(Updated - March 21, 2024 4:42 PM EDT)
Apple (NASDAQ:AAPL) stock closed 4% lower Thursday after it was confirmed the Department of Justice (DOJ) has officially sued the iPhone maker in an antitrust case for monopolization of smartphone markets.
The U.S. Justice Department and 17 states filed an antitrust lawsuit against Apple, saying the company "imposed restrictive rules for [the] app store to extract higher fees, thwart innovation, and curb competition."
Attorney General Merrick Garland said in a statement, "Consumers should not have to pay higher prices because companies violate the antitrust laws.
He believes that "if left unchallenged, Apple will only continue to strengthen its smartphone monopoly."
Apple has become the latest prominent tech firm sued by U.S. regulators. The list already includes Meta Platforms, Google, and Amazon.com.
The antitrust lawsuit accuses Apple of having an illegal monopoly on smartphones, which it said is sustained by imposing contractual restrictions on and withholding critical access from developers.
The antitrust suit argues that Apple blocks the growth of some apps, suppresses mobile cloud streaming services, excludes some messaging apps, and diminishes the functionality of non-Apple smartwatches.
Apple said in a statement, "We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it."
Analysts at Evercore ISI said the antitrust lawsuit is seen "as more of a headline risk than a financial risk in the US and unless we see new legislation passed it is unlikely Apple will be forced to meaningfully change its App Store fee or third party app store policies."