CUPERTINO, Calif. (AP) — Apple on Monday charged into the artificial intelligence craze with a new iPhone lineup that marks the company’s latest attempt to latch onto a technology trend and transform it into a cultural phenomenon.

The four different iPhone 16 models will all come equipped with special chips needed to power a suite if AI tools that Apple hopes will make its marquee product even more indispensable and reverse a recent sales slump.

Apple’s AI features are designed to turn its often-blundering virtual assistant Siri into a smarter and more versatile sidekick, automate a wide range of tedious tasks and pull off other crowd-pleasing tricks such as creating customized emojis within seconds.

After receiving a standing ovation for Monday’s event, Apple CEO Tim Cook promised the AI package will unleash “innovations that will make a true difference in people’s lives.”

But the breakthroughs won’t begin as soon as the new iPhones — ranging in price from $800 to $1,200 — hit the stores on September 20.

Most of Apple’s AI functions will roll out as part of a free software updates to iOS 18, the operating system that will power the iPhone 16 rolling out from October through December. U.S. English will be the featured language at launch but an update enabling other languages will come out next year, according to Apple.

It’s all part of a new approach that Apple previewed at a developers conference three months ago to create more anticipation for a next generation of iPhones amid a rare sales slump for the well-known devices.

Since Apple’s June conference, competitors such as Samsung and Google have made greater strides in AI – a technology widely expected to trigger the most dramatic changes in computing since the first iPhone came out 17 years ago.

Just as Apple elevated fledgling smartphones it into a must-have technology in 21st-century society, the Cupertino, California, company is betting it can do something similar with its tardy arrival to artificial intelligence.

In an attempt to set itself apart from the early leaders in AI, the technology being baked into the iPhone 16 is being promoted as “Apple Intelligence.” Despite the unique branding, Apple’s new approach mimics many of the features already available in the Samsung Galaxy S24 released in January and the Google Pixel 9 that came out last month.

“Apple could have waited another year for further development, but initial take up of AI- powered devices from the likes of Samsung has been encouraging, and Apple is keen to capitalize on this market,” said PP Foresight analyst Paolo Pescatore.

As it treads into new territory, Apple is trying to preserve its long-time commitment to privacy by tailoring its AI so that most of its technological tricks can processed on the device itself instead of relying on giant banks of computers located in remote data centers. When a task needs to connect to a data center, Apple promises it will be done in a tightly-controlled way that ensures that no personal data is stored remotely.

While corralling the personal information shared through Apple’s AI tools inherently reduces the chances that the data will be exploited or misused against a user’s wishes, it doesn’t guarantee iron-clad security. A device could still be stolen, for instance, or hacked through digital chicanery.

For users seeking to access even more AI tools than being offered by the iPhone, Apple is teaming up with OpenAI to give users the option of farming out more complicated tasks to the popular ChatGPT chatbot.

Although Apple is releasing a free version of its operating system to propel its on-device AI features, the chip needed to run the technology is only available on the iPhone 16 lineup and the high-end iPhone 15 models that came out a year ago.

That means most consumers who are interested in taking advantage of Apple’s approach to AI will have to buy one of the iPhone 16 models – a twist that investors are counting on will fuel a surge in demand heading into the holiday season.

The anticipated sales boom is the main reason Apple’s stock price has climbed by more than 10%, including a slight uptick Monday after the shares initially slipped following the showcase for the latest iPhones.

Besides its latest iPhones, Apple also introduced a new version of its smartwatch that will include a feature to help detect sleep apnea as well the next generation of its wireless headphones, the AirPods Pro, that will be able to function as a hearing aid with an upcoming software update.

The showcase held near Google’s Mountain View, California, headquarters took place two months earlier than when the company typically rolls out the next models in its Pixel phone line-up, which made its debut eight years ago.

Although Pixel phones still represent a sliver of worldwide smartphone sides, they are still closely watched because they serve as Google’s platform for demonstrating the latest advances in the Android operating system that powers virtually every phone not made by Apple.

And Google left little doubt that the Pixel 9 phones are meant to be a vessel for the AI technology that is expected to reshape the way people live and work, just as smartphones in general have done over the past 15 years.

“We are obsessed with the idea that AI can make life easier and more productive for people,” Rick Osterloh, a Google senior vice president who oversees the Pixel phones, said Tuesday.

That’s similar to the theme Apple is accentuating as it prepares to make AI a centerpiece of the iPhone.

That moment is expect to arrive shortly after Labor Day when Apple traditionally takes the wraps off its next iPhone. The next model, the iPhone 16, is expected to be a big attraction because it will be equipped with the special chip needed to run a suite of AI features. Those features are designed to make Apple’s virtual assistant Siri smarter and perform a wide variety of other tasks that the company is promising will make people’s lives easier, while still protecting their privacy.

Not surprisingly, the Pixel 9 lineup is also packed with AI technology, a shift that the Google began last October when it released that year’s model. This generation of phones will be the first centered around the Gemini technology that’s become the focal point of its push into AI.

Just as Apple is aiming to do with Siri, Google has designed its Gemini assistant to be more conversational, providing it with a range of 10 different human-like voices. It’s able to handle even more tasks, especially if users are willing to give it access to email and other documents.

In another move mirroring Apple, Google is equipping the Pixel 9 lineup with a special chip enabling many AI-powered services to be handled on the device instead of remote data centers, with the aim of boosting personal privacy and security.

In on-stage demonstrations Tuesday, the Gemini assistant speaking in a voice called “Ursa” was able to come up with helpful ideas for a fun way to use invisible ink when asked to come up with creative ideas.

But the Gemini assistant also stumbled when shown a picture of a poster for singer Sabrina Carpenter, and when asked to let the questioner know when she was performing a concert in the area. After coming up blank on the first two requests, the Gemini assistant provided the requested information.

