apple’s financial and

business interests.

17. Smartphones have so revolutionized American life that it can be hard to imagine a

world beyond the one that Apple, a self-interested monopolist, deems “good enough.” But under

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our system of antitrust laws, “good enough” is, quite simply, not enough. Consumers,

competition, and the competitive process—not Apple alone—should decide what options

consumers should have. And competition, not Apple’s self-interested business strategies, should

be the catalyst for innovation essential to our daily lives, not only in the smartphone market but

in closely related industries like personal entertainment, automotive infotainment, and even more

innovations that have not yet been imagined. Competition is what will ensure that Apple’s

conduct and business decisions do not thwart the next Apple.

18. Protecting competition and the innovation that competition inevitably ushers in

for consumers, developers, publishers, content creators, and device manufacturers is why

Plaintiffs bring this lawsuit under Section 2 of the Sherman Act to challenge Apple’s

maintenance of its monopoly over smartphone markets, which affect hundreds of millions of

Americans every day. Plaintiffs bring this case to rid smartphone markets of Apple’s

monopolization and exclusionary conduct and to ensure that the next generation of innovators

can upend the technological world as we know it with new and transformative technologies.

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TABLE OF CONTENTS

I. Introduction ......................................................................................................................... 5

II. Defendant Apple ............................................................................................................... 16

A. Apple launched the iPod, iTunes, and the iTunes Store against the backdrop of

United States v. Microsoft ..................................................................................... 18

B. Apple invited third-party investment on the iPhone and then imposed tight

controls on app creation and app distribution ....................................................... 21

III. Smartphones Are Platforms .............................................................................................. 24

IV. Apple Unlawfully Maintains Its Monopoly Power ........................................................... 26

A. Apple harms competition by imposing contractual restrictions, fees, and taxes on

app creation and distribution ................................................................................. 26

i. Super Apps: Apple prevented apps from threatening its smartphone

monopoly by undermining mini programs that reduce user dependence on

the iPhone.................................................................................................. 29

ii. Cloud Streaming Apps: Apple prevented developers from offering cloud

gaming apps that reduce dependence on the iPhone’s expensive hardware

................................................................................................................... 32

B. Apple uses APIs and other critical access points in the smartphone ecosystem to

control the behavior and innovation of third parties in order to insulate itself from

competition ........................................................................................................... 35

i. Messaging: Apple protects its smartphone monopoly by degrading and

undermining cross-platform messaging apps and rival smartphones ....... 35

ii. Smartwatches: Apple protects its smartphone monopoly by impeding the

development of cross-platform smartwatches .......................................... 39

iii. Digital Wallets: Apple restricts cross-platform digital wallets on the

iPhone, reinforcing barriers to consumers switching to rival smartphones

................................................................................................................... 42

C. Apple’s “moat” around its smartphone monopoly is wide and deep: it uses a

similar playbook to maintain its monopoly through many other products and

services .................................................................................................................. 46

V. Anticompetitive Effects .................................................................................................... 49

A. Apple’s conduct harms the competitive process ................................................... 49

B. Apple has every incentive to use its monopoly playbook in the future ................ 54

VI. Privacy, Security, and Other Alleged Countervailing Factors Do Not Justify Apple’s

Anticompetitive Conduct .................................................................................................. 55

VII. The Smartphone Industry .................................................................................................. 57

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 14 of 88 PageID: 14

A. Background ........................................................................................................... 57

B. Smartphone Hardware .......................................................................................... 58

C. Smartphone Operating Systems, Applications, and Other Software .................... 60

D. Relevant Markets .................................................................................................. 62

iv. Performance smartphones are a relevant product market ......................... 63

v. Smartphones are a broader relevant product market ................................. 64

vi. The United States is a relevant geographic market for performance

smartphones and smartphones .................................................................. 65

E. Apple has monopoly power in the smartphone and performance smartphone

markets .................................................................................................................. 66

VIII. Jurisdiction, Venue, and Commerce ................................................................................. 70

IX. Violations Alleged ............................................................................................................ 71

A. First Claim for Relief: Monopolization of the Performance Smartphone Market in

the United States in Violation of Sherman Act § 2 ............................................... 71

B. Second Claim for Relief, in the Alternative: Attempted Monopolization of the

Performance Smartphone Market in the United States in Violation of Sherman

Act § 2 ................................................................................................................... 72

C. Third Claim for Relief: Monopolization of the Smartphone Market in the United

States in Violation of Sherman Act § 2 ................................................................ 73

D. Fourth Claim for Relief, in the Alternative: Attempted Monopolization of the

Smartphone Market in the United States in Violation of Sherman Act § 2 .......... 74

E. Fifth Claim for Relief: Violation of the New Jersey Antitrust Act (Monopoly

Maintenance) ......................................................................................................... 75

F. Sixth Claim for Relief: Violations of Wisconsin State Law ................................. 76

X. Request for Relief ............................................................................................................. 76

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 15 of 88 PageID: 15

II. Defendant Apple

19. Apple is a global technology company with headquarters in Cupertino, California.

Apple is one of the world’s most valuable public companies with a market capitalization over

$2.5 trillion. In fiscal year 2023, Apple generated annual net revenues of $383 billion and net

income of $97 billion. Apple’s net income exceeds any other company in the Fortune 500 and

the gross domestic products of more than 100 countries.

20. The iPhone, Apple’s signature product, is the primary driver of Apple’s growth

and profitability, routinely commanding profit margins of more than 30 percent on devices

alone—significantly higher than its smartphone competitors. iPhone sales have made up a

majority of Apple’s annual revenue every year since 2012.

21. Apple increasingly extracts revenue from iPhone users beyond the initial

smartphone sale. For example, Apple offers iPhone upgrades, apps and in-app payments, paid

digital subscription services (e.g., Apple’s music streaming, TV, news, gaming, fitness, and

cloud storage subscriptions), accessories (e.g., tracking devices, headphones, chargers, iPhone

cases), and more. Apple refers to these offerings as “Services” and “Wearables, Home, and

Accessories,” respectively. In fiscal year 2023, these offerings accounted for nearly one-third of

Apple’s total revenue, or four times what Apple earned from selling Mac computers. Some of

the largest drivers of revenue within these categories are Apple’s smartwatch, the Apple Watch,

and Apple’s App Store, where iPhone users purchase and download apps. In recent years,

Services have accounted for an increasing share of Apple’s revenues, while the iPhone has

remained the primary gateway through which U.S. consumers access these services.

22. Apple’s U.S. market share by revenue is over 70 percent in the performance

smartphone market—a more expensive segment of the broader smartphone market where

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Apple’s own executives recognize the company competes—and over 65 percent for all

smartphones. These market shares have remained remarkably durable over the last decade.

23. Apple’s smartphone market shares understate Apple’s dominance and likely

growth in key demographics, including among younger American consumers. For example, one-

third of all iPhone users in the United States were born after 1996, as compared to just 10 percent

for Samsung, Apple’s closest smartphone competitor. Surveys show that as many as 88 percent

of U.S. teenagers expect to purchase an iPhone for their next smartphone. iPhone users also tend

to come from higher income households. Because smartphone users generally use a single

smartphone to access related products and services, locking up key user groups allows Apple to

capture greater spending on iPhone-related products and services, realize higher margins per user

as compared to its smartphone rivals, and exercise greater control over developers and other

smartphone ecosystem participants.

24. In fiscal year 2023, Apple spent $30 billion on research and development. By

comparison, Apple spent $77 billion on stock buybacks during the same year.

25. Apple was founded in 1976. During its first 25 years, the company focused in

large part on producing and marketing personal computers. Although the market for personal

computers expanded over the next several decades, Apple struggled to gain customer adoption

for its higher-priced products relative to its lower-cost competitors, including IBM and

Microsoft. In the late 1990s, Apple significantly restructured the company and embarked on a

new strategy focused not just on selling personal computers, but also consumer devices like the

iPod, which led to the development of the iPhone.

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A. Apple launched the iPod, iTunes, and the iTunes Store against the backdrop

of United States v. Microsoft

26. When Apple began developing mobile consumer devices, it did so against the

backdrop of United States v. Microsoft, which created new opportunities for innovation in areas

that would become critical to the success of Apple’s consumer devices and the company itself.

For example, the iPod did not achieve widespread adoption until Apple developed a cross-

platform version of the iPod and iTunes for Microsoft’s Windows operating system, at the time

the dominant operating system for personal computers. In the absence of the consent decree in

United States v. Microsoft, it would have been more difficult for Apple to achieve this success

and ultimately launch the iPhone.

27. On May 18, 1998, the Justice Department and the attorneys general of 19 states

and the District of Columbia filed United States v. Microsoft, an antitrust lawsuit against

Microsoft alleging that the company had violated Section 2 of the Sherman Act by monopolizing

the market for Intel-compatible personal computer operating systems. At trial, the government

successfully established that Microsoft took steps to undermine the competitive threats posed by

“middleware,” such as web browsers like Netscape, after recognizing that if users could use

middleware to access a variety of content and services via remote servers, over the internet, they

might be less reliant on Windows.

28. Microsoft also took steps to undermine cross-platform technologies like

QuickTime, a software architecture developed by Apple to play multimedia content (e.g., music

and videos) on Apple’s Mac computers and Microsoft’s Windows PCs. In particular, Apple’s

then-Senior Vice President of Software Engineering testified that Microsoft “[wrote] steps into

its operating system to ensure that a QuickTime file will not operate reliably on Windows,”

“trick[ed] the user into believing that QuickTime technology is part of the problem actually

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caused by the Windows operating system,” and “introduced greater technical incompatibilities

between QuickTime and Microsoft products.”

29. In April 2000, the trial court ultimately found that Microsoft’s conduct violated

Section 2 of the Sherman Act. An appeals court upheld the district court’s findings of liability

regarding middleware.

30. In January 2001, Apple introduced iTunes, software built on Apple’s QuickTime

architecture, and advertised it as “Jukebox Software” for organizing and listening to music.

The initial version of iTunes was only compatible with Apple’s Mac computers.

31. Later that same year, Apple debuted the iPod, a portable digital audio player that

worked alongside iTunes to “let[] you put your entire music collection in your pocket and listen

to it wherever you go.” Like iTunes, the initial iPod was only compatible with Mac computers.

32. On November 1, 2002, the trial court accepted a proposed consent decree in

United States v. Microsoft. Among other things, the consent decree prohibited Microsoft from

retaliating against companies for developing or distributing products such as browsers and media

players. The consent decree also required Microsoft to make various APIs available to third-

party developers, including Apple.

33. Following that consent decree in October 2003, Apple launched a cross-platform

version of iTunes that was compatible with the Windows operating system. As a result, a much

larger group of users could finally use the iPod and iTunes, including the iTunes Store. The

iTunes Store allowed users to buy and download music and play it on their iTunes computer

application or on the iPod. Apple benefited substantially from this new customer base. In the first

two years after launching the iPod, Apple sold a few hundred thousand devices. The year after

launching a Windows-compatible version of iTunes and gaining access to millions more

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customers, Apple sold millions of devices. Apple went on to sell hundreds of millions of iPod

devices over the next two decades. Moreover, iTunes became the market leader in online music

services. At an event in 2007, Apple’s then-CEO said of the iPod, “it didn’t just change the way

we all listened to music, it changed the entire music industry.” At the same event, he announced

that the company would change its name from Apple Computer, Inc. to Apple, Inc. in light of its

shifting focus to consumer electronics rather than computers.

34. The ubiquity of iPod and iTunes on Windows, in part because of a successful

antitrust enforcement action against Microsoft, contributed to the development and success of

Apple’s next flagship product—the iPhone. But after launching the iPhone, Apple began stifling

the development of cross-platform technologies on the iPhone, just as Microsoft tried to stifle

cross-platform technologies on Windows.

35. In January 2007, Apple debuted the first-generation iPhone, describing the device

as “an iPod, a phone, and an internet communicator,” and touting the fact that users could

“sync[] content from a user’s iTunes library on their PC or Mac.” Apple marketed the iPhone as

a smartphone that was easy to use. Reflecting on the company’s learning from the iPod, Apple’s

then-CEO announced, “iTunes is going to sync all your media to your iPhone—but also a ton of

data. Contacts, calendars, photos, notes, bookmarks, email accounts.”

36. The original iPhone cost approximately $299—approximately $450 in 2024

dollars adjusted for inflation—with a two-year contract with a phone carrier.

37. At launch, nearly all native apps for the iPhone were created by Apple. There

were only about a dozen apps overall, including Calendar, Camera, Clock, Contacts, iPod,

Messages, Notes, Phone, Photos, Safari, Stocks, Voice Memos, and Weather.

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38. Within a year of launching the iPhone, Apple invited third-party developers to

create native apps for the iPhone. Apple released its first software development kit—essentially

the digital tools for building native apps on Apple’s operating system (iOS)—to encourage and

enable third-party developers to create native apps for the iPhone. Apple also offered developers

ways to earn money by selling apps and later in-app purchases and subscriptions. By 2009,

Apple was running marketing campaigns highlighting the value that third-party apps provide to

iPhone users with the trademarked slogan: “There’s an app for that.”

