Department of Justice Hits Apple with Antitrust Lawsuit Over Alleged Monopoly Abuses
Summary:
The US Department of Justice has filed a comprehensive antitrust lawsuit against tech giant Apple, accusing it of stifling innovation and competition through monopolistic practices in its app marketplace. Backed by 16 state attorneys general, the complaint alleges that Apple manipulated developers into using its proprietary payment systems, obstructing developers and users. The lawsuit also criticizes Apple's 30% transaction fee on certain apps and in-app purchases, as well as its control over web apps. Apple's shares fell around 4% following the announcement.
Apple has been hit with a comprehensive antitrust lawsuit by the US Department of Justice. The lawsuit alleges that Apple has stifled innovation and competition through its monopolistic practices with regards to its app marketplace. As per the complaint filed in a federal court in New Jersey on March 21 — backed by 16 state attorneys general — Apple is said to have used its dominance in the smartphone market to manipulate developers to use its proprietary payment systems, subsequently obstructing both developers and users to its platform.
Apple's guidelines and agreements are reported to carry a set of inconsistent rules and limitations, which the tech titan can use to impose hefty charges, impede innovation, degrade user experience, and suppress competitive alternatives. The lawsuit suggests that this may explain the minimal functionality of many cryptocurrency apps on Apple devices.
The document reads, "Apple’s anticompetitive behavior not only holds back competition in the smartphone industry but has wider implications impacting industries affected by these constraints, inclusive of financial services."
The lawsuit also criticizes Apple for blocking alternative payment systems, citing this as an act of anti-competitive exclusion. The spotlight also falls on Apple's 30% transaction fee on apps and in-app purchases that use content, products, or services unaffiliated with Apple.
Cryptocurrency usage in apps is primarily restricted due to the cost associated with the integration of Apple's fiat-based payment systems. Although Apple allows some organizations and the public sector to run their own custom-built app stores, the general users, along with developers, are barred from accessing such platforms as they would compete with Apple's revenue model.
The complaint accuses Apple of enforcing its app store policies inconsistently and penalizing developers who aim to disrupt Apple's monopolistic power through technology. A number of non-fungible token (NFT) marketplaces, like OpenSea, for instance, have had to limit their functionalities on their iOS apps due to the 30% Apple fee.
Another instance cited is that of the Bitcoin-supportive Damus social app that was obliged to suspend its Bitcoin tipping feature upon being delisted by Apple for not utilizing its in-app payments module.
Moreover, Apple allegedly extends control even to web apps, demanding all iOS web browsers use its WebKit browser engine. The lawsuit further implicates Apple for barring access to competitive digital wallets that provide enhanced features, and preventing developers from offering their own payment services.
In the European Union, the Digital Markets Act has compelled Apple to permit alternative browser engine options, payment methods, and app stores, while preserving an approval process citing concerns of user privacy and security.
Following the announcement of the lawsuit, Apple's shares fell around 4% on March 21 to approximately $171, with after-hours trading remaining flat. Apple has not yet released an official comment regarding the complaint.
Published At
3/22/2024 6:13:29 AM
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