Apple Pay bags Cupertino another antitrust lawsuit
- Reference: 1658249111
- News link: https://www.theregister.co.uk/2022/07/19/apple_pay_lawsuit/
- Source link:
Filed in California federal court by Iowa-based Affinity Credit Union, [1]the lawsuit [PDF] alleges that Apple violates the Sherman Act by tying Apple Pay to its mobile devices, and also for both monopolizing and attempting to monopolize tap and pay on iOS.
According to the suit, Apple "exercises its market power… by requiring that consumers of its mobile devices also acquire its mobile wallet – Apple Pay – and prevents consumers from using competing mobile wallets."
[2]
The [3]Sherman Act , passed in 1890, was the US's first antitrust law and bans "every contract, combination, or conspiracy in restraint of trade," and "monopolization, attempted monopolization, or conspiracy or combination to monopolize."
[4]
[5]
The suit alleges that Apple not only blocks other mobile wallets and tap-to-pay systems, but then imposes a fee on card issuers for the privilege of doing so.
"Whenever an Apple Pay transaction is completed on a US issuer's payment card, the issuer must pay Apple a fee – 15 basis points on credit (.15 percent) and a flat 0.5 cents ($0.005) on debit," the suit said.
[6]
Such fees reportedly earned Apple $1 billion in 2019, and the suit claims that number is predicted to quadruple by 2023. The suit also alleges that Apple doesn't allow card issuers to pass those fees onto customers.
[7]Apple hits brakes on hiring amid economic uncertainty
[8]Apple's latest security feature could literally save lives
[9]UK tribunal: App Store class action seeking up to $1.8b can continue
[10]Apple's guy in charge of stopping insider trading guilty of … insider trading
Apple's approach stands in stark contrast to Android devices that, with open near-field communication hardware accessible by a number of digital wallets and tap-to-pay services, don't charge any transaction fees. "If Apple faced competition, it could not sustain these substantial fees," the suit claims.
Apple has not responded to requests for comment from The Register.
Is there an echo in here?
In May, [11]the EU issued its own lawsuit over the monopolistic nature of Apple Pay - the fourth anti-competition suit filed against Apple by the EU in the past two years.
The EU's case alleges that Apple restricted competition to the benefit of Apple Pay, which the European Commission's VP for competition policy, Margrethe Vestager, said is illegal under EU competition laws.
Similarly to how it has addressed comparable complaints in the past, Apple has said that opening its NFC hardware to third-party developers would be a security risk for users, but the European Commission has said its own investigations [12]did not support Apple's claim .
In the US case, Affinity's lawyers are trying to create a class of all US entities that have enabled cards for Apple Pay and subsequently had to pay fees to Apple for user transactions. The plaintiff hasn't specified their desired payout, but did say there are over 4,000 banks and credit unions eligible to join the class action.
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This case will be one to watch. As pointed out by the BBC, the plaintiff is represented by [14]the same legal firms that successfully argued a [15]$100 million settlement against Apple for overcharging small developers on commissions. ®
Get our [16]Tech Resources
[1] https://www.hbsslaw.com/sites/default/files/case-downloads/apple-pay/2022-07-18-apple-pay-complaint.pdf
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Ytcpg-wircalyJv0kTm4nAAAAFY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/antitrust-laws
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Ytcpg-wircalyJv0kTm4nAAAAFY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Ytcpg-wircalyJv0kTm4nAAAAFY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Ytcpg-wircalyJv0kTm4nAAAAFY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2022/07/19/apple_hiring_freeze/
[8] https://www.theregister.com/2022/07/06/apple_lockdown_mode/
[9] https://www.theregister.com/2022/07/06/apple_tribunal/
[10] https://www.theregister.com/2022/07/01/apple_lawyer_insider_trading/
[11] https://www.theregister.com/2022/05/02/eu_apple_suit_alleges_anticompetitive/
[12] https://ec.europa.eu/commission/presscorner/detail/en/speech_22_2773
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Ytcpg-wircalyJv0kTm4nAAAAFY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://www.bbc.com/news/technology-62221412
[15] https://www.theregister.com/2021/08/27/apple_vs_cameron_et_al_settlement/
[16] https://whitepapers.theregister.com/
Re: Tectonically slow
Because you can't charge them and hope to successfully prosecute them unless you have convincing evidence of their crimes.
That's what the investigations dig up. You have to sit there and go "ok X is illegal, and here is the proof where they're doing X"
Plus you have to do this in an ironclad formal follow-all-the-rules dot-the-Is-and-cross-the-Ts fashion where Apple's lawyers can't pick it apart and destroy it, which is their job, and they're good at it.
Re: Tectonically slow
"So why do we need a years-long investigation followed by a delay followed by more investigations to establish this?"
Because no matter how slam dunk it may appear, just because a politician or even a Government say something is illegal doesn't necessarily mean it is, or if it is, by how much it is illegal. Government seem to be expert at only one thing. Making fuzzy grey laws with lots of loopholes.
Don't get your hopes up.
This is a suit where one pack of wolves is suing another pack of wolves. One of them is going to try to blend in with the flock and shout down with the man, but in perfect Animal farm fashion, they are more interested fleecing sheep than the other wolves.
Be clear eyed about this, this suit is about breaking Apples lock on the devices so the incumbent payment processors can charge MORE than Apple, not less. The result of a win will look like progress. "look they have to allow other processors equal access to Apple devices, we are are equal now!"
Only some will be more equal then others, and the scope of this suit will leave out the fact that the incumbents have a stranglehold on the POS terminals and card readers. So once they can force their way onto Apple devices, they can disable support for their competition on the device on the other end of the transaction. Any settlement that does not address equal and open access to both the device wallets AND the merchant side hardware, contracts, and fees will just be opening Pandora's box. I had a long conversation with the owner of my favorite sandwich shop, and he was hurting pretty bad. One of the reasons he was on the ropes was the shift away from cash during the pandemic, and the sky high fees on square, cash app, and the older CC merchant networks.
To be clear Apple's own arguments are disingenuous and self serving, but the fees they are asking for are TINY by industry standards. Unlike the App store, this isn't about Apple being the sole operator of a rent seeking cartel, it's about Apple breaking into someone else's.
Tectonically slow
“… which the European Commission's VP for competition policy, Margrethe Vestager, said is illegal under EU competition laws.”
So, that seems fairly clear!
So why do we need a years-long investigation followed by a delay followed by more investigations to establish this?
Why not just charge the buggers, take them to court and decide how best to stomp on them (sorry - innocent until proven guilty) there? It could be over in a couple of months rather than decades