39. Apple’s decision to invite third-party participation on its iPhone platform

benefited Apple, too. The proliferation of third-party apps generated billions of dollars in profits

for Apple and an iPhone user base of more than 250 million devices in the United States. Apple’s

market shares—over 70 percent of the performance smartphone market and over 65 percent of

the broader smartphone market—likely understate its monopoly power today.

40. While Apple profits from third-party developers that increase the iPhone’s value

to users, Apple executives understand that third-party products and services can, in their own

words, be “fundamentally disruptive” to its smartphone monopoly, decreasing users’ dependence

on Apple and the iPhone and increasing competitive pressure on Apple. Apple therefore

willingly sacrifices the short-term benefits it would gain from improved products and services

developed by third parties when necessary to maintain its monopoly.

B. Apple invited third-party investment on the iPhone and then imposed tight

controls on app creation and app distribution

41. Apple controls how developers distribute and create apps for iPhone users. For

example, developers can only distribute native iPhone apps through Apple’s App Store, which is

the only way for users to download native iOS apps. Limiting distribution to the Apple App

Store enables Apple to exert monopoly power over developers by imposing contractual

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restrictions and rules that limit the behavior of non-Apple apps and services. Specifically, Apple

sets the conditions for apps it allows on the Apple App Store through its App Store Review

Guidelines. Under these guidelines, Apple has sole discretion to review and approve all apps and

app updates. Apple selectively exercises that discretion to its own benefit, deviating from or

changing its guidelines when it suits Apple’s interests and allowing Apple executives to control

app reviews and decide whether to approve individual apps or updates. Apple often enforces its

App Store rules arbitrarily. And it frequently uses App Store rules and restrictions to penalize

and restrict developers that take advantage of technologies that threaten to disrupt,

disintermediate, compete with, or erode Apple’s monopoly power.

42. Apple also controls app creation by deciding which APIs are available to

developers when they make third-party apps. For example, developers cannot provide native

apps on the iPhone unless they enter into Apple’s non-negotiable Developer Program License

Agreement (DPLA). That agreement requires developers to use public APIs only “in the manner

prescribed by Apple.” It also prohibits third-party apps from using APIs that Apple designates as

“private.” Apple selectively designates APIs as public or private to benefit Apple, limiting the

functionality developers can offer to iPhone users even when the same functionality is available

in Apple’s own apps, or even select third-party apps. Similar to Apple’s App Store restrictions,

Apple uses its DPLA to impose restrictions that penalize and restrict developers that take

advantage of technologies that threaten to disrupt, disintermediate, compete with, or erode

Apple’s monopoly power.

43. Developers cannot avoid Apple’s control of app distribution and app creation by

making web apps—apps created using standard programming languages for web-based content

and available over the internet—as an alternative to native apps. Many iPhone users do not look

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for or know how to find web apps, causing web apps to constitute only a small fraction of app

usage. Apple recognizes that web apps are not a good alternative to native apps for developers.

As one Apple executive acknowledged, “[d]evelopers can’t make much money on the web.”

Regardless, Apple can still control the functionality of web apps because Apple requires all web

browsers on the iPhone to use WebKit, Apple’s browser engine—the key software components

that third-party browsers use to display web content.

44. Nor can developers rely on alternative app stores even though this would benefit

developers and users. For example, developers cannot offer iPhone users an app store that only

offers apps curated for use by children, which would provide opportunities to improve privacy,

security, and child safety. By contrast, Apple allows certain enterprise and public sector

customers to offer versions of app stores with more curated apps to better protect privacy and

security.

45. Apple’s control over both app distribution and app creation gives Apple

tremendous power. For example, Apple designates as “private” the APIs needed to send Short

Message Service, or SMS, text messages, which is a protocol used by mobile carriers since the

early 1990s to allow users to send basic text messages to other mobile phone numbers using their

own mobile phone numbers. Developers have no technical means to access these private APIs,

but even if they did, doing so would breach their developer agreement with Apple, and therefore

put the developer at risk of losing the ability to distribute apps through the App Store. For

example, Apple prohibits third-party iPhone apps from sending or receiving SMS text messages

even though this functionality is available through Apple Messages. Likewise, Apple can control

the functionality of third-party apps and accessories through its control of app distribution

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because if an app includes functionality that Apple does not like, Apple can and does exercise its

discretion to simply block the app from the App Store.

46. Apple’s dominance is such that neither app developers nor iPhone users can

benefit from lower cost or higher quality means of distributing apps or purchasing and providing

digital products and services. Instead, Apple guarantees that it continues to benefit from the

contributions of third-party developers and other platform participants while also protecting itself

from the competitive threats and pressure those participants pose to Apple’s smartphone

monopoly.

47. This complaint focuses on Apple’s use of its dominance to impose contracts and

rules that restrict the behavior and design decisions of companies other than Apple.

III. Smartphones Are Platforms

48. Smartphones combine the functionality of a traditional mobile phone with

advanced hardware and software components. This cluster of services and features results in a

distinct product for consumers and developers. For example, smartphones not only make phone

calls, but also allow users to listen to music, send text messages, take pictures, play games,

access software for work, manage their finances, and browse the internet.

49. Smartphones are platforms. Platforms bring together different groups that benefit

from each other’s participation on the platform. A food delivery app, for example, is a multi-

sided platform that brings together restaurants, couriers, and consumers. A two-sided platform,

for example, may bring together service providers on the one hand and consumers on the other.

The technology and economics of a smartphone platform are fundamentally different from the

technology and economics of a simultaneous transaction platform, such as a credit card, because

smartphone platforms compete over device features and pricing in ways that do not directly

relate to app store transactions. Whereas credit card transactions reflect a single simultaneous

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action that requires both sides of the transaction for either side to exist, consumers value

smartphone platforms for a variety of reasons separate from their ability to facilitate a

simultaneous transaction. Consumers care about non-transactional components of the phone,

such as its camera and processing speed, and they care about non-transactional components of

apps, such as their features and functionality.

50. The economics of a smartphone platform are such that the platform’s value to

users—and in turn to the platform operator—increase when new apps and new features are added

to the platform. In order to create these economic benefits for itself and its users, Apple has

opened its smartphone platform to third-party developers, whose countless inventions and

innovations have created enormous value. Apple has willingly opened the platform to third-party

developers to capture this value even though there is no extensive regulatory framework

requiring it to do so or overseeing how it interacts with those third parties. In this way,

smartphone platforms are very different from other platforms, like landline telephone networks,

whose value-adding features were built primarily by the platform operator and which were only

opened to third parties when the platform operator was required to do so by regulation. When a

third-party developer for the iPhone creates a valuable new feature, consumers benefit and

consumer demand goes up for Apple’s products, increasing the economic value of the iPhone to

Apple. This has played out hundreds of thousands of times for the iPhone, resulting in an

enormously valuable smartphone platform reflecting the combined contributions of millions of

developers.

51. In contrast, limiting the features and functionality created by third-party

developers—and therefore available to iPhone users—makes the iPhone worse and deprives

Apple of the economic value it would gain as the platform operator. It makes no economic sense

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for Apple to sacrifice the profits it would earn from new features and functionality unless it has

some other compensating reason to do so, such as protecting its monopoly profits.

IV. Apple Unlawfully Maintains Its Monopoly Power

A. Apple harms competition by imposing contractual restrictions, fees, and

taxes on app creation and distribution

52. Apple’s internal documents show that, soon after the iPhone’s introduction and

notwithstanding its success, the company began to fear that disintermediation of its platform and

the commoditization of the iPhone would threaten Apple’s substantial profits from iPhone sales

and related revenue streams.

53. Accordingly, Apple exercised its control of app creation and app distribution in

key cases to cement the iPhone and App Store as the primary gateway to apps, products, and

services. Apple often claims these rules and restrictions are necessary to protect user privacy or

security, but Apple’s documents tell a different story. In reality, Apple imposes certain

restrictions to benefit its bottom line by thwarting direct and disruptive competition for its iPhone

platform fees and/or for the importance of the iPhone platform itself.

54. Three aspects of Apple’s efforts to protect and exploit its smartphone monopoly

are worth noting. First, Apple exercises its control over app distribution and app creation to

dictate how developers innovate for the iPhone, enforcing rules and contractual restrictions

that stop or delay developers from innovating in ways that threaten Apple’s power. In so doing,

Apple influences the direction of innovation both on and off the iPhone.

55. Second, Apple drives iPhone users away from products and services that compete

with or threaten Apple. In doing so, Apple increases the cost and friction of switching from the

iPhone to another smartphone and generates extraordinary profits through subscription services

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(like Apple’s proprietary music, gaming, cloud storage, and news services), advertisements

within the App Store, and accessories like headphones and smartwatches.

56. Third, Apple uses these restrictions to extract monopoly rents from third parties in

a variety of ways, including app fees and revenue-share requirements. For most of the last 15

years, Apple collected a tax in the form of a 30 percent commission on the price of any app

downloaded from the App Store, a 30 percent tax on in-app purchases, and fees to access the

tools needed to develop iPhone native apps in the first place. While Apple has reduced the tax it

collects from a subset of developers, Apple still extracts 30 percent from many app makers.

Apple also generates substantial and increasing revenue by charging developers to help users

find their apps in the App Store—something that, for years, Apple told developers was part of

the reason they paid a 30 percent tax in the first place. For example, Apple will sell keyword

searches for an app to someone other than the owner of the app. Apple is able to command these

rents from companies of all sizes, including some of the largest and most sophisticated

companies in the world.

57. As Apple exercised its control of app distribution and app creation, Apple slowed

its own iPhone innovation and extracted more revenue and profit from its existing customers

through subscriptions, advertising, and cloud services. These services increase the cost of

switching from the iPhone to another smartphone because many of these services—including its

proprietary gaming, cloud storage, and news service—are exclusive to the Apple ecosystem,

causing significant frictions for iPhone users who try to use alternative services on another

smartphone. Moreover, Apple’s conduct demonstrates that Apple recognized the importance of

digital products and services for the success of the iPhone while at the same time it restricted the

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development and growth of non-iPhone products and services—especially those that might make

it easier for users to switch from the iPhone to another smartphone.

58. Each step in Apple’s course of conduct built and reinforced the moat around its

smartphone monopoly. The cumulative effect of this course of conduct has been to maintain and

entrench Apple’s smartphone monopoly at the expense of the users, developers, and other third

parties who helped make the iPhone what it is today. Despite major technological changes over

the years, Apple’s power to control app creation and distribution and extract fees from

developers has remained largely the same, unconstrained by competitive pressures or market

forces. That this conduct is impervious to competition reflects the success of Apple’s efforts to

create and maintain its smartphone monopoly, the strength of that monopoly, and the durability

of Apple’s power.

59. Apple’s monopoly maintenance has taken many forms and continues to evolve

today; however, Apple’s anticompetitive and exclusionary course of conduct is exemplified by

its contractual rules and restrictions targeting several products and services: super apps, cloud

streaming apps, messaging apps, smartwatches, and digital wallets. By stifling these

technologies, and many others, Apple reinforces the moat around its smartphone monopoly not

by making its products more attractive to users, but by discouraging innovation that threatens

Apple’s smartphone monopoly or the disintermediation of the iPhone. Apple continues to expand

and shift the scope and categories of anticompetitive conduct such that the cumulative

anticompetitive effect of Apple’s conduct is even more powerful than that of each exclusionary

act standing alone.

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i. Super Apps: Apple prevented apps from threatening its smartphone

monopoly by undermining mini programs that reduce user

dependence on the iPhone

60. For years, Apple denied its users access to super apps because it viewed them as

“fundamentally disruptive” to “existing app distribution and development paradigms” and

ultimately Apple’s monopoly power. Apple feared super apps because it recognized that as they

become popular, “demand for iPhone is reduced.” So, Apple used its control over app

distribution and app creation to effectively prohibit developers from offering super apps instead

of competing on the merits.

61. A super app is an app that can serve as a platform for smaller “mini” programs

developed using programming languages such as HTML5 and JavaScript. By using

programming languages standard in most web pages, mini programs are cross platform, meaning

they work the same on any web browser and on any device. Developers can therefore write a

single mini program that works whether users have an iPhone or another smartphone.

62. Super apps can provide significant benefits to users. For example, a super app that

incorporates a multitude of mini programs might allow users to easily discover and access a wide

variety of content and services without setting up and logging into multiple apps, not unlike how

Netflix and Hulu allow users to find and watch thousands of movies and television shows in a

single app. As one Apple executive put it, “who doesn’t want faster, easier to discover apps that

do everything a full app does?” Restricting super apps makes users worse off and sacrifices the

short-term profitability of iPhones for Apple.

63. Super apps also reduce user dependence on the iPhone, including the iOS

operating system and Apple’s App Store. This is because a super app is a kind of middleware

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that can host apps, services, and experiences without requiring developers to use the iPhone’s

APIs or code.

