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Apple faces trial as federal court denies motion to dismiss antitrust lawsuit

Court ruling allows government case alleging smartphone monopoly to proceed despite tech giant's objections.

Luis Rijo

• 5 min read
Apple Store exterior as company faces federal antitrust trial over alleged smartphone monopoly practices
Apple Store exterior as company faces federal antitrust trial over alleged smartphone monopoly practices

A federal judge in New Jersey has denied Apple's motion to dismiss a major antitrust lawsuit (Case 2:24-cv-04055-JXN-LDW) filed by the US Department of Justice and 20 states, marking a significant setback for the tech giant in what could become one of the most consequential antitrust cases in recent years.

US District Judge Julien Neals ruled on June 30, 2025, that the government's allegations against Apple are sufficient to proceed to trial, rejecting the company's arguments that the lawsuit fails to demonstrate monopolistic behavior. The decision represents the first major judicial review of the case since it was filed in March 2024.

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Summary

Who: US Department of Justice, 20 state attorneys general, and Apple Inc.

What: Federal court denied Apple's motion to dismiss major antitrust lawsuit alleging illegal smartphone market monopolization through restrictive practices affecting developers and users across five key areas: super apps, cloud gaming, messaging, smartwatches, and digital wallets.

When: June 30, 2025, with the original case filed March 21, 2024

Where: US District Court for the District of New Jersey, with nationwide implications for smartphone markets

Why: Government alleges Apple maintains monopoly power through anticompetitive conduct including technical barriers, restrictive contracts, and high switching costs that prevent effective competition in smartphone and performance smartphone markets valued at hundreds of billions annually.

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According to the 33-page court opinion, Apple maintains a 65 percent market share in the smartphone market and 70 percent in the performance smartphone market. The lawsuit alleges the company has illegally maintained this dominance through restrictive practices affecting app developers and smartphone users.

The court found that plaintiffs adequately alleged Apple possesses monopoly power in both relevant markets. Judge Neals noted that sales of the iPhone totaled $201 billion in 2024, with Apple introducing a new budget model in February priced $170 higher than its predecessor.

Technical barriers at center of allegations

The government's case focuses on five key areas where Apple allegedly restricts competition: super apps, cloud-streaming apps, text messaging, smartwatches, and digital wallets. Prosecutors argue these restrictions prevent competitors from offering cross-platform services that would make it easier for consumers to switch smartphones.

The lawsuit details how Apple's App Store Guidelines effectively block developers from creating apps that host mini programs by requiring text-only displays, preventing categorization, and blocking access to Apple's payment system. Similarly, the company allegedly prevents third-party developers from offering cloud gaming subscription services as native apps on the iPhone.

For messaging services, the complaint alleges Apple designates critical APIs as "private," preventing third-party developers from combining SMS functionality with advanced messaging features. This allegedly forces users to rely on iMessage for full functionality when communicating with other iPhone users.

The court rejected Apple's argument that these practices constitute lawful refusals to deal. Judge Neals found the refusal-to-deal doctrine does not apply because plaintiffs do not allege Apple is failing to deal with smartphone rivals, but rather that the company imposes restrictions on developers and users.

Market definition survives challenge

Apple had argued that the relevant markets - smartphones and performance smartphones - were improperly defined. The court disagreed, finding that performance smartphones constitute a distinct submarket encompassing devices that compete with most iPhones while excluding entry-level smartphones.

The ruling noted that performance smartphones are made with different quality materials, maintain higher-performance components, and include features like NFC antennas that entry-level devices lack. Consumers typically purchase performance smartphones with post-paid service plans that include promotional discounts.

The court also upheld the United States as the relevant geographic market, citing evidence that consumers demand services from US retailers when purchasing smartphones, including device activation, setup, and content transfer. Regulatory requirements and different pricing between countries further support the geographic market definition.

Barriers to entry substantial

The opinion detailed several barriers that protect Apple's market position. The court noted that fewer than 10 percent of smartphone purchases in the United States are first-time buyers, meaning rivals must encourage existing iPhone users to switch when seeking to replace or upgrade their devices.

Switching costs create what the court called an "increasingly impenetrable" barrier, with nearly 90 percent of iPhone owners replacing their device with another iPhone. Users switching to Android smartphones face potential costs including relearning device operations, transferring data, purchasing new apps, and buying new accessories.

For new market entrants, the court found that introducing smartphones requires considerable investments in expensive components like mobile chips and specialized glass screens. Companies must also negotiate distribution agreements with mobile carriers and satisfy technical requirements, with the barriers evidenced by failures of Amazon, Microsoft, HTC, and LG to successfully enter the relevant markets.

Intent to monopolize demonstrated

The court found sufficient evidence of Apple's specific intent to monopolize through internal communications from company executives. These statements allegedly demonstrate awareness that certain practices were designed to maintain the company's market position rather than compete on merits.

The ruling cited an Apple manager's statement that allowing super apps to become "the main gateway where people play games, book a car, make payments" would "let the barbarians in at the gate" because "iOS stickiness goes down." Another executive allegedly said supporting cross-platform messaging would "simply serve to remove [an] obstacle to iPhone families giving their kids Android phones."

Apple's Senior Vice President of Worldwide Marketing allegedly forwarded an email to CEO Tim Cook stating that "moving iMessage to Android will hurt us more than help us," according to the court opinion.

Fifth major tech antitrust case

The case against Apple represents the fifth major antitrust lawsuit brought by the US government against big tech companies in recent years. Federal authorities have also filed cases against Meta Platforms, Amazon, and two separate lawsuits against Google's parent company Alphabet.

This lawsuit joins ongoing antitrust enforcement that has already produced significant results. A federal court ruled in August 2024 that Google monopolized the search market, while Epic Games recently won a contempt ruling against Apple over App Store practices.

The digital advertising industry has faced parallel scrutiny, with the Federal Trade Commission recently targeting media rating companies in a sweeping industry probe amid mounting regulatory pressure across the technology sector.

Apple maintains innocence

An Apple spokesperson said the company believes the lawsuit is wrong on both facts and law, stating it will continue to vigorously fight the case in court. The company has consistently maintained that its success stems from product quality and that users choose its services because they prefer them, not due to lack of alternatives.

Apple argued during motion practice that its limitations on third-party developers' access to its technology were reasonable, contending that forcing it to share technology with competitors would chill innovation. The company also disputed the government's market share calculations and anticompetitive effect allegations.

The court's denial of the motion to dismiss means the case will proceed to discovery and potentially trial, setting up what could be years of litigation. The outcome could fundamentally reshape how Apple operates its ecosystem and interacts with app developers.

Why this matters

This ruling significantly impacts the digital advertising landscape by potentially opening Apple's closed ecosystem to greater competition. The case could reshape mobile advertising measurement, cross-platform attribution, and app monetization strategies. Marketing professionals should monitor developments as potential changes to Apple's platform policies could affect campaign performance tracking, audience targeting capabilities, and media buying strategies across iOS devices. Previous antitrust actions have already altered industry practices, and this case could produce similar structural changes affecting how marketers engage with mobile audiences.

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