The Pixel 9 phones also will feature “Magic Editor,” AI technology capable of completely transforming pictures by quickly and seamlessly adding a person who wasn’t in the original photo, or by altering the photo’s landscape or background.

The more advanced Gemini Assistant will require a monthly subscription that will be free for one year for all buyers of the next Pixel 9 phones, which will begin shipping Aug. 22 before becoming more widely available next month.

The standard Pixel 9 will sell for $800, a $100 increase from last year, while the Pixel 9 Pro will sell for $1,000 or $1,100, depending on the size. The next generation of a foldable Pixel phone that Google introduced last year will sell for $1,800.

The event also signaled that Google intends to conduct business as usual even as its internet empire is being threatened by a judge’s recent decision declaring its dominant search engine to be an illegal monopoly.

The landmark ruling will trigger another round of court hearings to determine the measures that Google must take to create a more competitive market – a process that could result in Google being banned from engaging in some deals or, in the drastic scenario, being ordered to spin off its Android software or relinquish other key pillars bolstering the nearly $2 trillion market value of its corporate parent, Alphabet Inc.

Besides its latest phones, Google also took aim at several other popular Apple products with its next Pixel Watch and wireless earbuds.

The highly anticipated decision issued by U.S. District Judge Amit Mehta comes nearly a year after the start of a trial pitting the U.S. Justice Department against Google in the country’s biggest antitrust showdown in a quarter century.

After reviewing reams of evidence that included testimony from top executives at Google, Microsoft and Apple during last year’s 10-week trial, Mehta issued his potentially market-shifting decision three months after the two sides presented their closing arguments in early May.

“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” Mehta wrote in his 277-page ruling. He said Google’s dominance in the search market is evidence of its monopoly.

Google “enjoys an 89.2% share of the market for general search services, which increases to 94.9% on mobile devices,” the ruling said.

It represents a major setback for Google and its parent, Alphabet Inc., which had steadfastly argued that its popularity stemmed from consumers’ overwhelming desire to use a search engine so good at what it does that it has become synonymous with looking things up online. Google’s search engine processes an estimated 8.5 billion queries per day worldwide, nearly doubling its daily volume from 12 years ago, according to a recent study released by the investment firm BOND.

Kent Walker, Google’s president of global affairs, said the company intends to appeal Mehta’s findings.

“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” Walker said.

For now, the decision vindicates antitrust regulators at the Justice Department, which filed its lawsuit nearly four years ago while Donald Trump was still president, and has been escalating it efforts to rein in Big Tech’s power during President Joe Biden’s administration.

“This victory against Google is an historic win for the American people,” said Attorney General Merrick Garland. “No company — no matter how large or influential — is above the law. The Justice Department will continue to vigorously enforce our antitrust laws.”

The case depicted Google as a technological bully that methodically has thwarted competition to protect a search engine that has become the centerpiece of a digital advertising machine that generated nearly $240 billion in revenue last year. Justice Department lawyers argued that Google’s monopoly enabled it to charge advertisers artificially high prices while also enjoying the luxury of not having to invest more time and money into improving the quality of its search engine — a lax approach that hurt consumers.

Mehta’s ruling focused on the billions of dollars Google spends every year to install its search engine as the default option on new cellphones and tech gadgets. In 2021 alone, Google spent more than $26 billion to lock in those default agreements, Mehta said in his ruling.

Google ridiculed those allegations, noting that consumers have historically changed search engines when they become disillusioned with the results they were getting. For instance, Yahoo was the most popular search engine during the 1990s before Google came along.

Mehta said the evidence at trial showed the importance of the default settings. He noted that Microsoft’s Bing search engine has 80% share of the search market on the Microsoft Edge browser. The judge said that shows other search engines can be successful if Google is not locked in as the predetermined default option.

Still, Mehta credited the quality of Google’s product as an important part of its dominance, as well, saying flatly that “Google is widely recognized as the best (general search engine) available in the United States.”

The Consumer Choice Center, a lobbying group that has fought other attempts to rein in businesses, decried Mehta’s decision as a step in the wrong direction. “The United States is drifting toward the anti-tech posture of the European Union, a part of the world that makes almost nothing and penalizes successful American companies for their popularity,” said Yael Ossowski, the center’s deputy director.

Mehta’s conclusion that Google has been running an illegal monopoly sets up another legal phase to determine what sorts of changes or penalties should be imposed to reverse the damage done and restore a more competitive landscape. He scheduled a Sept. 6 hearing to begin setting the stage for the next phase.

The potential outcome could result in a wide-ranging order requiring Google to dismantle some of the pillars of its internet empire, or preventing it from paying to ensure its search engine automatically answers queries on the iPhone and other devices. Or, the judge could conclude only modest changes are required to level the playing field.

“Google’s loss in its search antitrust trial could be a huge deal — depending on the remedy,” said Emarketer senior analyst Evelyn Mitchell-Wolf.

Regardless, she added, a drawn-out appeals process will delay any immediate effects for both consumers and advertisers.

The appeals process could take as long as five years, predicted George Hay, a law professor at Cornell University who was the chief economist for the Justice Department’s antitrust division for most of the 1970s. That lengthy process will enable Google to fend off the likelihood of Mehta banning default search agreements, Hay said, but it probably won’t shield the company from class-action lawsuits citing the judge’s findings that advertisers were gouged with monopolistic pricing.

If there is a significant shakeup, it could turn out to be a coup for Microsoft, whose own power was undermined during the late 1990s when the Justice Department targeted the software maker in an antitrust lawsuit accusing it of abusing the dominance of its Windows operating system on personal computers to lock out competition.

That Microsoft case mirrored the one brought against Google in several ways and now the result could also echo similarly. Just as Microsoft’s bruising antitrust battle created distractions and obstacles that opened up more opportunities for Google after its 1998 inception, the decision against Google could be a boon for Microsoft, which already has a market value of more than $3 trillion. At one time, Alphabet was worth more than Microsoft, but now trails its rival, with a market value of about $2 trillion.