64. As users interact with a super app, they rely less on the smartphone’s proprietary

software and more on the app itself. Eventually, users become more willing to choose a different

smartphone because they can access the same interface, apps, and content they desire on any

smartphone where the super app is also present. Moreover, developers can write mini programs

that run on the super app without having to write separate apps for iPhones and other

smartphones. This lowers barriers to entry for smartphone rivals, decreases Apple’s control over

third-party developers, and reduces switching costs.

65. Apple recognizes that super apps with mini programs would threaten its

monopoly. As one Apple manager put it, allowing super apps to become “the main gateway

where people play games, book a car, make payments, etc.” would “let the barbarians in at the

gate.” Why? Because when a super app offers popular mini programs, “iOS stickiness goes

down.”

66. Apple’s fear of super apps is based on first-hand experience with enormously

popular super apps in Asia. Apple does not want U.S. companies and U.S. users to benefit from

similar innovations. For example, in a Board of Directors presentation, Apple highlighted the

“[u]ndifferentiated user experience on [a] super platform” as a “major headwind” to growing

iPhone sales in countries with popular super apps due to the “[l]ow stickiness” and “[l]ow

switching cost.” For the same reasons, a super app created by a U.S. company would pose a

similar threat to Apple’s smartphone dominance in the United States. Apple noted as a risk in

2017 that a potential super app created by a specific U.S. company would “replace[ ] usage of

native OS and apps resulting in commoditization of smartphone hardware.”

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67. Apple did not respond to the risk that super apps might disrupt its monopoly by

innovating. Instead, Apple exerted its control over app distribution to stifle others’ innovation.

Apple created, strategically broadened, and aggressively enforced its App Store Guidelines to

effectively block apps from hosting mini programs. Apple’s conduct disincentivized investments

in mini program development and caused U.S. companies to abandon or limit support for the

technology in the United States.

68. In particular, part of what makes super apps valuable to consumers is that finding

and using mini programs is easier than using an app store and navigating many separate apps,

passwords, and set-up processes. Instead of making mini program discovery easy for users,

however, Apple made it nearly impossible.

69. Since at least 2017, Apple has arbitrarily imposed exclusionary requirements that

unnecessarily and unjustifiably restrict mini programs and super apps. For example, Apple

required apps in the United States to display mini programs using a flat, text-only list of mini

programs. Apple also banned displaying mini programs with icons or tiles, such as descriptive

pictures of the content or service offered by the mini program. Apple also banned apps from

categorizing mini programs, such as by displaying recently played games or more games by the

same developer. These restrictions throttle the popularity of mini programs and ultimately make

the iPhone worse because it discourages developers from creating apps and other content that

would be attractive to iPhone users.

70. Apple also selectively enforced its contractual rules with developers to prevent

developers from monetizing mini programs, hurting both users and developers. For example,

Apple blocked mini programs from accessing the APIs needed to implement Apple’s in-app

payment (IAP) system—even if developers were willing to pay Apple’s monopoly tax. Similarly,

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Apple blocked developers’ ability to use in-app payment methods other than directly using IAP.

For instance, super apps could create a virtual currency for consumers to use in mini programs,

but Apple blocked this too. Apple, however, allows other, less-threatening apps to do so.

ii. Cloud Streaming Apps: Apple prevented developers from offering

cloud gaming apps that reduce dependence on the iPhone’s expensive

hardware

71. For years, Apple blocked cloud gaming apps that would have given users access

to desirable apps and content without needing to pay for expensive Apple hardware because this

would threaten its monopoly power. In Apple’s own words, it feared a world where “all that

matters is who has the cheapest hardware” and consumers could “buy[] a [expletive] Android for

25 bux at a garage sale and . . . have a solid cloud computing device” that “works fine.” Apple’s

conduct made its own product worse because consumers missed out on apps and content. This

conduct also cost Apple substantial revenues from third-party developers. At the same time,

Apple also made other smartphones worse by stifling the growth of these cross-platform apps on

other smartphones. Importantly, Apple prevented the emergence of technologies that could lower

the price that consumers pay for iPhones.

72. Cloud streaming apps let users run a computationally intensive program without

having to process or store the program on the smartphone itself. Instead, a user’s smartphone

leverages the computing power of a remote server, which runs the program and streams the result

back to the phone. Cloud streaming allows developers to bring cutting-edge technologies and

services to smartphone consumers—including gaming and interactive artificial intelligence

services—even if their smartphone includes hardware that is less powerful than an iPhone.

73. Cloud streaming has significant benefits for users. For example, Apple has

promoted the iPhone 15 by promising that its hardware is powerful enough to enable “next-level

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performance and mobile gaming.” But powerful hardware is unnecessary if games are played via

cloud streaming apps. For a cloud game, the user experiences and plays the game on the

smartphone, but the game is run by hardware and software in remote computing centers (“the

cloud”). Thus, cloud gaming apps deliver rich gaming experiences on smartphones without the

need for users to purchase powerful, expensive hardware. As a result, users with access to cloud

streamed games may be more willing to switch from an iPhone to a smartphone with less

expensive hardware because both smartphones can run desirable games equally well.

74. Cloud streaming also has significant advantages for developers. For example,

instead of re-writing the same game for multiple operating systems, cloud platforms can act as

middleware that allow developers to create a single app that works across iOS, Android, and

other operating systems. Cloud streaming provides more and simpler options for offering

subscriptions, collecting payments, and distributing software updates as well. All of this helps

game developers reach economies of scale and profitability they might not achieve without

offering cloud gaming apps and reduces their dependence on iOS and Apple’s App Store.

75. Apple wielded its power over app distribution to effectively prevent third-party

developers from offering cloud gaming subscription services as a native app on the iPhone. Even

today, none are currently available on the iPhone.

76. For years, Apple imposed the onerous requirement that any cloud streaming

game—or any update to a cloud streaming game—be submitted as a stand-alone app for

approval by Apple. Having to submit individual cloud streaming games for review by Apple

increased the cost of releasing games on the iPhone and limited the number of games a developer

could make available to iPhone users. For example, the highest quality games, referred to as

AAA games, typically require daily or even hourly updates across different platforms. If these

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updates need to be individually approved by Apple, developers must either delay their software

updates across all platforms or only update their games on non-iOS platforms, potentially

making the iOS version of the game incompatible with other versions on other platforms until

Apple approves the update. Neither option is tenable for players or developers.

77. Until recently, Apple would have required users to download cloud streaming

software separately for each individual game, install identical app updates for each game

individually, and make repeated trips to Apple’s App Store to find and download games. Apple’s

conduct made cloud streaming apps so unattractive to users that no developer designed one for

the iPhone.

78. Apple undermines cloud gaming apps in other ways too, such as by requiring

cloud games to use Apple’s proprietary payment system and necessitating game overhauls and

payment redesigns specifically for the iPhone. Apple’s rules and restrictions effectively force

developers to create a separate iOS-specific version of their app instead of creating a single

cloud-based version that is compatible with several operating systems, including iOS. As a

result, developers expend considerable time and resources re-engineering apps to bring cross-

platform apps like multiplayer games to the iPhone.

79. Cloud streaming apps broadly speaking—not just gaming—could force Apple to

compete more vigorously against rivals. As one Apple manager recognized, cloud streaming

eliminates “a big reason for high-performance local compute” and thus eliminates one of the

iPhone’s advantages over other smartphones because then “all that matters is who has the

cheapest hardware.” Accordingly, it reduces the need for users to buy expensive phones with

advanced hardware. This problem does not “stop at high-end gaming,” but applies to “a number

of high-compute requirement applications.”

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B. Apple uses APIs and other critical access points in the smartphone ecosystem

to control the behavior and innovation of third parties in order to insulate

itself from competition

i. Messaging: Apple protects its smartphone monopoly by degrading

and undermining cross-platform messaging apps and rival

smartphones

80. Apple undermines cross-platform messaging to reinforce “obstacle[s] to iPhone

families giving their kids Android phones.” Apple could have made a better cross-platform

messaging experience itself by creating iMessage for Android but concluded that doing so “will

hurt us more than help us.” Apple therefore continues to impede innovation in smartphone

messaging, even though doing so sacrifices the profits Apple would earn from increasing the

value of the iPhone to users, because it helps build and maintain its monopoly power.

81. Messaging apps allow smartphone users to communicate with friends, family, and

other contacts and are often the primary way users interact with their smartphones. In Apple’s

own words, messaging apps are “a central artery through which the full range of customer

experience flows.”

82. Smartphone messaging apps operate using “protocols,” which are the systems that

enable communication and determine the features available when users interact with each other

via messaging apps.

83. One important protocol used by messaging apps is SMS.

SMS offers a broad user

network, but limited functionality. For example, all mobile phones can receive SMS messages,

but SMS does not support modern messaging features, such as large files, edited messages, or

reactions like a “thumbs up” or a heart.

Following industry practice, throughout this complaint, “SMS” refers to both SMS and MMS (“multimedia

messaging service”). MMS is a companion protocol to SMS that allows for group messages and messages with basic

multimedia content, such as small file sharing.

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84. Many messaging apps—such as WhatsApp, Facebook Messenger, and Signal—

use proprietary, internet-based protocols, which are sometimes referred to as OTT (“over the

top”) protocols. OTT messaging typically involves more secure and advanced features, such as

encryption, typing indicators, read receipts, the ability to share rich media, and disappearing or

ephemeral messages. While all mobile phones can send and receive SMS messages, OTT only

works between users who sign up for and communicate through the same messaging app. As a

result, a user cannot send an OTT message to a friend unless the friend also uses the same

messaging app.

85. Apple makes third-party messaging apps on the iPhone worse generally and

relative to Apple Messages, Apple’s own messaging app. By doing so, Apple is knowingly and

deliberately degrading quality, privacy, and security for its users. For example, Apple designates

the APIs needed to implement SMS as “private,” meaning third-party developers have no

technical means of accessing them and are prohibited from doing so under Apple’s contractual

agreements with developers. As a result, third-party messaging apps cannot combine the “text to

anyone” functionality of SMS with the advanced features of OTT messaging. Instead, if a user

wants to send somebody a message in a third-party messaging app, they must first confirm

whether the person they want to talk to has the same messaging app and, if not, convince that

person to download and use a new messaging app. By contrast, if an Apple Messages user wants

to send somebody a message, they just type their phone number into the “To:” field and send the

message because Apple Messages incorporates SMS and OTT messaging.

86. Apple prohibits third-party developers from incorporating other important

features into their messaging apps as well. For example, third-party messaging apps cannot

continue operating in the background when the app is closed, which impairs functionality like

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message delivery confirmation. And when users receive video calls, third-party messaging apps

cannot access the iPhone camera to allow users to preview their appearance on video before

answering a call. Apple Messages incorporates these features.

87. If third-party messaging apps could incorporate these features, they would be

more valuable and attractive to users, and the iPhone would be more valuable to Apple in the

short term. For example, by incorporating SMS, users would avoid the hassle of convincing

someone to download a separate app before sending them a message. Third-party messaging

apps could also offer the ability to schedule SMS messages to be sent in the future, suggest

replies, and support robust multi-device use on smartphones, tablets, and computers—as they

have already done on Android.

88. Moreover, messaging apps benefit from significant network effects—as more

people use the app, there are more people to communicate with through the app, which makes

the app more valuable and in turn attracts even more users. Incorporating SMS would help third-

party messaging apps grow their network and attract more users. Instead, Apple limits the reach

of third-party messaging apps and reinforces network effects that benefit Apple.

89. Recently, Apple has stated that it plans to incorporate more advanced features for

cross-platform messaging in Apple Messages by adopting a 2019 version of the RCS protocol

(which combines aspects of SMS and OTT). Apple has not done so yet, and regardless it would

not cure Apple’s efforts to undermine third-party messaging apps because third-party messaging

apps will still be prohibited from incorporating RCS just as they are prohibited from

incorporating SMS. Moreover, the RCS standard will continue to improve over time, and if

Apple does not support later versions of RCS, cross-platform messaging using RCS could soon

be broken on iPhones anyway.

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90. In addition to degrading the quality of third-party messaging apps, Apple

affirmatively undermines the quality of rival smartphones. For example, if an iPhone user

messages a non-iPhone user in Apple Messages—the default messaging app on an iPhone—then

the text appears to the iPhone user as a green bubble and incorporates limited functionality: the

conversation is not encrypted, videos are pixelated and grainy, and users cannot edit messages or

see typing indicators. This signals to users that rival smartphones are lower quality because the

experience of messaging friends and family who do not own iPhones is worse—even though

Apple, not the rival smartphone, is the cause of that degraded user experience. Many non-iPhone

users also experience social stigma, exclusion, and blame for “breaking” chats where other

participants own iPhones. This effect is particularly powerful for certain demographics, like

teenagers—where the iPhone’s share is 85 percent, according to one survey. This social pressure

reinforces switching costs and drives users to continue buying iPhones—solidifying Apple’s

smartphone dominance not because Apple has made its smartphone better, but because it has

made communicating with other smartphones worse.

