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DOJ files suit against Apple, accusing it of abusing power as a monopoly

MICHEL MARTIN, HOST:

For years now, Apple has portrayed itself as the responsible corporate citizen with beloved product designs.

STEVE INSKEEP, HOST:

Now, the Justice Department and 16 states are suing Apple, saying its smartphones were designed to limit competition. Attorney General Merrick Garland says Apple profits not by making its own products better, but by making other products worse.

MARTIN: Wendy Lee covers entertainment and business for the Los Angeles Times, and she's with us now from the San Francisco Bay Area to tell us more about it. Good morning, Wendy.

WENDY LEE: Good morning.

MARTIN: So obviously, it's a big deal when the Justice Department takes on one of the world's biggest companies, but how big of a deal could this be for consumers?

LEE: This could be a really big deal for consumers because Apple owns the hardware, the iPhone, the software behind it. And also, all the apps on the iPhone have to go through the App Store, which Apple controls. So if the DOJ succeeds in this lawsuit, that could dramatically change how Apple does business, which could theoretically cause prices to be less for consumers.

MARTIN: So in his remarks, Attorney General Garland made his case for how he said consumers are suffering from this alleged monopoly. This is what he said.

(SOUNDBITE OF ARCHIVED RECORDING)

MERRICK GARLAND: Fewer choices, higher prices and fees, lower-quality smartphones, apps and accessories, and less innovation from Apple and its competitors.

MARTIN: A lot of consumers get their smartphones through companies like AT&T or Verizon, who offer discounts and even free phone upgrades with contracts. I mean, anytime you turn on the television, you see those. So how does the DOJ argue that we're actually paying more money for their iPhones because of Apple's business practices?

LEE: Because Apple owns the iPhone as well as the software and the App Store, that Apple also sells all these accessories with the phone. So if you're an Apple user and you're going to use a smartwatch, you probably are going to buy an Apple Watch. And Apple Watches only work with iPhones. So if one wanted to buy a Google phone, all of a sudden, you have to buy a new smartwatch because your Apple Watch won't work with the Google phone. And so I think that's one way in which the DOJ is arguing that stifles competition.

The other way is in the App Store itself, that Apple takes a up to 30% cut of the App Store subscriptions and in-app purchases, and many developers pass on that cost to consumers.

MARTIN: So how is the company responding?

LEE: Well, the company disagrees with the lawsuit. And also, the company believes that it threatens how Apple does business and also says it could hinder its ability to create the type of technology that people expect from Apple.

MARTIN: So if this lawsuit does force Apple to change its behavior, can you just give us a sense of how consumers might benefit?

LEE: Yeah. I mean, I think that some of the ways that consumers could benefit is lower prices on apps. Also, that some of the functionality between iPhone users and Android users, such as when Apple users use iMessage to message Android users, that green message that you get on your iMessage - that might change. That functionality might improve. And it's also possible that Apple might open up its App Store to other types of apps that the DOJ is alleging that it hasn't really been open to.

MARTIN: All right, so potentially some big changes. And here's where I want to mention Apple is a financial supporter of NPR, but we very obviously cover them as we cover any other company.

That is LA Times reporter Wendy Lee. Wendy, thank you so much.

LEE: Thank you. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.