If Mehta decides to limit or ban Google’s default search deals, it could squeeze Apple’s profits, too. Although parts of his decision were redacted to protect confidential business information, Mehta noted that Google paid Apple an estimated $20 billion in 2022, doubling from 2020. The judge also noted Apple has periodically considered building its own search technology, but backed off that after a 2018 analysis estimated the company would lose more than $12 billion in revenue during the first five years after a break-up with Google.

Google’s payments have helped Apple’s steadily growing services division, which generated $85 billion in revenue during the company’s last fiscal year. Apple didn’t immediately respond to a request for comment.

The Justice Department’s antitrust division has recently taken on some of the biggest companies in the world. It sued Apple in March and in May announced a sweeping lawsuit against Ticketmaster and its owner, Live Nation Entertainment. Antitrust enforcers have also opened investigations into the roles Microsoft, Nvidia and OpenAI have played in the artificial intelligence boom.

The Biden administration has won some big cases, including blocking mergers of some of the world’s biggest publishers as well as JetBlue Airways and Spirit Airlines. It’s also had some notable setbacks, including in the sugar and healthcare industries.

Google faces several other legal threats both in the U.S. and abroad. In September, a federal trial is scheduled to begin in Virginia over the Justice Department’s allegations that Google’s advertising technology constitutes an illegal monopoly.

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Liedtke reported from San Ramon, California. Associated Press writers Alanna Durkin Richer and Barbara Ortutay contributed to this report.

CUPERTINO, Calif. (AP) — Apple has jumped into the race to bring generative artificial intelligence to the masses, spotlighting a slew of features Monday designed to soup up the iPhone, iPad and Mac.

And in a move befitting a company known for its marketing prowess, the AI technology coming as part of free software updates later this year is being billed as “Apple Intelligence.”

Even as it tried to put its own stamp on technology’s hottest area, Apple tacitly acknowledged during its World Wide Developers Conference that it needs help catching up with companies like Microsoft and Google, which have emerged as the early leaders in AI. Apple is leaning on ChatGPT, made by the San Francisco startup OpenAI, to make its often-bumbling virtual assistant Siri smarter and more helpful.

“All of this goes beyond artificial intelligence, it’s personal intelligence, and it is the next big step for Apple,” CEO Tim Cook said.

Siri’s optional gateway to ChatGPT will be free to all iPhone users and made available on other Apple products once the option is baked into the next generation of Apple’s operating systems. ChatGPT subscribers are supposed to be able to easily sync their existing accounts when using the iPhone, and should get more advanced features than free users would.

To herald the alliance with Apple, OpenAI CEO Sam Altman sat in the front row of the packed conference, which was attended by developers from more than 60 countries.

“Together with Apple, we’re making it easier for people to benefit from what AI can offer,” Altman said in a statement.

Beyond allowing Siri to tap into ChatGPT’s storehouse of knowledge, Apple is giving its 13-year-old virtual assistant an extensive makeover designed to make it more personable and versatile, even as it currently fields about 1.5 billion queries a day.

When Apple releases free updates to the software powering the iPhone and its other products this fall, Siri will signal its presence with flashing lights along the edges of the display screen. It will be able to handle hundreds of more tasks — including chores that may require tapping into third-party devices — than it can now, based on Monday’s presentations.

Apple’s full suite of upcoming features will only work on more recent models of the iPhone, iPad and Mac because the devices require advanced processors. For instance, consumers will need last year’s iPhone 15 Pro or buy the next model coming out later this year to take full advantage of Apple’s AI package, although all the tools will work on Macs dating back to 2020 after that computer’s next operating system is installed.

The AI-packed updates coming to the next versions of Apple software are meant to enable the billions of people who use the company’s devices to get more done in less time, while also giving them access to creative tools that could liven things up. For instance, Apple will deploy AI to allow people to create emojis, dubbed “Genmojis” on the fly to fit the vibe they are trying to convey.

Apple’s goal with AI “is not to replace users, but empower them,” Craig Federighi, Apple’s senior vice president of software engineering, told reporters. Users will also have the option of going into the device settings to turn off any AI tools they don’t want.

Monday’s showcase seemed aimed at allaying concerns Apple might be losing its edge with the advent of AI, a technology expected to be as revolutionary as the 2007 introduction of the Phone. Both Google and Samsung have already released smartphone models touting AI features as their main attractions, while Apple has been stuck in an uncharacteristically extended sales slump.

AI mania is the main reason that Nvidia, the dominant maker of the chips underlying the technology, has seen its market value rocket from about $300 billion at the end of 2022 to about $3 trillion. The meteoric rise allowed Nvidia to surpass Apple as the second most valuable company in the U.S. Earlier this year, Microsoft also eclipsed the iPhone maker on the strength of its so-far successful push into AI.

Investors didn’t seem as impressed with Apple’s AI presentation as the crowd that came to the company’s Cupertino, California, headquarters to see it. Apple’s stock price dipped nearly 2% Monday.

Despite that negative reaction, Wedbush Securities analyst Dan Ives asserted in a research note that Apple is “taking the right path.” He hailed the presentation as a “historical” day for a company that already has reshaped the tech industry and society.

Besides pulling AI tricks out of its bag, Apple also used the conference to confirm that it will be rolling out a technology called Rich Communications Service, or RCS, to its iMessage app. The technology should improve the quality and security of texting between iPhones and devices powered by Android software, such as the Samsung Galaxy and Google Pixel.

The change, due out with the next version of iPhone’s operating software, won’t eliminate the blue bubbles denoting texts originating from iPhones and the green bubbles marking text sent from Android devices — a distinction that has become a source of social stigma.