91. Apple recognizes that its conduct harms users and makes it more difficult to

switch smartphones. For example, in 2013, Apple’s Senior Vice President of Software

Engineering explained that supporting cross-platform OTT messaging in Apple Messages

“would simply serve to remove [an] obstacle to iPhone families giving their kids Android

phones.” In March 2016, Apple’s Senior Vice President of Worldwide Marketing forwarded an

email to CEO Tim Cook making the same point: “moving iMessage to Android will hurt us more

than help us.”

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92. In 2022, Apple’s CEO Tim Cook was asked whether Apple would fix iPhone-to-

Android messaging. “It’s tough,” the questioner implored Mr. Cook, “not to make it personal but

I can’t send my mom certain videos.” Mr. Cook’s response? “Buy your mom an iPhone.”

93. Recently, Apple blocked a third-party developer from fixing the broken cross-

platform messaging experience in Apple Messages and providing end-to-end encryption for

messages between Apple Messages and Android users. By rejecting solutions that would allow

for cross-platform encryption, Apple continues to make iPhone users’ less secure than they could

otherwise be.

ii. Smartwatches: Apple protects its smartphone monopoly by impeding

the development of cross-platform smartwatches

94. Apple uses smartwatches, a costly accessory, to prevent iPhone customers from

choosing other phones. Having copied the idea of a smartwatch from third-party developers,

Apple now prevents those developers from innovating and limits the Apple Watch to the iPhone

to prevent a negative “impact to iPhone sales.”

95. Smartwatches are wrist-worn devices with an interactive display and

accompanying apps that let users perform a variety of functions, including monitoring health

data, responding to messages and notifications, performing mobile payments, and, of course,

telling time. Smartwatches must generally be paired with a smartphone to operate and unlock

their full functionality, such as receiving and responding to emails and text messages or

answering phone calls. Because of the significant cost of buying a smartwatch, users are less

willing to choose a smartphone if it is not compatible with their smartwatch.

96. Apple’s smartwatch—Apple Watch—is only compatible with the iPhone.

So, if Apple can steer a user towards buying an Apple Watch, it becomes more costly for that

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user to purchase a different kind of smartphone because doing so requires the user to abandon

their costly Apple Watch and purchase a new, Android-compatible smartwatch.

97. By contrast, cross-platform smartwatches can reduce iPhone users’ dependence

on Apple’s proprietary hardware and software. If a user purchases a third-party smartwatch that

is compatible with the iPhone and other smartphones, they can switch from the iPhone to another

smartphone (or vice versa) by simply downloading the companion app on their new phone and

connecting to their smartwatch via Bluetooth. Moreover, as users interact with a smartwatch,

e.g., by accessing apps from their smartwatch instead of their smartphone, users rely less on a

smartphone’s proprietary software and more on the smartwatch itself. This also makes it easier

for users to switch from an iPhone to a different smartphone.

98. Apple recognizes that driving users to purchase an Apple Watch, rather than a

third-party cross-platform smartwatch, helps drive iPhone sales and reinforce the moat around its

smartphone monopoly. For example, in a 2019 email the Vice President of Product Marketing

for Apple Watch acknowledged that Apple Watch “may help prevent iPhone customers from

switching.” Surveys have reached similar conclusions: many users say the other devices linked to

their iPhone are the reason they do not switch to Android.

99. Apple also recognizes that making Apple Watch compatible with Android would

“remove[an] iPhone differentiator.”

100. Apple uses its control of the iPhone, including its technical and contractual

control of critical APIs, to degrade the functionality of third-party cross-platform smartwatches

in at least three significant ways: First, Apple deprives iPhone users with third-party

smartwatches of the ability to respond to notifications. Second, Apple inhibits third-party

smartwatches from maintaining a reliable connection with the iPhone. And third, Apple

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undermines the performance of third-party smartwatches that connect directly with a cellular

network. In doing so, Apple constrains user choice and crushes innovation that might help fill in

the moat around Apple’s smartphone monopoly.

101. The ability to respond to notifications, e.g., new messages or app alerts, directly

from a smartwatch is one of the top considerations for smartwatch purchasers—and one of the

most used product features when it is available. According to Apple’s own market research, the

ability to “[s]end and receive text messages from social and messaging apps” is a critical feature

for a smartwatch. In 2013, when Apple started offering users the ability to connect their iPhones

with third-party smartwatches, Apple provided third-party smartwatch developers with access to

various APIs related to the Apple Notification Center Service, Calendar, Contacts, and

Geolocation. The following year, Apple introduced the Apple Watch and began limiting third-

party access to new and improved APIs for smartwatch functionality. For example, Apple

prevents third-party smartwatches from accessing APIs related to more advanced Actionable

Notifications, so iPhone users cannot respond to notifications using a third-party smartwatch.

Instead, Apple provides third-party smartwatches access to more limited APIs that do not allow

users to respond to a message, accept a calendar invite, or take other actions available on Apple

Watch.

102. A reliable Bluetooth connection is essential for a smartwatch to connect

wirelessly with a smartphone, and thereby function as a companion to the user’s smartphone and

unlock its full functionality. But Apple prohibits third-party smartwatch developers from

maintaining a connection even if a user accidentally turns off Bluetooth in the iPhone’s control

center. Apple gives its own Apple Watch that functionality, however, because Apple recognizes

that users frequently disable Bluetooth on their iPhone without realizing that doing so

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disconnects their watch. As a result, iPhone users have a worse experience when they try to use a

third-party smartwatch with their iPhone. Apple also requires users to turn on “Background App

Refresh” and disable the battery-saving “Low Power Mode” in their iPhone settings for third-

party smartwatches to remain consistently connected to their companion app, which is necessary

to allow a user’s iPhone and their smartwatch to update and share data about the weather or

exercise tracking, even though Apple does not impose similar requirements for Apple Watch.

103. Cellular-enabled smartwatches incorporate the ability to connect directly to a

cellular network, allowing users to make calls, send messages, and download data even if their

smartwatch is not paired to a smartphone. Cellular-enabled smartwatches are popular with

consumers, making up approximately 20 percent of Apple Watch sales. Apple Watch users can

use the same phone number for their smartphone and smartwatch when connected to the cellular

network. As a result, messages are delivered to both the user’s smartphone and smartwatch,

providing an integrated messaging experience. Although it is technologically feasible for Apple

to allow an iPhone user with a third-party smartwatch to do the same, Apple instead requires

these users to disable Apple’s iMessage service on the iPhone in order to use the same phone

number for both devices. This is a non-starter for most iPhone users. In practice, iPhone users

with a third-party smartwatch must maintain separate phone numbers for the two devices,

worsening their user experience, and may miss out on receiving messages sent to their primary

iPhone number.

iii. Digital Wallets: Apple restricts cross-platform digital wallets on the

iPhone, reinforcing barriers to consumers switching to rival

smartphones

104. Apple recognizes that paying for products and services with a digital wallet will

eventually become “something people do every day of their lives.” But Apple has used its

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control over app creation, including its technical and contractual control over API access, to

effectively block third-party developers from creating digital wallets on the iPhone with tap-to-

pay functionality, which is an important feature of a digital wallet for smartphones. As a result,

Apple maintains complete control over how users make tap-to-pay payments with their iPhone.

Apple also deprives users of the benefits and innovations third-party wallets would provide so

that it can protect “Apple’s most important and successful business, iPhone.”

105. Digital wallets are apps that allow a user to store and use passes and credentials,

including credit cards, personal identification, movie tickets, and car keys, in a single app.

For example, digital wallets allow users to make in-person payments by tapping their device on a

payment terminal rather than tapping or swiping a physical credit card. Digital wallets can also

be used for transactions in mobile apps and mobile websites.

106. Absent Apple’s conduct, cross-platform digital wallets could also be used to

manage and pay for subscriptions and in-app purchases.

107. Apple Wallet is Apple’s proprietary digital wallet on the iPhone. Apple Wallet

incorporates Apple’s proprietary payment system Apple Pay, which processes digital payments

on the web, in apps, and at merchant points of sale.

108. Today, Apple Wallet offers users a way to make these payments using their

iPhone. But Apple envisions that Apple Wallet will ultimately supplant multiple functions of

physical wallets to become a single app for shopping, digital keys, transit, identification, travel,

entertainment, and more. As users rely on Apple Wallet for payments and beyond, it “drive[s]

more sales of iPhone and increase[s] stickiness to the Apple ecosystem” because Apple Wallet is

only available on the iPhone. Thus, switching to a different smartphone requires leaving behind

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the familiarity of an everyday app, setting up a new digital wallet, and potentially losing access

to certain credentials and personal data stored in Apple Wallet.

109. Cross-platform digital wallets would offer an easier, more seamless, and

potentially more secure way for users to switch from the iPhone to another smartphone. For

example, if third-party developers could create cross-platform wallets, users transitioning away

from the iPhone could continue to use the same wallet, with the same cards, IDs, payment

histories, peer-to-peer payment contacts, and other information, making it easier to switch

smartphones. And because many users already use apps created by their preferred financial

institutions, if these financial institutions offered digital wallets, then users would have access to

new apps and technologies without needing to share their private financial data with additional

third parties, including Apple. In the short term, these improved features would make the iPhone

more attractive to users and profitable for Apple.

110. Accordingly, the absence of cross-platform digital wallets with tap-to-pay

capability on the iPhone makes it harder for iPhone users to purchase a different smartphone.

111. The most important function for attracting users to a digital wallet for

smartphones is the ability to offer tap-to-pay, i.e., the ability to make in-person payments by

tapping your smartphone on a payment terminal. Apple uses its control over app creation and

API access to selectively prohibit developers from accessing the near-field communication

(NFC) hardware needed to provide tap-to-pay through a digital wallet app.

112. Apple Wallet is the only app on the iPhone that can use NFC to facilitate tap-to-

pay. While Apple actively encourages banks, merchants, and other parties to participate in Apple

Wallet, Apple simultaneously exerts its smartphone monopoly to block these same partners from

developing better payment products and services for iPhone users.

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113. Apple also uses its smartphone monopoly to extract payments from banks, which

need to access customers that use digital wallets on iPhones. Since Apple first launched Apple

Pay—long before it achieved meaningful adoption—Apple has charged issuing banks 15 basis

points (0.15 percent) for each credit card transaction mediated by Apple Pay. Payment apps from

Samsung and Google are free to issuing banks. Apple’s fees are a significant expense for issuing

banks and cut into funding for features and benefits that banks might otherwise offer smartphone

users. The volume of impacted transactions is large and growing. A U.S. Consumer Financial

Protection Bureau report estimates that Apple Pay facilitated nearly $200 billion in transactions

in the United States in 2022. And the report goes on to explain that “analysts estimate that the

value of digital wallet tap-to-pay transactions will grow by over 150 percent by 2028.”

114. Multiple app developers have sought direct NFC access for their payment or

wallet apps. Yet Apple prohibits these developers from incorporating tap-to-pay functionality in

their apps for fear that doing so would “be one way to disable [A]pple [P]ay trivially,” leading to

the “proliferation of other payment apps” that might operate cross-platform and ultimately

undermine Apple’s smartphone monopoly.

115. There is no technical limitation on providing NFC access to developers seeking to

offer third-party wallets. For example, Apple allows merchants to use the iPhone’s NFC antenna

to accept tap-to-pay payments from consumers. Apple also acknowledges it is technically

feasible to enable an iPhone user to set another app (e.g., a bank’s app) as the default payment

app, and Apple intends to allow this functionality in Europe.

116. Apple further impedes the adoption of digital wallets by restricting others from

offering the same ability to authenticate digital payment options on online checkout pages. By

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limiting the ability of third-party wallets to provide a simple, fast, and comprehensive solution to

online purchasing, Apple further undermines the viability of such wallets.

117. Apple also blocks other digital wallets from serving as an alternative to Apple’s

in-app payment (IAP). This prevents these wallets from increasing their attractiveness and

improving the overall user experience on the iPhone by offering consumer experiences that may

include use of rewards points in purchasing, digital receipts, returns, loyalty programs, and

digital coupons for purchases of relevant subscriptions and digital goods. Apple even prohibits

developers on its App Store from notifying users in the developer’s app that cheaper prices for

services are available using alternative digital wallets or direct payments.

118. Apple’s conduct reflects its knowing degradation of the experience of its own

users by blocking them from accessing wallets that would have better or different features. In so

doing, Apple cements reliance on the iPhone and also imposes fees on a large and critical slice of

all digital wallet NFC transactions, which the U.S. Consumer Financial Protection Bureau

estimates will grow to $451 billion by 2028.

C. Apple’s “moat” around its smartphone monopoly is wide and deep: it uses a

similar playbook to maintain its monopoly through many other products and

services

119. The exclusionary and anticompetitive acts described above are part of Apple’s

ongoing course of conduct to build and maintain its smartphone monopoly. They are hardly

exhaustive. Rather, they exemplify the innovation Apple has stifled and Apple’s overall strategy

of using its power over app distribution and app creation to selectively block threatening

innovations.

