- Apple stock dropped more than 3.6% on Thursday after the Justice Department sued the company.
- The suit says Apple has a monopoly in the smartphone market.
- Shares of Apple have declined about 7% year-to-date.
Apple stock declined nearly 4% on Thursday after the Justice Department filed a lawsuit in the US District Court in New Jersey against the tech giant, saying the company us engaged in anticompetitive practices in the smartphone market.
The share price was down 3.7% at 12:53 p.m. ET, trading around $172 each. The stock is down nearly 7% year-to-date.
"Each step in Apple's course of conduct built and reinforced the moat around its smartphone monopoly," the complaint said. "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."
The Justice Department — as well as more than a dozen state attorneys general — said Apple has exhibited anti-competitive practices across its products, as well as through its advertising and news businesses.
Apple's iPhone business is inching closer to a $300 billion annualized run rate.
"Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers," read a separate Thursday statement from the office of the Attorney General in Connecticut.
The lawsuit alleged that Apple is disrupting growth for apps that would make it easier for consumers to switch smartphones, and that the company has also made cross-platform messaging features worse and less secure as a way to incentivize users to keep buying iPhones.
The development marks another volley in the Biden Administration's efforts to curtail the power of Big Tech, and follows antitrust cases aimed at Google, Amazon, and Meta.
Apple rebuffed the allegations in a statement.
"This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets," Apple said. "If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people's technology."
"We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it," the company added.