The US has filed a lawsuit against Apple, accusing the firm of monopolising the smartphone market through a host of actions, including the blocking of third-party apps from offering contactless payments.
The Justice Departments suit alleges that Apple illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers.
A major component of the complaint centres on how Apple limits third party digital wallets. Apple Pay is the only mobile payment service that may access the NFC ‘tap and go’ technology embedded on iOS mobile devices for payments in stores, a process that has been damned by banks in a number of jurisdictions for preventing competition from their own proprietary apps.
Says the DoJ complaint: “Digital wallets are an increasingly important way that smartphones are used and are a product in which users develop a great deal of comfort and trust as they typically contain users’ most sensitive information. Digital wallets that work across smartphone platforms allow users to move from one smartphone brand to another with decreased frictions, among other things.
“Apple has denied users access to digital wallets that would have provided a wide variety of enhanced features and denied digital wallet developers—often banks—the opportunity to provide advanced digital payments services to their own customers.”
In addition, the DoJ alleges that Apple uses its smartphone monopoly to “extract payments” from banks which need to access customers that use the iPhone.
Continues the filing: “Apple’s conduct reflects its knowing degradation of the experience of its own users by blocking them from accessing wallets that would have better or different features. In so doing, Apple cements reliance on the iPhone and also imposes fees on a large and critical slice of all digital wallet NFC transactions, which the US Consumer Financial Protection Bureau estimates will grow to $451 billion by 2028.”
While Apple has said it will “vigorously” fight the wide-ranging suit, it has previously signalled that it is prepared to cede ground when it comes to payments. Earlier this year, the company moved to head off European Commission antitrust charges by offering third-party providers access to the NFC chip technology.
Other key planks of the US suit include allegations that Apple blocks so-called ‘Super Apps’; suppresses mobile cloud streaming services; excludes cross-platform messaging apps; and diminishes the functionality of non-Apple smartwatches.
Attorney General Merrick Garland says: “We allege that 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. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.