120. Apple has deployed a similar playbook for a much broader range of third-party

apps and services as well, many of which present technologies that function as middleware,

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facilitate switching, reduce the need for expensive hardware, or disintermediate Apple’s iPhone

by enabling the development of cross-platform technologies. For instance, Apple has

undermined third-party location trackable devices that fully function across platforms. Apple has

impaired third-party, cross-platform video communications apps while steering users to its own

video communication app, FaceTime. Apple has limited the capabilities of third-party iOS web

browsers, including by requiring that they use Apple’s browser engine, WebKit. Protocols that

Apple has placed around new “eSIM” technology may introduce additional frictions for any user

who seeks to transition from an iPhone to a different phone while maintaining the same phone

number. Apple has impeded cross-platform cloud storage apps in order to steer iPhone users into

iCloud, making data transfer between different devices more difficult. Apple uses restrictions in

sales channels to impede the sale and distribution of rival smartphones. And Apple has worsened

its users’ experience by making it difficult for iPhone users to use superior voice and AI

assistants and steering users to use Siri as a voice assistant.

121. Ultimately, the strategies Apple has employed to date are not the only ones Apple

can use to achieve its anticompetitive and lucrative ends. As technology evolves, Apple

continues to evolve and shift its anticompetitive behavior to protect its monopoly power.

For example, in recent years, Apple has increasingly moved into offering its own subscription

services, including news, games, video, music, cloud storage, and fitness subscriptions that could

be used to keep users tethered to the platform. These subscription services and other ancillary

fees are a significant part of Apple’s net revenue. These subscriptions services can also increase

switching costs among iPhone users. If an Apple user can only access their subscription service

on an iPhone, they may experience significant costs, time, lost content, and other frictions if they

attempt to switch to a non-Apple smartphone or subscription service.

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122. These subscription services can also increase Apple’s power over content creators

and newspapers, among others, by exerting control over how audiences access their work,

decreasing traffic to their websites and apps, and positioning Apple as the middleman or

tollbooth operator in the relationship between creators and users. In so doing, Apple takes on

outsize importance and control in the creative economy, which may diminish incentives to fund,

make, and distribute artistic expression.

123. In addition, when one road is closed to Apple, Apple has demonstrated its ability

to find new roads to the same or worse ends. For example, Apple was recently ordered to stop

blocking link-outs by third parties to their websites where users could buy the third party’s

product cheaper. In response, Apple reportedly allowed link-outs to websites but now charges for

purchases made on the web even if they are not an immediate result of a click from a link in a

native iPhone app.

124. Apple has also attempted to undermine cross-platform technologies like digital

car keys in ways that benefit Apple but harm consumers. For example, Apple has required

developers to add digital keys developed for their own apps to Apple Wallet as well. The default

status of Apple Wallet steers users to the Apple Wallet rather than allowing third parties to

present digital car keys only in their own cross-platform app, increasing dependence on Apple

and the iPhone whenever they use their car. At the same time, it decreases the incentives of

automakers to innovate because automakers are forced to share data with Apple and prevented

from differentiating themselves as they could absent Apple’s conduct.

125. Apple’s threatened dominance over the automotive industry goes well beyond the

Apple Wallet and Apple’s demands on car makers to allow innovative products and services on

the iPhone. Apple’s smartphone dominance extends to CarPlay, an Apple infotainment system

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that enables a car’s central display to serve as a display for the iPhone and enables the driver to

use the iPhone to control maps and entertainment in the car. Like the smartphone market,

infotainment systems are increasingly considered must-have capabilities in newer vehicles. After

leveraging its smartphone dominance to car infotainment systems, Apple has told automakers

that the next generation of Apple CarPlay will take over all of the screens, sensors, and gauges in

a car, forcing users to experience driving as an iPhone-centric experience if they want to use any

of the features provided by CarPlay. Here too, Apple leverages its iPhone user base to exert more

power over its trading partners, including American carmakers, in future innovation. By applying

the same playbook of restrictions to CarPlay, Apple further locks-in the power of the iPhone by

preventing the development of other disintermediating technologies that interoperate with the

phone but reside off device.

V. Anticompetitive Effects

A. Apple’s conduct harms the competitive process

126. As described above, Apple protects its monopoly power in smartphones and

performance smartphones by using its control over app distribution and app creation to suppress

or delay apps, innovations, and technologies that would reduce user switching costs or simply

allow users to discover, purchase, and use their own apps and content without having to rely on

Apple. As a result, Apple faces less competition from rival smartphones and less competitive

pressure from innovative, cross-platform technologies not because Apple makes its own products

better but because it makes other products worse. With the benefit of less competition, Apple

extracts extraordinary profits and regulates innovation to serve its interests. This leaves all

smartphone users worse off, with fewer choices, higher prices and fees, lower quality

smartphones, apps, and accessories, and less innovation from Apple and others. Left

unchallenged, Apple will continue to use and strengthen its smartphone monopoly to dictate how

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companies can create and distribute apps in the future so that they cannot threaten Apple’s

smartphone monopolies.

127. Apple’s conduct has resulted in less choice for smartphone users. Today, only two

companies (Google and Samsung) remain as meaningful competitors to Apple in the premium

smartphone market.

128. Even when users consider these alternatives, Apple’s conduct has increased the

technical, behavioral, monetary, and other costs of switching from an iPhone to an alternative

smartphone. This undermines competition and entrenches Apple’s monopoly power.

For example, according to user surveys, one of the biggest reasons iPhone users do not switch to

rival smartphones today is to avoid the problems Apple has created for cross-platform

messaging. Likewise, Apple exercised its control over app distribution and app creation to

impede the development and growth of super apps, depriving users of technology that would

have facilitated switching by decreasing user’s dependence on Apple and the iPhone. Apple took

a similar approach to cloud streaming apps, delaying or suppressing technology that would have

made it easier for users to switch to cheaper smartphones. Apple also used its control over app

creation, including its control over critical APIs, to impose technical and contractual restrictions

on messaging apps, third-party smartwatches, and digital wallets, undermining cross-platform

technologies that would have helped users overcome switching costs and friction and ultimately

increased smartphone competition.

129. Apple’s conduct has delayed or suppressed the emergence of cross-platform

technologies that would put competitive pressure on Apple’s ability to extract extraordinary

profits from users and developers. For example, if developers could distribute their programs

through super apps or cloud streaming apps, rather than the App Store, it would put competitive

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pressure on Apple’s ability to control app distribution and app creation as well as the taxes Apple

imposes on developers who want to distribute apps to iPhone users. Similarly, third-party digital

wallets, or other apps with tap-to-pay functionality, would benefit users and developers by

putting more competitive pressure on Apple as well. For example, digital wallets could

eventually provide developers an alternative way to process payments and manage customer

relationships, forcing Apple to compete more aggressively by lowering fees and improving

quality, which would ultimately benefit users. Instead, Apple continues to exert its power over

customers and financial institutions when users pay for something with their phone—in the App

Store, in an app, or increasingly in the physical world with tap-to-pay.

130. Apple’s conduct has harmed users in other ways. For example, third-party digital

wallets would reduce Apple’s ability to charge banks high fees when users make payments using

Apple Wallet, which ultimately cost consumers through higher prices or other reductions in

quality. Alternative digital wallets could also provide smartphone users better rewards, e.g., cash

back, as well as a more private, secure payment experience from a user’s preferred financial

institution rather than being forced to go through Apple. But these tap-to-pay digital wallet

products and services do not exist today because of Apple.

131. Apple’s conduct has made its own products worse, sacrificing the short-term

profits Apple could earn from improving the iPhone in order to preserve the long-term value of

maintaining its monopoly. In a competitive market, Apple would compete aggressively to

support the development of popular apps and accessories for iPhone users, which would in turn

make iPhones more attractive to users and more valuable. But Apple takes steps to delay or

suppress cross-platform technologies that it recognizes would be popular with users, such as

super apps and cloud streaming apps, because of the threat they pose to Apple’s smartphone

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monopolies. As a result, several developers have abandoned plans to develop super apps and

cloud-based gaming apps even after making substantial investments in bringing them to market.

Apple’s conduct may have also slowed the development of innovative, high-compute apps

related to education, artificial intelligence, and productivity as well. Apple has also impeded

innovation by third-party smartwatches such that manufacturers have limited the functionality of

their smartwatches for iPhone users, suspended support for iPhone compatibility because of

Apple’s restrictions, or canceled development of cross-platform smartwatches altogether. At

least one company’s canceled smartwatch formed part of its overall wearables strategy, including

future development of virtual-reality technology. Similarly, Apple degrades third-party

messaging apps, even though it makes cross-platform messaging less private and less secure for

iPhone users, because doing so raises switching costs.

132. Apple’s conduct has harmed other smartphone users, too. Because of the

resources and risks required to maintain different features across different smartphones, many

potential super app, mini program, and other developers do not implement features prohibited by

Apple even on other smartphones. For example, prospective digital wallet providers, including

U.S. banks, have abandoned the development of digital-wallet apps for either Apple or other

smartphones. Another company decided not to offer users an innovative digital car key in part

because Apple required that company to add any features related to the key into Apple Wallet

rather than allowing that company to put its key solely in its own app. Other developers have

shrunk, shuttered, or abandoned plans to launch super apps, cloud-streamed gaming apps,

smartwatches, and other apps. As a result, all smartphone users enjoy lower quality smartphones,

less innovation, and less choice.

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133. Apple’s documents and conduct show that Apple is motivated by the

anticompetitive purpose of building or maintaining monopoly power in the relevant markets.

For example, Apple sacrificed substantial revenues it could have earned from super apps, mini

programs, cloud streaming apps, and other third-party apps and accessories. In particular, mobile

gaming already accounts for a large and growing portion of Apple’s revenue. Popular cloud

streamed gaming apps would offer iPhone users access to popular services (including games)

and in turn generate significant revenue for Apple through subscriptions and in-app purchases.

Instead, Apple preferred the long-term benefit of reduced smartphone competition to the revenue

it would generate from cloud gaming, super apps, and mini programs or the quality (and

consumer demand) increase that would flow from this innovation. Apple has also used its control

over app distribution and app creation to selectively undermine cross-platform technologies, not

because this helps protect users but because it helps protect Apple.

134. The harms to smartphone competition caused by Apple’s conduct are amplified

by Apple’s decision to grant itself exclusive distribution rights to iPhone users through the Apple

App Store. If Apple allowed users to access apps in other ways, users could choose an app store

that did not restrict super apps or mini programs, even if Apple ran its App Store the same way it

does today. Apple does not allow that choice, however, because if it did developers could write

their programs for any smartphone rather than specifically for iOS, just as internet browsers and

Apple’s QuickTime allowed developers to write programs that worked on a variety of operating

systems not just Windows. That would lower users’ switching costs and reduce users’ and

developers’ dependence on Apple and the iPhone.

135. Apple’s smartphone monopoly gives it many levers to maintain its power even in

the face of interventions focused on eliminating or disciplining specific anticompetitive

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practices. This is because Apple’s iPhone monopoly, secured by its anticompetitive conduct,

grants it the power to set the rules by which most smartphone users buy digital and hardware

products, and by which developers are allowed to sell these same products to users. If Apple is

forced to change some of these rules, it has the power to adopt new rules, restrictions, or features

that reinforce Apple’s monopoly and harm competition in other ways. For example, Apple has

stated plans to adopt RCS due to market and international regulatory pressure. But Apple

continues to contractually restrict third parties from accessing other APIs and features that would

enable cross-platform messaging apps. In another instance, Apple was enjoined from enforcing

certain anti-steering provisions in its agreements with developers. In response, Apple simply

created a different set of onerous restrictions on app developers to achieve a similar result. In

other cases, Apple has used its control over app distribution to force companies to comply with

Apple’s policies that may contradict local laws by delaying the review of the offending

companies’ apps.

B. Apple has every incentive to use its monopoly playbook in the future

136. Apple’s conduct does not just impact the past and present but poses significant

risk to the development of new innovations. Apple may use its smartphone monopoly playbook

to acquire or maintain power over next-frontier devices and technologies. As Apple grows its

dominance, Apple may continue delaying or stifling the innovations of cross-platform

companies, in order to lock users into Apple devices.

137. Apple has countless products and services—AirPods, iPads, Music, Apple TV,

photos, maps, iTunes, CarPlay, AirDrop, Apple Card, and Cash. These provide future avenues

for Apple to engage in anticompetitive conduct and the ability to circumvent remedies.

Appropriate forward-looking remedies are necessary to ensure that Apple cannot use these

products and services to further entrench its monopoly power.

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138. Apple’s conduct extends beyond just monopoly profits and even affects the flow

of speech. For example, Apple is rapidly expanding its role as a TV and movie producer and has

exercised that role to control content.

139. Apple has also attempted to use its monopoly to collect user data and stifle

innovation in the automotive industry by, among other things, impeding the development of

digital key technologies by requiring them to be offered in Apple’s proprietary wallet product

and creating new single points of power over emerging uses of the iPhone. These acts further

reinforce Apple’s power in the iPhone by locking in Apple’s services and excluding other

alternative technologies that have the potential to disintermediate Apple’s iPhone.