In another upcoming twist to the iPhone’s messaging app, users will be able to write a text (or have an AI tool compose it) in advance and schedule a specific time to automatically send it.

Monday’s presentation marked the second straight year that Apple has created a stir at its developers conference by using it to usher in a trendy form of technology that other companies already had employed.

Last year, Apple provided an early look at its mixed-reality headset, the Vision Pro, which wasn’t released until early 2024. Nevertheless, Apple’s push into mixed reality — with a twist that it bills as “spatial computing” — has raised hopes that there will be more consumer interest in this niche technology.

Part of that optimism stems from Apple’s history of releasing technology later than others, then using sleek designs and slick marketing campaigns to overcome its tardy start.

Bringing more AI to the iPhone will likely raise privacy concerns — a topic that Apple has gone to great lengths to assure its loyal customers it can be trusted not to peer too deeply into their personal lives. Apple did talk extensively Monday about its efforts to build strong privacy protections and controls around its AI technology.

One way Apple is trying to convince consumers that the iPhone won’t be used to spy on them is harnessing its chip technology so most of its AI-powered features are handled on the device itself instead of at remote data centers, often called “the cloud.” Going down this route would also help protect Apple’s profit margins because AI processing through the cloud is far more expensive than when it is run solely on a device.

When Apple users make AI demands that requiring computing power beyond what’s available on the device, the tasks will be handled by what the company is calling a “private cloud” that is supposed to shield their personal data.

Apple’s AI “will be aware of your personal data without collecting your personal data,” Federighi said.

Netflix gained another 9.3 million subscribers to start the year while its profit soared with the help of a still-emerging expansion into advertising, but caught investors off guard with a change that will make it more difficult to track the video streaming service’s future growth.

The performance announced Thursday demonstrated that Netflix is still building on its momentum of last year, when a crackdown on free-loading viewers relying on shared passwords and the rollout of a low-priced option including commercials revived its growth following a post-pandemic lull.

The strategy resulted in Netflix adding 30 million subscribers last year — the second largest annual increase the service’s history.

Netflix’s gains during the January-March period more than quadrupled the 1.8 million subscribers that the video streaming service added at the same time last year, and was nearly three times more than analysts had projected. The Los Gatos, California, company ended March with nearly 270 million worldwide subscribers, including about 83 million in its biggest market covering the U.S. and Canada.

Investors increasingly are viewing Netflix as the clear-cut winner in a fierce streaming battle that includes Apple, Amazon, Walt Disney Co. and Warner Bros. Discovery — a conclusion has caused its stock price to more than double since the end of 2022.

But Netflix surprised investors by disclosing in a shareholder letter that it will stop providing quarterly updates about its subscriber totals beginning next year, a move that will make it more difficult to track the video streaming service’s growth — or contraction. The company has regularly posted its quarterly subscriber totals since going public 22 years ago.

Netflix’s shares dipped more than 5% in extended trading, despite the strong financial showing.

In a video meeting with analysts, Netflix co-CEO Greg Peters said management believes the company’s financial growth has become more meaningful to watch than quarter-to-quarter fluctuations in subscribers.

“We think this is a better approach that reflects the evolution of the business,” Peters said.

The company still intends to give annual updates on total subscribers. That plan indicates Netflix is trying to get investors focus on long-term trends rather than three-month increments that can be affected by short-term factors such as programming changes and household budgetary pressures that cause temporary cancellations, said Raj Venkatesan, a business administration professor at the University of Virginia who studies the video streaming market.

Now that Netflix has been cracking down on password sharing for more than a year, management also likely realizes it has reaped most of the subscriber gains from those measures and recognizes it will be more difficult to maintain that momentum, eMarketer analyst Ross Benes said.

“They are quitting while they are ahead by no longer reporting quarterly subscriber numbers,” Benes said.

Netflix’s renewed subscriber growth has been coupled with a sharper focus on boosting profit and revenue — an emphasis that has led management to be more judicious about its spending on original programming and regularly raising its subscription prices.

It’s a formula that helped Netflix earn $2.33 billion, or $5.28 per share, in the most recent quarter, a 79% increase from the same time last year. Revenue rose 15% from a year ago to $9.37 billion. Analysts polled by FactSet had projected earnings of $4.52 per share on revenue of $9.27 billion.

Advertising sales still play a small role in Netflix’s finances, with BMO Capital Markets analyst Brian Pitz projecting the company will bring in about $1.5 billion from commercials streamed on its service this year, while foreseeing years of steady growth ahead. The low-priced option with ads is having a big impact on bringing in and retaining subscribers, according to Pitz, who expects 41 million customers paying for the commercial format.

WASHINGTON (AP) — The Justice Department on Thursday announced a sweeping antitrust lawsuit against Apple, accusing the tech giant of engineering an illegal monopoly in smartphones that boxes out competitors, stifles innovation and keeps prices artificially high.

The lawsuit, filed in federal court in New Jersey, alleges that Apple has monopoly power in the smartphone market and leverages control over the iPhone to “engage in a broad, sustained, and illegal course of conduct.”

“Apple has locked its consumers into the iPhone while locking its competitors out of the market,” said Deputy Attorney General Lisa Monaco. Stalling the advancement of the very market it revolutionized, she said, it has “smothered an entire industry.”

Apple called the lawsuit “wrong on the facts and the law” and said it “will vigorously defend against it.”

The suit takes aim at how Apple allegedly molds its technology and business relationships to “extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.”

That includes diminishing the functionality of non-Apple smartwatches, limiting access to contactless payment for third-party digital wallets and refusing to allow its iMessage app to exchange encrypted messaging with competing platforms.

It specifically seeks to stop Apple from undermining technologies that compete with its own apps — in areas including streaming, messaging and digital payments — and prevent it from continuing to craft contracts with developers, accessory makers and consumers that let it “obtain, maintain, extend or entrench a monopoly.”

