The US Department of Justice has filed a landmark antitrust lawsuit against Apple, arguing that the iPhone maker has monopolised the smartphone market.
In the lawsuit, filed on Thursday in the District of New Jersey, the Justice Department said Apple has used its market power to extract more money from consumers, publishers and others.
Fifteen US states and the District of Columbia joined the Justice Department in the lawsuit.
“Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits but by violating federal antitrust law,” US Attorney General Merrick Garland told a news briefing.
“Consumers should not have to pay higher prices because companies break the law.”
Mr Garland said Apple consolidated power in the market “not by making its own products better, but by making other products worse”.
The Justice Department has recently taken an aggressive approach in enforcing antitrust laws that President Joe Biden's administration says are critical to maintaining a competitive market.
Mr Garland said Apple would continue to expand its monopoly power if it were not challenged.
Apple shares fell as much as 3.8 per cent on Thursday after the announcement.
The company said it would defend against the lawsuit, saying it sets a “dangerous precedent”.
US Justice Department takes Apple to court over 'monopoly
What does the lawsuit claim?
The Justice Department claims that Apple has blocked cross-platform messaging apps and limited third-party wallet compatibilities to push consumers towards buying iPhones.
“As any iPhone user who has ever seen a green text message, or received a tiny grainy video can attest, Apple's anti-competitive conduct also includes making it more difficult for iPhone users to message with users of non Apple products,” Mr Garland said.
In particular, the lawsuit takes aim at Apple's so-called walled garden, the company's ecosystem of devices and operating systems that make it challenging for consumers to switch to non-Apple products.
The lawsuit also talks of the Apple Watch, which is only compatible with iPhones.
Apple has also inhibited third-party digital wallets from offering tap-to-pay functionality, the lawsuit alleges.
The Biden administration's complaint also says Apple's conduct has affected web browsers, video communication, news subscriptions, advertising and more.
Forrester vice president and principal analyst Dipanjan Chatterjee said Apple's tightly control limits customers' choices.
"To that end, there is no dearth of people who are irked by this handcuffing and choose not to frolic in Apple's walled garden," Mr Chatterjee said.
"Then there are others who are part of the Apple family precisely because of the carefully managed ecosystem's ease of use and intuitiveness.
"By virtue of the ubiquity of the iPhone, Apple becomes a de facto toll gate through which other providers must pass to access a large and lucrative customer base.
"But while its decision to limit access may be construed as hampering competition and hurting some consumers (and that the courts will decide), it also ensures a better experience and creates value for its consumers."
What other investigations does Apple face?
The Justice Department's lawsuit comes with Apple already facing antitrust investigations in Europe and elsewhere.
The company was recently fined $2 billion by the EU for unfairly shutting out music-streaming rivals such as Spotify on its platforms. Apple has said it will appeal against the fine.
Apple faces an investigation in the UK over complaints about how the company treats app developers.
The company has also faced legal challenges from Epic Games over the App Store.
A US judge ruled the App Store did not breach US antitrust law, but did breach Californian state law.