140. Finally, Apple’s monopolization of smartphone markets gives it tremendous

power over the lives of millions of Americans. Today, Apple uses that power to undermine rival

smartphones, suppress innovative technologies, and stymie consumer choice. Tomorrow, Apple

may use its power to force its own users (and their data) to become its next profitable product.

VI. Privacy, Security, and Other Alleged Countervailing Factors Do Not Justify Apple’s

Anticompetitive Conduct

141. There are no valid, procompetitive benefits of Apple’s exclusionary conduct that

would outweigh its anticompetitive effects. Apple’s moat building has not resulted in lower

prices, higher output, improved innovation, or a better user experience for smartphone users.

142. Apple markets itself on the basis of privacy and security to differentiate itself

from what competition is left in the smartphone market. But this does not justify Apple’s

monopolistic and anticompetitive conduct. Apple imposes contractual restraints on app creation

and distribution, imposes hefty fees on many types of smartphone interactions, and conditionally

restricts API access on its smartphone platform simply because it can. There are limited if any

competitive constraints on this conduct. As a point of comparison, Apple does not engage in

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such conduct on its Mac laptops and computers. It gives developers the freedom to distribute

software directly to consumers on Mac without going through an Apple-controlled app store and

without paying Apple app store fees. This still provides a safe and secure experience for Mac

users, demonstrating that Apple’s control over app distribution and creation on the iPhone is

substantially more restrictive than necessary to protect user privacy and security.

143. In fact, many alternative technologies that Apple’s conduct suppresses would

enhance user security and privacy. For example, Apple’s conduct targeting digital wallets forces

users to share information with Apple even if they would prefer to share that information solely

with their bank, medical provider, or other trusted third party. In particular, when an iPhone user

provisions a credit or debit card into Apple Wallet, Apple intervenes in a process that could

otherwise occur directly between the user and card issuer introducing an additional point of

failure for privacy and security.

Likewise, super apps or alternative app stores could offer users

and their families a more curated selection of apps that better protect user privacy and security.

Indeed, Apple allows enterprise and public sector customers to offer more curated app stores on

employee iPhones because it better protects privacy and security.

144. Apple is also willing to make the iPhone less secure and less private if that helps

maintain its monopoly power. For example, text messages sent from iPhones to Android phones

are unencrypted as a result of Apple’s conduct. If Apple wanted to, Apple could allow iPhone

users to send encrypted messages to Android users while still using iMessage on their iPhone,

which would instantly improve the privacy and security of iPhone and other smartphone users.

145. Similarly, Apple is willing to sacrifice user privacy and security in other ways so

long as doing so benefits Apple. For example, Apple allows developers to distribute apps

through its App Store that collect vast amounts of personal and sensitive data about users—

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including children—at the expense of its users’ privacy and security. Apple also enters

agreements to share in the revenue generated from advertising that relies on harvesting users’

personal data. For example, Apple accepts massive payments from Google to set its search

engine as the default in the Safari web browser even though Apple recognizes that other search

engines better protect user privacy.

146. Finally, Apple selectively enforces its rules and contractual restrictions for app

distribution and app creation. For example, when it benefits Apple to do so, Apple permits

developers to introduce mini programs, stream content from the cloud, use virtual currency, and

receive special permissions or access APIs not automatically available to everyone.

147. Ultimately, Apple chooses to make the iPhone private and secure when doing so

benefits Apple; Apple chooses alternative courses when those courses help Apple protect its

monopoly power. Apple’s conduct underscores the pretextual nature of any claim that Apple’s

conduct is justified by protecting user privacy or security.

VII. The Smartphone Industry

A. Background

148. Mobile phones are portable devices that enable communications over radio

frequencies instead of telephone landlines. These signals are transmitted by equipment covering

distinct geographic areas, or “cells,” which is why mobile phones were called cell phones. The

first commercial cell phones became available in the 1980s. Since then, improvements in both

cell phone components and wireless technology have made it possible to transfer large volumes

of data around the globe in a short period. As a result, mobile phones began to offer a wider

array of features and the adoption of mobile phones dramatically increased. Today, nearly all

American adults own a mobile phone.

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149. Smartphones combine the functionality of a traditional mobile phone with

advanced hardware and software components. Smartphones not only make phone calls, but allow

users to listen to music, send text messages, take pictures, play games, access software for work,

manage their finances, and browse the internet. Consumers choose between smartphones based,

in part, on their functionality. Today, smartphone functionality is driven in large part, though not

exclusively, by a combination of hardware and software components. Thus, in a competitive

market, smartphone manufacturers would compete and innovate to provide the best functionality.

150. Although consumers could replace some smartphone functionality with separate

devices such as by always carrying a camera and laptop, they generally prefer to access this

combination of functionality as part of a single device. Thus, phones with some but not all of

these features are not reasonable substitutes for smartphones. For example, a Canon or Nikon

camera is not a substitute for an Apple or Samsung smartphone notwithstanding that both these

products are capable of taking digital pictures.

B. Smartphone Hardware

151. A smartphone’s hardware includes the frame and screen. Higher performing

smartphones are typically constructed from better materials like glass and metal instead of

plastic, manufactured to higher standards that make them more durable (e.g., water and dust

proof), and have higher quality displays.

152. A smartphone’s hardware also includes the semiconductor chipsets that run the

smartphone: central processing of software instructions, graphics, video, display, memory, data

storage, and connection to wireless networks. Chipsets that offer superior performance—faster

processing and network connections, better graphics, more storage—are costly. As a result,

smartphone manufacturers typically include them only in more expensive performance

smartphones.

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153. Smartphone hardware includes other important components like cameras, and

position and motion sensors. Performance smartphones typically have higher quality cameras,

better battery life, wireless charging, and advanced biometrics such as face scanning.

154. Smartphones also contain several types of antennas that allow the phone to

communicate with other smartphones, accessories, or other devices using standard

communication protocols such as Wi-Fi, Bluetooth, and Near-Field Communications (NFC).

a. Wi-Fi is a wireless networking technology that uses radio waves to provide

wireless high-speed Internet access through mobile devices, computers, printers,

and other equipment. “Wi-Fi,” in particular, refers to IEEE 802.11 standards that

define the protocols that enable communications with current Wi-Fi-enabled

wireless devices such as wireless routers and access points.

b. Bluetooth is a wireless standard that allows smartphones to use shortwave radios

to communicate with accessories like headphones and smartwatches. An industry-

wide Bluetooth standard specifies technological requirements to ensure that all

Bluetooth devices can recognize and interact with each other. A typical Bluetooth

signal has a range of about 30 feet.

c. Near Field Communication (NFC) allows smartphones to interact with NFC-

enabled devices like a credit card terminal at a coffee shop. NFC relies on short-

range wireless technologies, including radio signals, to communicate and share

information. To operate, two NFC-enabled devices must typically be within four

centimeters or less of one another.

155. Three device manufacturers, Apple, Samsung, and Google, account for

approximately 94 percent of all smartphones by revenue in the United States. Apple and

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Samsung alone account for approximately 90 percent of all smartphone revenues in the United

States.

156. Cloud-based technologies are run using hardware and software in remote

computing centers (“the cloud”) rather than by hardware and software on a smartphone. The user

experiences the technology on the phone but the complex computing that generates the rich

experience and that executes the user’s commands happens in the cloud. Thus, cloud apps can

deliver rich experiences on smartphones with less capable hardware than iPhones currently

contain.

C. Smartphone Operating Systems, Applications, and Other Software

157. In addition to hardware, smartphones include various software components that

make a smartphone more attractive to users.

158. The most important software component is a smartphone’s operating system, the

foundational software that manages both the hardware and other software programs on the

device. All iPhones are preloaded with Apple’s proprietary, exclusive iPhone operating system

called iOS. The only other significant mobile operating system in the United States is Google’s

Android, which works with smartphones manufactured by Samsung, whose U.S. headquarters is

located in this district, Google, Motorola, and smaller players. Software applications, known as

“apps,” are programs that perform specific tasks at the smartphone user’s request, such as

sending messages, playing music, or web browsing. Apps depend on a smartphone’s operating

system to function. For example, to make a video call, apps must communicate with a

smartphone’s operating system to access various hardware components on the phone, such as the

camera, microphone, and speaker. Apps communicate with a smartphone’s operating system

through application programming interfaces (APIs).

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159. Apps that work with a particular smartphone operating system are called native

apps. Thus, Apple’s native iOS apps work with iPhone and native Android apps work with

Android smartphones.

160. Most app developers do not view Android as a substitute for iOS or iOS as a

substitute for Android. The overwhelming majority of users choose a single phone and do not

“multi-home” by carrying an Android phone and the iPhone at the same time. Thus, a developer

cannot reach iPhone users on Android or Android users on iPhones. Due to the lack of user

multi-homing, most developers create native apps for both iOS and Android to reach the greatest

number of smartphone users. For example, a food delivery or ride-sharing app cannot develop an

app just for Android phones or just for the iPhone. Developing for both platforms is often

necessary for developers to reach the scale they need to be viable.

161. It is also important to develop apps for the iPhone and other smartphone platforms

because most apps are increasingly “social” in nature and require users on one platform to reach

users on the other. For example, the developer of a dating app must enable its users on iPhones to

meet users on Android and vice-versa. A money-sharing app must enable users on Android

devices to send money to users on iPhones and vice versa.

162. App developers typically provide a similar user experience for native apps on

iPhones and Android smartphones to minimize the resources and risks of maintaining different

features across different smartphones. Even so, developers must program native apps to work

with a specific operating system and so they do not always interoperate or synchronize across

different operating systems.

163. Middleware is software that provides similar APIs and functionality across a

diverse set of operating systems and devices. This allows developers to create cross-platform

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applications without having to write separate code for individual operating systems or devices

because developers can rely on the APIs exposed by the middleware rather than APIs that only

work on specific operating systems or devices. Apple has long understood how middleware can

help promote competition and its myriad benefits, including increased innovation and output, by

increasing scale and interoperability. As Apple’s then-Senior Vice President of Software

Engineering testified during the government’s landmark monopolization case in United States v.

Microsoft: “Because we have created QuickTime for both Windows and Macintosh computers,

developers can write a single version of a content product that will run on both Macintosh and

Windows, without the additional expense of ‘porting’ the product to different operating

systems.” In the context of smartphones, examples of middleware include internet browsers,

internet or cloud-based apps, super apps, and smartwatches, among other products and services.

While not meeting the technical definition of middleware, certain other products and services

may nonetheless have the same economic impact as middleware, such as eliminating the added

expense of porting a product or experience across hardware or operating systems. For the

purposes of this complaint middleware refers to both technical middleware and to products and

services that, while not technically middleware, have the same economic effect.

D. Relevant Markets

164. All smartphones compete against each other in a broad relevant market. But

industry participants, including Apple, assess competition among smartphones in narrower

markets that are best understood as submarkets of the larger all-smartphone market. Because

Apple chooses not to compete to sell new smartphones in the entry-level tier, the most relevant

market to assess its conduct is a narrower submarket that excludes this tier. Regardless of how

the market is drawn, however, Apple’s conduct is unlawful.

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iv. Performance smartphones are a relevant product market

165. Performance smartphones are a narrower relevant product market within the

broader smartphone market. This narrower market includes those smartphones that compete with

most iPhones and excludes the lowest-end smartphones, which industry participants sometimes

refer to as “entry-level” smartphones.

166. Industry participants recognize performance smartphones as distinct and

frequently group smartphones into tiers that include entry-level smartphones and higher tiers

such as “premium” or “flagship.”

167. Apple has also long recognized a distinction between these higher-end

smartphones and lower-end, entry-level smartphones. Apple’s own documents indicate it does

not view entry-level smartphones as competing with the iPhone and other performance

smartphones.

168. Performance smartphones have distinct characteristics and uses as compared to

other smartphones. For example, entry-level smartphones are generally made with lower-quality

materials and are less durable (e.g., plastic instead of metal and glass). They have lower-

performance components such as slower processors and lower-capacity storage, which prevent

users from running more intensive applications or storing large volumes of pictures and data on

the device. Entry-level smartphones often lack features such as an NFC antenna that allows

consumers to use their phone to make payments or access passes for public transit.

169. Consumers typically purchase performance smartphones under different terms

than entry-level smartphones. Consumers generally use entry-level smartphones along with pre-

paid service plans. By contrast, consumers usually purchase performance smartphones for use

with post-paid service plans that include promotional discounts to consumers who purchase

performance smartphones.

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170. Because of these differences, among others, between entry-level smartphones and

performance smartphones, entry-level smartphones are not reasonable substitutes for

performance smartphones.

