A lawsuit against Apple seems likely on this Y-chronologically-denoted day. This time, the Cupertino business is accused of making a lot of money—and doing so in an anticompetitive way—by providing its own Apple Pay service with preferential treatment on the iPhone platform.
Law firms Hagens Berman and Sperling & Slater filed a class-action complaint in a US federal court in Northern California on Wednesday. It slams Apple for allowing its own Apple Pay service to use the iPhone’s NFC chip while barring other services like Google Pay and Samsung Pay from doing the same. As a result, iOS users will only have access to a single tap-to-pay option.
To make matters more complicated, according to the lawsuit, Apple gains a tidy sum of money each year by charging card issuers excessive transaction fees because of its exclusive Apple Pay policy; if the market were more competitive, the suit alleges, these prices would fall. In 2019, the corporation is said to have earned $1 billion from this source of revenue, and it is expected to earn four times that amount in 2023.
The lawsuit contends that this is a breach of the Sherman Act of 1890, which prohibits “monopolization, attempted monopolization, conspiracy, or combination of monopolies,” as well as the later Clayton Act, which covers more antitrust scenarios.
According to the lawsuit, “in contrast to the Android ecosystem,” there is only a single tap-and-pay mobile wallet that is compatible with Apple’s iOS devices (iPhone, iPad, and Apple Watch). Only Apple Pay, an in-house payment system developed by Apple, is an option.
There is no doubt in my mind that a superior solution would not have secured Apple Pay’s position as the preeminent payment method. From a practical sense, Apple Pay is nearly identical to Google Pay and Samsung Pay. As a result, all potential and free competitors are prevented from accessing the NFC interface needed to compete, and Apple Pay has been propped up as a result. “
Plaintiffs are requesting an order “requiring that Apple halt the abusive, unlawful, and anticompetitive activities disclosed herein,” and monetary damages for the US card issuers that make up the proposed class of plaintiffs. If the suit is successful, the damages could be substantial, based on Apple’s reported profits from Apple Pay issuer fees and the size of the settlements Hagens Berman has secured from Apple in the past: over $400 million over ebook price fixing in 2014, and $100 million over App Store rules and fees last year.
A $36.5 billion fine was threatened by EU regulators back in May if Apple refused to allow rivals access to the NFC chip in the iPhone. They requested that the company open the device back in May.