The lawsuit — filed with 16 state attorneys general — is just the latest example of aggressive antitrust enforcement by an administration that has also taken on Google, Amazon and other tech giants with the stated aim of making the digital universe more fair, innovative and competitive.

“The Department of Justice has an enduring legacy taking on the biggest and toughest monopolies in history,” said Assistant Attorney General Jonathan Kanter, head of the antitrust division, at a press conference announcing the lawsuit. “Today we stand here once again to promote competition and innovation for next generation of technology.”

Antitrust researcher Dina Srinavasan, a Yale University fellow, compared the lawsuit’s significance to the government’s action against Microsoft a quarter century ago — picking a “tremendous fight” with what has been the world’s most prosperous company.

“It’s a really big deal to go up and punch someone who is acting like a bully and pretending not to be a bully,” she said.

President Joe Biden has called for the Justice Department and the Federal Trade Commission to vigorously enforce antitrust statutes. While its stepped-up policing of corporate mergers and questionable business practices has met resistance from some business leaders — accusing the Democratic administration of overreach — it’s been lauded by others as long overdue.

The case seeks to pierce the digital fortress that Apple Inc., based in Cupertino, California, has assiduously built around the iPhone and other popular products such as the iPad, Mac and Apple Watch to create what is often referred to as a “walled garden” so its hardware and software can seamlessly offer user-friendly harmony.

The strategy has helped Apple attain an annual revenue of nearly $400 billion and, until recently, a market value of more than $3 trillion. But Apple’s shares have fallen by 7% this year even as most of the stock market has climbed to new highs, resulting in long-time rival Microsoft seizing the mantle as the world’s most valuable company.

Apple said the lawsuit, if successful, would “hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect” and would “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”

“At Apple, we innovate every day to make technology people love — designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users,” the company said in a statement. “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets.

Apple has defended the walled garden as an indispensable feature prized by consumers who want the best protection available for their personal information. It has described the barrier as a way for the iPhone to distinguish itself from devices running on Google’s Android software, which isn’t as restrictive and is licensed to a wide range of manufacturers.

“Apple claims to be a champion of protecting user data, but its app store fee structure and partnership with Google search erode privacy,” Consumer Reports senior researcher Sumit Sharma said in a statement.

The lawsuit complains that Apple charges as much as $1,599 for an iPhone and that the high margins it earns on each is more than double what others in the industry get. And when users run an internet search, Google gives Apple a “significant cut” of the advertising revenue those searches generate.

The company’s app store also charges developers up to 30 percent of the app’s price for consumers.

Critics of Apple’s alleged anticompetitive practices have long complained that its claim to prioritize user privacy is hypocritical when profits are at stake. While its iMessage services is sheathed from prying eyes by end-to-end encryption, that protection evaporates the moment someone texts a non-Apple device.

But Will Strafach, a mobile security expert, said that while he believes Apple needs reigning in, he’s concerned that the Justice Department’s focus on messaging may be misplaced and could weaken security and privacy.

“I am quite glad that access to SMS messages is restricted,” said Strafach, creator of the Guardian Firewall app.

He notes that a number of apps, ostensibly for weather and news, on iPhones have secretly and persistently sent users’ GPS data to third parties. Strafach said he is concerned weakened Apple security “could open the door to stalkerware/spouseware, which is already more difficult to install on Apple devices compared to Android.”

However, prominent critic Cory Doctorow has complained that while Apple has blocked entities like Facebook from spying on its users it runs its “own surveillance advertising empire” that gathers the same kinds of personal data but for its own use.

“Apple has a history of clandestine deals with surveillance giants like Google, and (CEO) Tim Cook gave Uber a slap on the wrist instead of an app store ban when (the ride-sharing company) built a backdoor to spy on iPhone users who had already deleted Uber’s app,” noted Sean O’Brien, founder of Yale’s Privacy Lab.

Fears about an antitrust crackdown on Apple’s business model haven’t just contributed to the drop in the company’s stock price, there also is concern it lags behind Microsoft and Google in the push to develop products powered by artificial intelligence technology.

Antitrust regulators made it clear in their complaint that they see Apple’s walled garden mostly as a weapon to ward off competition, creating market conditions that enable it to charge higher prices that have propelled its lofty profit margins while stifling innovation.

“Consumers should not have to pay higher prices because companies break the law,,” said Attorney General Merrick Garland. Left unchallenged, Apple would “only continue to strengthen its smartphone monopoly,” he added.

William Kovacic, a former chairman of the Federal Trade Commission who teaches at George Washington University, said he expects the core of Apple’s defense to be that it is not at all a monopoly in the smartphone market. Justice Department lawyers have built a “high-quality” argument of harm in the 88-page indictment with “impressive excerpts from the firm’s own documents,” he said.

But don’t expect a verdict until 2026 — which means the case could easily drag on with appeals.

The case escalates the Biden administration’s antitrust siege, which has already triggered lawsuits against Google and Amazon accusing them in engaging in illegal tactics to thwart competition, as well as unsuccessful attempts to block new acquisitions by Microsoft and Meta Platforms.

In addition the FTC sued Facebook in 2020 over its acquisitions of Instagram and WhatsApp.

Kovacic predicts antitrust action by the FTC or Justice Department against Microsoft over its relationship with OpenAI is “coming up around the corner,” and “the two agencies are fighting over who will handle that better.”

“They foreshadowed this would be their agenda and they’re filling out the agenda the way they said,” he added. “These are all high-stakes matters, and you can expect an intense and aggressive defense.”

Apple’s business interests are also entangled in the Justice Department’s case against Google, which went to trial last fall and is headed toward final arguments scheduled to begin May 1 in Washington, D.C. In that case, regulators are alleging Google has stymied competition by paying for the rights for its already dominant online search engine to be the automatic place to handle queries on the iPhone and a variety of web browsers in an arrangement that generates an estimated $15 billion to $20 billion annually.

