The U.S. Justice Department has launched a sweeping antitrust complaint against Apple, honing in on its lucrative Apple Pay business, claiming the tech giant is blocking competition and reaping billions annually.
In a bold move, the DOJ asserts that Apple’s tight grip on tap-to-pay transactions not only hampers competition but also hinders innovation. The fees extracted from banks and others to participate in Apple Pay allegedly discourage them from exploring alternative services, curtailing potential advancements.
Apple Pay, a contentious topic, has faced regulatory scrutiny before, notably in Europe, where it’s been under investigation since 2020. However, with its recent olive branch in January 2024—offering third parties access to its NFC technology—the tech behemoth aims to placate regulators, although the offer is under review.
Interestingly, while Europe has been a battleground for Apple’s antitrust woes, the DOJ’s complaint is conspicuously devoid of European incidents, focusing squarely on Apple’s American operations.
The DOJ contends that Apple wields “complete control” over tap-to-pay transactions via its iPhones in the U.S., effectively shutting out competition from third-party mobile wallets. This dominance not only limits payment options but also stifles potential uses of the technology, the complaint alleges.
Furthermore, Apple’s ambitious vision for Apple Wallet to encompass an array of functionalities beyond finance raises concerns. By aiming to integrate shopping, transit, identification, and more, Apple seeks to consolidate user data, amplifying its smartphone sales strategy.
Amidst the DOJ’s scrutiny, Google emerges favorably, cited as a rare example of a payment app developer refraining from transaction fees on its platform. Apple’s fees, conversely, significantly impact banks’ bottom lines, diverting funds from potential user benefits.
As the legal battle unfolds, Apple’s counterargument will likely emphasize the frictionless experience Apple Pay provides, fostering increased transactions. Yet, with Apple Pay facilitating billions in transactions annually, its impact reverberates across the digital landscape, adding weight to the DOJ’s case.