171. Moreover, competition from non-performance smartphones is not sufficient today

to prevent Apple from exercising monopoly power in the performance smartphone market.

v. Smartphones are a broader relevant product market

172. Smartphones are a relevant product market. Smartphones are distinct from phones

that offer less capable hardware and software options than smartphones. These other phones,

sometimes called “feature phones,” may offer basic web browsing in addition to calling and

messaging options, but do not offer the breadth of access to the internet or third-party apps as

smartphones. Similarly, these phones often have lower-quality hardware, such as poorer

displays, less capable cameras, and rely on physical keyboards instead of smartphone touch

screens. Thus, these phones are not reasonable substitutes for smartphones.

173. Smartphones are also distinct from other portable devices, such as tablets,

smartwatches, and laptop computers. These devices lack the combination of function, size, and

portability that consumers rely on in a smartphone, even if they offer some similar capabilities.

Thus, none of these other products are reasonable substitutes for smartphones.

174. Apple, other participants in the market, and the public recognize that smartphones

are distinct from feature phones and other portable devices.

175. Competition from feature phones, or other alternatives, is not sufficient to prevent

Apple from exercising monopoly power in the smartphone market.

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vi. The United States is a relevant geographic market for performance

smartphones and smartphones

176. The United States is a relevant geographic market for the sale of performance

smartphones and smartphones. Users in the United States demand services offered by U.S.

retailers when they purchase a smartphone. For example, consumers who purchase a smartphone

from their mobile carrier can get assistance with activating their new device, setting it up, and

transferring important content like apps, messages, photos, and video to their new smartphone. A

smartphone purchased abroad for use in the United States might be incompatible with the

consumer’s domestic carrier, may not have the necessary radio technology to take advantage of

the carrier’s highest speed connections, the carrier might not be able to offer support during setup

or subsequently, or the phone’s warranty may be invalid.

177. Consumers must also purchase smartphones through a U.S. retailer if they want to

take advantage of valuable promotions offered by their mobile carrier. These same promotions

and free financing are unavailable to U.S. consumers who purchase their phones in other

countries.

178. Finally, potential new smartphone entrants to the U.S. market must also comply

with telecommunications regulations and satisfy other legal requirements. No extensive

regulatory framework governs how Apple operates its platform with respect to developers, but

there are a number of regulatory requirements that must be met in order to enter the smartphone

market. For example, some smartphone makers are effectively barred from offering their

smartphones to U.S. consumers.

179. Consumers in the United States could not avoid or defeat an increase in the price

of performance smartphones or smartphones by purchasing and importing smartphones from

abroad. This allows Apple to set prices for the same smartphone in the United States separately

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from those in other countries. For example, Apple lowered the price of the iPhone 11 in China

relative to the United States because Apple faced greater competition in China. This additional

competition arises in part because a popular super app put competitive pressure on Apple and

made it easier for users to switch from an iPhone to a rival smartphone. As a result, Apple is

unable to command the same prices for the iPhone in China than they do in the United States due

to less competition.

E. Apple has monopoly power in the smartphone and performance smartphone

markets

180. Apple has monopoly power in the smartphone and performance smartphone

markets because it has the power to control prices or exclude competition in each of them. Apple

also enjoys substantial and durable market shares in these markets. Moreover, Apple’s market

shares likely underestimate Apple’s power because they are protected by significant barriers to

entry, network effects, and switching costs. Apple recognizes and exploits these barriers to entry,

network effects, and switching costs to protect itself from competition from rival platforms and

innovations, products, and services that may diminish consumer reliance on the iPhone. Apple’s

power will likely increase over time.

181. In the U.S. market for performance smartphones, where Apple views itself as

competing, Apple estimates its market share exceeds 70 percent. These estimates likely

understate Apple’s market share today. For example, Apple’s share among key demographics,

including younger audiences and higher-income households, is even larger. Even in the broadest

market consisting of all smartphones—including many smartphones that Apple and industry

participants do not view as competing with Apple’s iPhones and other higher-end phones—

Apple’s share is more than 65 percent by revenue. Similarly, even if consumers choose one

phone over another, the vast majority of developers consider iPhones and Android devices as

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complements because developers must build apps that run on both platforms due to the lack of

user multi-homing. In effect, the lack of multi-homing among users necessitates multi-homing

among developers. This market reality increases the power that Apple is able to exercise over

developers that seek to reach users on smartphones—especially performance smartphones that

run sophisticated apps.

182. Apple’s high market shares are durable. Over the last decade, Apple increased its

share of smartphones sold in the United States most years. Through the same period, Apple

collected more than half the revenue for all smartphones sold in the United States.

183. Apple’s monopoly power in the relevant markets is protected by substantial

barriers to entry and expansion. For example, since fewer than ten percent of smartphone

purchasers in the United States are buying their first smartphone, there are fewer new customers

available for Apple’s rivals. Instead, rivals must encourage existing iPhone users to switch from

using an iPhone to using another smartphone when they replace or upgrade their phone. As a

result, switching costs—many created or exacerbated by Apple—impose substantial barriers to

entry and expansion for rival smartphones. This barrier is increasingly impenetrable. Nearly 90

percent of iPhone owners in the United States replace their iPhone with another iPhone. At least

one U.S. carrier estimates that as high as 98 percent of iPhone users on its network replace or

upgrade their iPhone in a given quarter by buying another iPhone. The increased switching costs

that consumers experience because of Apple’s conduct underpins these exceedingly high

retention rates.

184. Apple’s monopoly power in the relevant markets is protected by other barriers to

entry, expansion, or repositioning as well. For example, introducing a new smartphone requires

considerable investments in acquiring expensive and scarce components such as mobile chips

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and specialized glass for screens. Other significant barriers to entry include product design,

software development, regulatory approval, manufacturing, marketing, and customer service.

Because most smartphones are bought through mobile carriers including Verizon, which has its

operations headquarters in this district, new entrants or those seeking to expand or reposition

must meet the carriers’ technical requirements to access the major carrier networks in the United

States. New entrants and smaller rivals must also negotiate distribution agreements and persuade

carriers and other retailers to promote their products to consumers. As explained above, rival

smartphones must also overcome the substantial network effects generated by interactions

between users, developers, and others who interact with the iPhone.

185. Apple’s iPhone platform is protected by several additional barriers to entry and

expansion, including strong network and scale effects and high switching costs and frictions. For

example, if an iPhone user wants to buy an Android smartphone, they are likely to face

significant financial, technological, and behavioral obstacles to switching. The user may need to

re-learn how to operate their smartphone using a new interface, transfer large amounts of data

(e.g., contacts), purchase new apps, or transfer or buy new subscriptions and accessories. These

switching costs and frictions are even higher when software applications, APIs, and other

functionality do not help the different devices and operating systems communicate and

interoperate. These switching costs and frictions increase the “stickiness” of the iPhone, making

users more beholden to the smartphone manufacturer and platform operator.

186. Many prominent, well-financed companies have tried and failed to successfully

enter the relevant markets because of these entry barriers. Past failures include Amazon (which

released its Fire mobile phone in 2014 but could not profitably sustain its business and exited the

following year); Microsoft (which discontinued its mobile business in 2017); HTC (which exited

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the market by selling its smartphone business to Google in September 2017); and LG (which

exited the smartphone market in 2021). Today, only Samsung and Google remain as meaningful

competitors in the U.S. performance smartphone market. Barriers are so high that Google is a

distant third to Apple and Samsung despite the fact that Google controls development of the

Android operating system.

187. Apple’s monopoly power is separately demonstrated by direct indicia. For

example, Apple can and does profitably forego innovation without fear of losing customers to

competitors. For example, Apple’s vice president of iPhone marketing explained in February

2020: “In looking at it with hindsight, I think going forward we need to set a stake in the ground

for what features we think are ‘good enough’ for the consumer. I would argue were [sic] already

doing *more* than what would have been good enough.”

After identifying old features that

“would have been good enough today if we hadn’t introduced [updated features] already,” she

explained, “anything new and especially expensive needs to be rigorously challenged before it’s

allowed into the consumer phone.”

188. Apple’s profits and profit margins, for nearly every aspect of the iPhone, are

further evidence of Apple’s monopoly power. For example, Apple’s per-unit smartphone profit

margins are far more than its next most profitable rival. Apple charges carriers considerably

more than its rivals to buy and resell its smartphones to the public and employs contract clauses

that may impede the ability of carriers to promote rival smartphones, a harmful exercise of

monopoly power that is hidden to most consumers. Apple extracts fees from developers—as

much as 30 percent when users purchase apps or make in-app payments. Apple also extracts a

0.15 percent commission from banks on credit card transactions through its digital wallet, while

none of its smartphone competitors with digital wallets charge any fee. Apple predicts that it will

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collect nearly $1 billion in worldwide revenue on Apple Pay fees by 2025.

A recent report by the

U.S. Consumer Financial Protection Bureau suggest these revenues will only increase, as

“analysts expect the value of digital wallet tap-to-pay transactions will grow by over 150 percent

by 2028.”

189. Apple increasingly charges developers additional fees to promote their apps in the

App Store as well. In fact, this is one of the fastest-growing parts of Apple’s services business,

with revenue “increasing by more than a third to $4.4B in FY 2022.”

190. These indicia of Apple’s monopoly power are direct evidence of its monopoly

power in the relevant markets.

VIII. Jurisdiction, Venue, and Commerce

191. The United States brings this action pursuant to Section 4 of the Sherman Act, 15

U.S.C § 4, to prevent and restrain Apple’s violations of Section 2 of the Sherman Act, 15 U.S.C.

§ 2.

192. The Attorneys General assert these claims based on their independent authority to

bring this action pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26, and common law, to

obtain injunctive and other equitable relief based upon Apple’s anticompetitive practices in

violation of Section 2 of the Sherman Act, 15 U.S.C. § 2.

193. The Attorneys General are the chief legal officers of their respective states. They

have authority to bring actions to protect the economic wellbeing of their states and residents,

and to seek injunctive relief to remedy and protect against harm resulting from violations of the

antitrust laws.

194. Apple’s actions and course of conduct are ongoing and are likely to continue or

recur, including through other practices with the same purpose or effect.

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195. Apple’s actions complained of herein have harmed, and continue to harm,

competition, consumers, and the general welfare and economies of the Plaintiff States. This

Court has subject matter jurisdiction over this action under Section 4 of the Sherman Act, 15

U.S.C. § 4, and 28 U.S.C. §§ 1331, 1337(a), and 1345.

196. The Court has personal jurisdiction over Apple, and venue is proper in this

District under Section 12 of the Clayton Act, 15 U.S.C. § 22, and under 28 U.S.C. § 1391,

because Apple transacts business and is found within this District.

197. Apple is a corporation headquartered in Cupertino, California. Apple is one of the

largest publicly traded companies in the world, generating hundreds of billions of dollars from

the sale of smartphones, computers, tablets, and related services and accessories.

198. Apple engages in, and its activities substantially affect, interstate trade and

commerce. Apple provides a range of products and services that are marketed, distributed, and

offered to consumers throughout the United States, in the plaintiff States, across state lines, and

internationally.

IX. Violations Alleged

A. First Claim for Relief: Monopolization of the Performance Smartphone

Market in the United States in Violation of Sherman Act § 2

199. Plaintiffs incorporate the allegations of paragraphs 1 through 198 above.

200. Performance smartphones in the United States is a relevant antitrust market, and

Apple has monopoly power in that market.

201. Apple has willfully monopolized the performance smartphone market in the

United States through an exclusionary course of conduct and the anticompetitive acts described

herein. Each of Apple’s actions individually and collectively increased, maintained, or protected

its performance smartphone monopoly.

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202. Apple’s anticompetitive acts include, but are not limited to, its contractual

restrictions against app creation, distribution, and access to APIs that have impeded apps and

technologies including, but not limited to, super apps, cloud streaming, messaging, wearables,

and digital wallets. The areas identified in this complaint reflect a non-exhaustive list of recent

anticompetitive acts but as technology advances, both the technologies impeded and the specific

manner of impediment may shift in response to technological and regulatory change consistent

with Apple’s past conduct.

203. While each of Apple’s acts is anticompetitive in its own right, Apple’s

interrelated and interdependent actions have had a cumulative and self-reinforcing effect that has

harmed competition and the competitive process. Apple’s anticompetitive acts have had harmful

effects on competition and consumers.

204. Apple’s exclusionary conduct lacks a procompetitive justification that offsets the

harm caused by Apple’s anticompetitive and unlawful conduct.

B. Second Claim for Relief, in the Alternative: Attempted Monopolization of the

Performance Smartphone Market in the United States in Violation of

Sherman Act § 2

205. Plaintiffs incorporate the allegations of paragraphs 1 through 204 above.

206. Performance smartphones in the United States is a relevant antitrust market, and

Apple has attempted to monopolize that market.

207. Apple has attempted to monopolize the performance smartphone market in the

United States through an exclusionary course of conduct and the anticompetitive acts described

herein. Each of Apple’s actions individually and collectively increased Apple’s market power in

the performance smartphone market.

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208. Apple’s anticompetitive acts include, but are not limited to, its contractual

restrictions against app creation, distribution, and access to APIs that have impeded apps and

technologies including, but not limited to, super apps, cloud streaming, messaging, wearables,

and digital wallets. The areas identified in this complaint reflect a non-exhaustive list of recent

anticompetitive acts but as technology advances, both the technologies impeded and the specific

manner of impediment may shift in response to technological and regulatory change consistent

with Apple’s past conduct.