With the Justice Department mounting a direct attack across its business, Apple stands to lose even more.

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Liedtke reported from San Francisco.

NEW YORK (AP) — Reddit’s stock soared in its Wall Street debut as investors pushed the value of the company close to $9 billion seconds after it began trading on the New York Stock Exchange.

Reddit, which priced its IPO at $34 a share, debuted Thursday afternoon at $47 a share. At the close of trading, it was up 48% at $50.44, backing off a peak of $57.80.

“This volatility is not surprising because there has been a lot of buzz around Reddit,” Reena Aggarwal, director of Georgetown University’s Psaros Center for Financial Markets and Policy, noted.

When Reddit’s price initially jumped, she explained, some investors who got an allocation may have sold their shares to cash in on the gains, bringing it back down. She noted that this could to continue in the stock’s early days.

Reddit’s IPO will test the quirky company’s ability to overcome a nearly 20-year history colored by uninterrupted losses, management turmoil and user backlashes to build a sustainable business.

The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to existential worries, as well as get recommendations from like-minded people.

About 76 million users checked into one of Reddit’s roughly 100,000 communities in December, according to the regulatory disclosures required before the San Francisco company goes public. Reddit set aside up to 1.76 million of 15.3 million shares being offered in the IPO for users of its service.

Per the usual IPO custom, the remaining shares are expected to be bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance.

Reddit’s moneymaking potential also has attracted some prominent supporters, including OpenAI CEO Sam Altman, who accumulated a stake as an early investor that has made him one of the company’s biggest shareholders. Altman owns 12.2 million shares of Reddit stock, according to the company’s IPO disclosures.

By the tech industry’s standards, Reddit remains extraordinarily small for a company that has been around as long as it has. Thursday’s opening debut valuation of $9 billion, for example, is still far below the $1.2 trillion market value boasted by Meta Platforms — whose biggest social media service Facebook was started just 18 months earlier than Reddit.

Reddit has never profited from its broad reach while piling up cumulative losses of $717 million. That number has swollen from cumulative losses of $467 million in December 2021 when the company first filed papers to go public before aborting that attempt.

In the recent documents filed for its revived IPO, Reddit attributed the losses to a fairly recent focus on finding new ways to boost revenue.

Not long after it was born, Reddit was sold to magazine publisher Conde Nast for $10 million in deal that meant the company didn’t need to run as a standalone business. Even after Conde Nast parent Advance Magazine Publishers spun off Reddit in 2011, the company said in its IPO filing that it didn’t begin to focus on generating revenue until 2018.

Those efforts, mostly centered around selling ads, have helped the social platform increase its annual revenue from $229 million in 2020 to $804 million last year. But the San Francisco-based company also posted combined losses of $436 million from 2020 through 2023.

Reddit outlined a strategy in its filing calling for even more ad sales on a service that it believes companies will be a powerful marketing magnet because so many people search for product recommendations there.

The company also is hoping to bring in more money by licensing access to its content in deals similar to the $60 million that Google recently struck to help train its artificial intelligence models. That ambition, though, faced an almost immediate challenge when the U.S. Federal Trade Commission opened an inquiry into the arrangement.

Since Thursday just marks Reddit’s first day on the public market, Aggarwal stressed that the first key measure of success will boil down to the company’s next earnings call.

“As a public company now they have to report a lot more … in the next earnings release,” she said. “I’m sure the market will watch that carefully.”

Reddit also experienced tumultuous bouts of instability in leadership that may scare off prospective investors. Company co-founders Steve Huffman and Alexis Ohanian — also the husband of tennis superstar Serena Williams — both left Reddit in 2009 while Conde Nast was still in control, only to return years later.

Huffman, 40, is now CEO. Although his founder’s letter leading up to this IPO didn’t mention it, Huffman touched upon the company’s past turmoil in another missive included in a December 2021 filing attempt that was subsequently canceled.

“We lived these challenges publicly and have the scars, learnings, and policy updates to prove it,” Huffman then wrote. “Our history influences our future. There will undoubtedly be more challenges to come.”

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Liedtke reported from San Francisco.

Although Google struck the deal with state attorneys general in September, the settlement’s terms weren’t revealed until late Monday in documents filed in San Francisco federal court. The disclosure came a week after a federal court jury rebuked Google for deploying anticompetitive tactics in its Play Store for Android apps.

The settlement with the states includes $630 million to compensate U.S. consumers funneled into a payment processing system that state attorneys general alleged drove up the prices for digital transactions within apps downloaded from the Play Store. That store caters to the Android software that powers most of the world’s smartphones.

Like Apple does in its iPhone app store, Google collects commissions ranging from 15% to 30% on in-app purchases — fees that state attorneys general contended drove prices higher than they would have been had there been an open market for payment processing. Those commissions generated billions of dollars in profit annually for Google, according to evidence presented in the recent trial focused on its Play Store.

Eligible consumers will receive at least $2, according to the settlement, and may get additional payments based on their spending on the Play store between Aug. 16, 2016 and Sept. 30, 2023. The estimated 102 million U.S. consumers who made in-app purchases during that time frame are supposed to be automatically notified about various options for how they can receive their cut of the money.

Another $70 million of the pre-trial settlement will cover the penalties and other costs that Google is being forced to pay to the states.

Although Google is forking over a sizeable sum, it’s a fraction of the $10.5 billion in damages that the attorneys general estimated the company could be forced to pay if they had taken the case to trial instead of settling.

Google also agreed to make other changes designed to make it even easier for consumers to download and install Android apps from other outlets besides its Play Store for the next five years. It will refrain from issuing as many security warnings, or “scare screens,” when alternative choices are being used.

The makers of Android apps will also gain more flexibility to offer alternative payment choices to consumers instead of having transactions automatically processed through the Play Store and its commission system. Apps will also be able to promote lower prices available to consumers who choose an alternate to the Play Store’s payment processing.