209. While each of Apple’s acts is anticompetitive in its own right, Apple’s

interrelated and interdependent actions have had a cumulative and self-reinforcing effect that has

harmed competition and the competitive process.

210. In undertaking this course of conduct, Apple has acted with specific intent to

monopolize, and to destroy effective competition in, the performance smartphone market in the

United States. There is a dangerous probability that, unless restrained, Apple will succeed in

monopolizing the performance smartphone market in the United States, in violation of Section 2

of the Sherman Act.

C. Third Claim for Relief: Monopolization of the Smartphone Market in the

United States in Violation of Sherman Act § 2

211. Plaintiffs incorporate the allegations of paragraphs 1 through 210 above.

212. Smartphones in the United States is a relevant antitrust market, and Apple has

monopoly power in that market.

213. Apple has willfully monopolized the smartphone market in the United States

through an exclusionary course of conduct and the anticompetitive acts described herein. Each of

Apple’s actions individually and collectively increased, maintained, or protected its smartphone

monopoly.

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214. Apple’s anticompetitive acts include, but are not limited to, its contractual

restrictions against app creation, distribution, and access to APIs that have impeded apps and

technologies including, but not limited to, super apps, cloud streaming, messaging, wearables,

and digital wallets. The areas identified in this complaint reflect a non-exhaustive list of recent

anticompetitive acts but as technology advances, both the technologies impeded and the specific

manner of impediment may shift in response to technological and regulatory change consistent

with Apple’s past conduct.

215. While each of Apple’s acts is anticompetitive in its own right, Apple’s

interrelated and interdependent actions have had a cumulative and self-reinforcing effect that has

harmed competition and the competitive process.

216. Apple’s anticompetitive acts have had harmful effects on competition and

consumers.

217. Apple’s exclusionary conduct lacks a procompetitive justification that offsets the

harm caused by Apple’s anticompetitive and unlawful conduct.

D. Fourth Claim for Relief, in the Alternative: Attempted Monopolization of the

Smartphone Market in the United States in Violation of Sherman Act § 2

218. Plaintiffs incorporate the allegations of paragraphs 1 through 217 above.

219. Smartphones in the United States is a relevant antitrust market, and Apple has

attempted to monopolize that market.

220. Apple has attempted to monopolize the smartphone market in the United States

through an exclusionary course of conduct and the anticompetitive acts described herein. Each of

Apple’s actions individually and collectively increased Apple’s market power in the smartphone

market.

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221. Apple’s anticompetitive acts include, but are not limited to, its contractual

restrictions against app creation, distribution, and access to APIs that have impeded apps and

technologies including, but not limited to, super apps, cloud streaming, messaging, wearables,

and digital wallets. The areas identified in this complaint reflect a non-exhaustive list of recent

anticompetitive acts but as technology advances, both the technologies impeded and the specific

manner of impediment may shift in response to technological and regulatory change consistent

with Apple’s past conduct.

222. While each of Apple’s acts is anticompetitive in its own right, Apple’s

interrelated and interdependent actions have had a cumulative and self-reinforcing effect that has

harmed competition and the competitive process.

223. In undertaking this course of conduct, Apple has acted with specific intent to

monopolize, and to destroy effective competition in, the smartphone market in the United States.

There is a dangerous probability that, unless restrained, Apple will succeed in monopolizing the

smartphone market in the United States, in violation of Section 2 of the Sherman Act.

E. Fifth Claim for Relief: Violation of the New Jersey Antitrust Act (Monopoly

Maintenance)

224. Plaintiff State of New Jersey repeats and realleges and incorporates by reference

each and every preceding paragraph and allegation of this Complaint as if fully set forth herein.

225. The New Jersey Antitrust Act, N.J.S.A. 56:9-4(a), states: “It shall be unlawful for

any person to monopolize, or attempt to monopolize, or to combine or conspire with any person

or persons, to monopolize trade or commerce in any relevant market within this State.”

226. In the operation of its business, Apple engaged in numerous commercial

practices that violate the New Jersey Antitrust Act, N.J.S.A. 56:9-1 to -19, including

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 75 of 88 PageID: 75

monopolizing or attempting to monopolize trade or commerce in the smartphone market and the

performance smartphone market within the State of New Jersey, in violation of N.J.S.A. 56:9-4.

227. Each violation of the New Jersey Antitrust Act by Apple constitutes a separate

unlawful practice and violation, under N.J.S.A. 56:9-16.

228. Plaintiff State of New Jersey seeks all remedies available under the New Jersey

Antitrust Act, N.J.S.A. 56:9-1 to -19, including, without limitation, the following: (a) injunctive

and other equitable relief, pursuant to N.J.S.A. 56:9-7 and N.J.S.A.56:9-10(a); and (b) other

remedies as the Court may deem appropriate and the interests of justice may require.

F. Sixth Claim for Relief: Violations of Wisconsin State Law

229. Plaintiff State of Wisconsin repeats and re-alleges and incorporates by reference

every paragraph and allegation in this Complaint as if fully set forth herein.

230. The aforementioned practices by Apple violate Wisconsin’s Antitrust Act, Wis.

Stat. Ch. § 133.03 et seq. These violations substantially affect the people of Wisconsin and have

impacts within the State of Wisconsin.

231. Plaintiff State of Wisconsin, through its Attorney General and under its antitrust

enforcement authority in Wis. Stat. Ch. 133, is entitled to all remedies available under Wis. Stat.

§§ 133.03, 133.16, 133.17, and 133.18.

X. Request for Relief

232. To remedy these illegal acts, Plaintiffs request that the Court:

1. Adjudge and decree that Apple has acted unlawfully to monopolize, or, in the

alternative, attempt to monopolize, the smartphone market in the United States

in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2;

2. Adjudge and decree that Apple has acted unlawfully to monopolize, or, in the

alternative, attempt to monopolize, the performance smartphone market in the

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 76 of 88 PageID: 76

United States in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, the

New Jersey Antitrust Act, N.J.S.A. 56:9-1 to -19, Wisconsin’s Antitrust Act,

Wis. Stat. Ch. § 133.03 et seq.;

3. Enter relief as needed to cure any anticompetitive harm;

4. Enjoin Apple from continuing to engage in the anticompetitive practices

described herein and from engaging in any other practices with same purpose

or effect as the challenged practices, including but not limited to:

a. preventing Apple from using its control of app distribution to

undermine cross-platform technologies such as super apps and

cloud streaming apps, among others;

b. preventing Apple from using private APIs to undermine cross-

platform technologies like messaging, smartwatches, and digital

wallets, among others; and

c. preventing Apple from using the terms and conditions of its

contracts with developers, accessory makers, consumers, or others

to obtain, maintain, extend, or entrench a monopoly.

5. Enter any other preliminary or permanent relief necessary and appropriate to

restore competitive conditions in the markets affected by Apple’s unlawful

conduct;

6. Enter any additional relief the Court finds just and proper; and

7. Award each Plaintiff, as applicable, an amount equal to its costs, including

reasonable attorneys’ fees, incurred in bringing this action.

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 77 of 88 PageID: 77

Dated: March 21, 2024

espectfull

FOR PLAINTIFF UNITED STATES OF AMERICA:

JONATHAN S. KANTER

Assistant Attorney General for Antitrust

DOHA G. MEKKI

Principal Deputy Assistant Attorney General

for Antitrust

HETAL J. DOSHI

Deputy Assistant Attorney General for

Antitrust

MICHAEL B. KADES

Deputy Assistant Attorney General for

Antitrust

RYAN DANKS

Director of Civil Enforcement

MIRIAM R. VISHIO

Deputy Director of Civil Enforcement

ERIC D. DUNN

Counsel to the Assistant Attorney General

DANIEL S. GUARNERA

Chief, Civil Conduct Task Force

JACKLIN CHOU LEM

Civil Chief, San Francisco Office

KATE M. RIGGS

Assistant Chief, Civil Conduct Task Force

PHILIP R. SELLINGER

United States Attorney

s/ J. Andrew Ruymann

By: J. ANDREW RUYMANN*

Assistant United States Attorney

U.S. Attorney’s Office

402 East State Street, Room 430

Trenton, NJ 08608

Telephone: 609-989-0563

Email: [email protected]

s/ Jonathan Lasken

By: JONATHAN LASKEN*

Assistant Chief, Civil Conduct Task Force

LORRAINE VAN KIRK

Senior Litigation Counsel

s/ Jennifer Hane

By: JENNIFER HANE

SEAN CARMAN

PAM COLE

JAMES ROBERT DUNCAN III

JEREMY C. KEENEY

ANDREW L. KLINE

PATRICK M. KUHLMANN

MATTHEW C. MANDELBERG

NOLAN J. MAYTHER

MICHAEL MIKAWA

SARAH OLDFIELD

MICHAEL A. RABKIN

AARON M. SHEANIN

MICAH D. STEIN

JESSICA JOHNSTON TATICCHI

Trial Attorneys

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United States Department of Justice

Antitrust Division

450 Fifth Street NW, Suite 8600

Washington, DC 20530

Telephone: 202-598-6517

Email: [email protected]

Attorneys for the United States

*Attorne

s of Recor

FOR PLAINTIFF STATE OF NEW JERSEY

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FOR PLAINTIFF STATE THE DISTRICT OF COLUMBIA:

BRIAN L. SCHWALB

ATTORNEY GENERAL

JENNIFER C. JONES

Deputy Attorney General

Public Advocacy Division

BETH MELLEN

WILLIAM F. STEPHENS

Assistant Deputy Attorneys General

Public Advocacy Division

ADAM GITLIN

Chief, Antitrust and Nonprofit Enforcement Section

Public Advocacy Division

ELIZABETH G. ARTHUR

Assistant Attorney General

Public Advocacy Division

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 80 of 88 PageID: 80

400 6th Street NW, 10th Floor

Washington, D.C. 20001

Tel.: 202-442-9864

Email: [email protected]

Attorneys for Plaintiff State the District of Columbia

Pro hac vice application forthcoming

FOR PLAINTIFF STATE OF MAINE:

AARON M. FREY

Attorney General of Maine

______________________

CHRISTINA M. MOYLAN

Assistant Attorney General

MICHAEL DEVINE

Assistant Attorney General

Consumer Protection Division

Office of the Maine Attorney General

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 81 of 88 PageID: 81

6 State House Station

Augusta, ME 04333-0006

Telephone: 207-626-8800

Email: [email protected]

[email protected]

Attorneys for Plaintiff State of Maine

Pro hac vice application forthcoming

FOR PLAINTIFF PEOPLE OF THE STATE OF MICHIGAN:

DANA NESSEL

Attorney General of Michigan

JASON R. EVANS

Division Chief

Corporate Oversight Division

[email protected]

SCOTT A. MERTENS

Section Head

Corporate Oversight Division

[email protected]

JONATHAN S. COMISH

Assistant Attorney General

Corporate Oversight Division

[email protected]

LEANN D. SCOTT

Assistant Attorney General

Corporate Oversight Division

[email protected]

Michigan Department of Attorney General

525 W Ottawa St.

Lansing, MI 48933

Telephone: 517-335-7622

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 82 of 88 PageID: 82

Attorneys for Plaintiff People of the State of Michigan

Pro hac vice application forthcoming

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FOR PLAINTIFF STATE OF NEW HAMPSHIRE:

By its attorney,

JOHN M. FORMELLA

Attorney General

________________________

ALEXANDRA C. SOSNOWSKI

Assistant Attorney General

Consumer Protection and Antitrust Bureau

New Hampshire Department of Justice

Office of the Attorney General

One Granite Place South

Concord, NH 03301

Telephone: 603-271-2678

Email: [email protected]

Attorneys for Plaintiff State of New Hampshire

Pro hac vice application forthcoming

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FOR PLAINTIFF STATE OF NORTH DAKOTA:

DREW H. WRIGLEY

Attorney General

State of North Dakota

Elin S. Alm

Assistant Attorney General

Christopher G. Lindblad

Assistant Attorney General

Consumer Protection and Antitrust Division

Office of Attorney General

1720 Burlington Drive, Suite C

Case 2:24-cv-04055 Document 1 Filed 03/21/24 Page 85 of 88 PageID: 85

Bismarck, ND 58504-7736

Telephone: 701-328-5570

[email protected]

Attorneys for Plaintiff State of North Dakota

Pro hac vice application forthcoming

FOR PLAINTIFF STATE OF OKLAHOMA:

GENTNER DRUMMOND

Attorney General of Oklahoma

CALEB J. SMITH

Assistant Attorney General

Consumer Protection Unit

Office of the Oklahoma Attorney General

15 West 6th Street

Suite 1000

Tulsa, OK 74119

Telephone: 918-581-2230

Email: [email protected]

Attorneys for Plaintiff State of Oklahoma

Pro hac vice application forthcoming

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FOR PLAINTIFF STATE OF WISCONSIN:

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