Investors seemed unfazed by the settlement as shares in Google’s corporate parent, Alphabet Inc., rose slightly in Tuesday’s midday trading.

The settlement represents a “loud and clear message to Big Tech — attorneys general across the country are unified, and we are prepared to use the full weight of our collective authority to ensure free and fair access to the digital marketplace,” said Connecticut Attorney General William Tong.

Wilson White, Google’s vice president of government affairs and public policy, framed the deal as a positive for the company, despite the money and concessions it entails. The settlement “builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete with other (software) makers, and invest in the Android ecosystem for users and developers,” White wrote in a blog post.

Although the state attorneys general hailed the settlement as a huge win for consumers, it didn’t go far enough for Epic Games, which spearheaded the attack on Google’s app store practices with an antitrust lawsuit filed in August 2020.

Epic, the maker of the popular Fortnite video game, rebuffed the settlement in September and instead chose to take its case to trial, even though it had already lost on most of its key claims in a similar trial targeting Apple and its iPhone app store in 2021.

The Apple trial, though, was decided by a federal judge instead of the jury that vindicated Epic with a unanimous verdict that Google had built anticompetitive barriers around the Play Store. Google has vowed to appeal the verdict.

Corie Wright, Epic’s vice president of public policy, derided the states’ settlement as little more than a one-time payout that provides “no true relief for consumers or developers,” in a blog post.

In court documents, the attorneys general said they decided to settle because of significant risks posed by a trial, including the possibility that a jury may have thought their plan to seek $10.5 billion in damages was exorbitant. The attorneys general also cited for the potential of jurors becoming confused had their case been presented alongside Epic’s claims in the trial, as had been the original plan.

But now the Epic trial’s outcome nevertheless raises the specter of Google potentially being ordered to pay even more money as punishment for its past practices and making even more dramatic changes to its lucrative Android app ecosystem.

Those changes will be determined next year by U.S. District Judge James Donato, who presided over the Epic Games trial. Donato also still must approve Google’s Play Store settlement with the states.

“In the next phase of the case, Epic will seek meaningful remedies to truly open up the Android ecosystem so consumers and developers will genuinely benefit from the competition that U.S. antitrust laws were designed to promote,” Wright pledged.

Google faces an even bigger legal threat in another antitrust case targeting its dominant search engine that serves as the centerpiece of a digital ad empire that generates more than $200 billion in sales annually. Closing arguments in a trial pitting Google against the Justice Department are scheduled for early May before a federal judge in Washington D.C.

SAN FRANCISCO (AP) — Netflix on Wednesday disclosed summertime subscriber gains that surpassed industry analysts’ projections, signaling the video streaming service’s crackdown on password sharing is converting former freeloaders into paying customers.

In an effort to bring in even more revenue, Netflix also announced it’s raising the price for its most expensive streaming service by $2 to $23 per month in the U.S. — a 10% increase — and its lowest-priced, ad-free streaming plan to $12 — another $2 bump. The $15.50 per month price for Netflix’s most popular streaming option in the U.S. will remain unchanged, as will a $7 monthly plan that includes intermittent commercials.

It also raised its prices for subscribers in the U.K. and France.

The company added nearly 8.8 million worldwide subscribers during the July-September period, more than tripling the number gained during the same time last year when Netflix was scrambling to recover from a downturn in customers during the first half last year. The increase left Netflix with about 247 million worldwide subscribers, well above the 243.8 million projected by analysts surveyed by FactSet Research.

Netflix’s financial performance also topped the analyst forecasts that shape investor expectations. The Los Gatos, California, company earned $1.68 billion, or $3.73 per share, a 20% increase from the same time last year while revenue climbed 8% to $8.54 billion.

The company’s stock price soared more than 12% in extended trading after the latest quarterly numbers came out. Netflix shares have increased by about 30% so far this year amid mounting evidence its video streaming service is faring better than most in a crowded fielded of competitors that is testing the financial limits of many households.

Netflix has picked up more than 16 million subscribers through the first nine months of the year, already eclipsing the 8.9 million subscribers that it added all of last year. But it’s still a fraction of the more than 36 million additional subscribers that Netflix attracted in 2020 when the pandemic turned into a gold mine for the service at a time when people were looking for ways to stay entertained while tethered to home.

This year’s subscriber inroads have been made despite entertainment labor strife centered in part on writers’ and actors’ complaints about unfairly low payments doled out by video streaming services such as Netflix. The company has been able to withstand the recently settled writers’ strike and ongoing actors strike by drawing upon a backlog of already finished TV series and movies in the U.S., as well as productions made in international markets unaffected by the labor disputes.

In an apparent effort to rebuild its library of original programming after everyone returns to work, Netflix said it expects to spend about $17 billion on TV series and films next year.

Netflix’s decision to abandon its long-established practice of allowing subscribers to share their account passwords with friends and family outside their households has prompted more viewers who had been watching the video service for free to sign up for their own accounts. The crackdown also has boosted Netflix’s in another way – current subscribers can share their accounts with someone living outside their households by paying higher monthly fees.

“We are incredibly pleased with how it has been going,” Netflix co-CEO Greg Peters said when asked about the password-sharing crackdown during a Wednesday video conference call. He predicted more subscriber gains will accrue from the crackdown for at least several more quarters as Netflix confronts more “borrower households” about watching the service’s programming without paying for it.

The apparent success of the password-sharing crackdown could now free management to focus on other ways to bring in more revenue, such as a low-priced option that includes advertising introduced a year ago.

Netflix’s decision to open its service up to commercials hasn’t been a big boon yet. But Harding Loevner analyst Uday Cheruvu said he believes that will change as advertisers realize that the personal information the company has gleaned from viewers’ entertainment tastes can help target their commercials at consumers most likely to buy their products in the same way internet powerhouses such as Google and Facebook have been doing for years. Peters said during the video conference call that Netflix is already working with is ad partner, Microsoft, to target its commercials more precisely.

“I think the advertising potential of Netflix is underappreciated,” Cheruvu said. “The audience engagement with the video advertising there could be multiple times stronger than a social media platform.”

In a shareholder letter, Netflix said roughly 30% of its incoming subscribers are opting for the $7 plan with commercials, growth that is likely to attract more spending from advertisers. The higher prices for Netflix’s premium plans also seems likely to divert more subscribers into the ad-supported option.

“The ‘streamflation’ era is upon us, and consumers should expect to be hit with price hikes, password sharing limits, and enticed with ad supported options,” said Scott Purdy, U.S. media leader for KPMG.

The curtain is finally coming down on Netflix’s once-iconic DVD-by-mail service, a quarter century after two Silicon Valley entrepreneurs came up with a concept that obliterated Blockbuster video stores while providing a springboard into video streaming that has transformed entertainment.

The DVD service that has been steadily shrinking in the shadow of Netflix’s video streaming service will shut down after its five remaining distribution centers in California, Texas, Georgia and New Jersey mail out their final discs Friday.

The fewer than 1 million recipients who still subscribe to the DVD service will be able to keep the final discs that land in their mailboxes.

“It’s sad,” longtime Netflix DVD subscriber Amanda Konkle said Thursday as she waited the arrival for her final disc, “The Nightcomers,” a 1971 British horror film featuring Marlon Brando. “It’s makes me feel nostalgic. Getting these DVDs has been part of my routine for decades.”

Some of the remaining DVD diehards will get up to 10 discs as a going away present to loyal customers such as Konkle, 41, who has watched more than 900 titles since signing up for the service in 2006. In hopes of being picked for the 10 DVD giveaway, Konkle set up her queue to highlight for more movies starring Brando and older films that are difficult to find on streaming.

At its peak, the DVD boasted more than 20 million subscribers who could choose from more than 100,000 titles stocked in the Netflix library. But in 2011, Netflix made the pivotal decision to separate the DVD side business from a streaming business that now boasts 238 million worldwide subscribers and generated $31.5 billion in revenue year.

The DVD service, in contrast, brought in just $146 million in revenue last year, making its eventual closure inevitable against a backdrop of stiffening competition in video streaming that has forced Netflix to whittle expenses to boost its profits.

“It is very bittersweet,” said Marc Randolph, Netflix’s CEO when the company shipped its first DVD, “Beetlejuice,” in April 1998. “We knew this day was coming, but the miraculous thing is that it didn’t come 15 years ago.”

Although he hasn’t been involved in Netflix’s day-to-day operations for 20 years, Randolph came up with the idea for a DVD-by-service in 1997 with his friend and fellow entrepreneur, Reed Hastings, who eventually succeeded him as CEO — a job Hastings held until stepping aside earlier this year.

Back when Randolph and Hastings were mulling the concept, the DVD format was such a nascent technology that there were only about 300 titles available at the time.

In 1997, DVDs were so hard to find that when they decided to test whether a disc could make it thorough the U.S. Postal Service that Randolph wound up slipping a CD containing Patsy Cline’s greatest hits into a pink envelope and dropping it in the mail to Hastings from the Santa Cruz, California, post office.

Randolph paid just 32 cents for the stamp to mail that CD, less than half the current cost of 66 cents for a first-class stamp.

Netflix quickly built a base of loyal movie fans while relying on a then-novel monthly subscription model that allowed customers to keep discs for as long as they wanted without facing the late fees that Blockbuster imposed for tardy returns. Renting DVDs through the mail became so popular that Netflix once ranked as the U.S. Postal Service’s fifth largest customer while mailing millions of discs each week from nearly 60 U.S. distribution centers at its peak.

Along the way, the red-and-white envelopes that delivered the DVDs to subscribers’ homes became an eagerly anticipated piece of mail that turned enjoying a “Netflix night” into a cultural phenomenon. The DVD service also spelled the end of Blockbuster, which went bankrupt in 2010 after its management turned down an opportunity to buy Netflix instead of trying to compete against it.

Even as video streaming boomed, movie lovers like Michael Fusco stuck with the DVD service because it still offered films that were no longer shown in theaters and couldn’t easily be found in stores. When Netflix announced its intention to close the DVD service five months ago, Fusco expanded his subscription plan so he could rent as many as eight discs at a time at a cost of $56 a month.

Fusco, 36, got his money’s worth, especially in August when he watched 32 DVDs sent to him by Netflix.

“I was very strategic,” said Fusco, who also thought carefully about what films to pick as his final selections after watching more than 2,400 titles during his 18 years as subscriber. The Southern California resident is now awaiting a Spanish comedy, “Solo Con Tu Pareja,” as his final disc and also set up his queue to highlight films by Harrison Ford (“Mosquito Coast”), Tom Hanks (“Joe Versus The Volcano”) and Arnold Schwarzenegger (“Twins”) should he be among those picked for the final 10-disc giveaway.

Randolph and Hastings always planned on video streaming rendering the DVD-by-mail service obsolescent once technology advanced to the point that watching movies and TV shows through internet connections became viable. That expectation is one of the reasons they settled on Netflix as the service’s name instead of other monikers that were considered, such as CinemaCenter, Fastforward, NowShowing and DirectPix (the DVD service was dubbed “Kibble,” during a six-month testing period)

“From Day One, we knew that DVDs would go away, that this was transitory step,” Randolph said. “And the DVD service did that job miraculously well. It was like an unsung booster rocket that got Netflix into orbit and then dropped back to earth after 25 years. That’s pretty impressive.”

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This story has been corrected to reflect that Netflix’s DVD service had more than 20 million subscribers at its peak, not 16 million.