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The US Department of Justice (DOJ) has taken legal action against Apple, accusing the tech giant of engaging in unfair practices that target cryptocurrency apps. Alongside 16 state and district attorneys general, the DOJ has filed a civil antitrust lawsuit against Apple, alleging that the company is attempting to monopolize the smartphone market in violation of the Sherman Act.
Apple, a publicly traded company based in California, reported substantial revenues in fiscal year 2023 that surpassed the gross domestic products of many countries. The lawsuit, filed in the US District Court for the District of New Jersey, claims that Apple illegally controls the smartphone market by imposing restrictive contracts on developers and limiting their access to essential resources. These actions allegedly hinder the development of crypto apps, products, and services that could reduce reliance on iPhones, promote compatibility with other platforms, and lower costs for consumers and developers.
The DOJ contends that Apple leverages its dominant position to extract more money from various parties, including consumers, developers, artists, and small businesses. US Attorney General Merrick Garland stated in a press conference that Apple’s policies unfairly eliminate alternative payment systems and highlight the 30% fee it imposes on apps and in-app purchases, even though Apple is not the app developer. This fee, combined with Apple’s exclusive support for fiat currencies in its payment systems, presents challenges for integrating cryptocurrencies into apps. Consequently, many crypto-based apps have found it economically unfeasible to offer in-app purchases or use cryptocurrencies within the Apple ecosystem.
Government officials also allege that Apple refuses to support cross-platform messaging apps, restricts third-party digital wallets and non-Apple smartwatches, and blocks mobile cloud streaming services, among other tactics, to maintain its dominance over the smartphone market.
Apple is facing legal challenges not only from the US DOJ but also from EU regulators. The company’s practices reportedly hinder iPhone users and developers from accessing alternative app stores that could compete with Apple’s fees. The DOJ asserts that Apple selectively enforces its App Store rules and penalizes developers who use technologies that could disrupt its monopoly power. Examples cited include nonfungible token (NFT) marketplaces like OpenSea disabling certain features on their iOS apps due to the 30% fee, and a Bitcoin-friendly social app called Damus removing its BTC tipping feature after Apple delisted it for not using its in-app payments system.
Furthermore, Apple’s control extends to web apps accessed through iOS devices, as the company mandates the use of its WebKit browser engine for all iOS web browsers. The DOJ also accuses Apple of denying access to competing digital wallets and preventing developers from offering payment services to customers.
The officials leading the case emphasize that no company should be exempt from the law, regardless of its size. They are determined to enforce antitrust laws to protect consumers and promote fair competition in the market.
In response, an Apple spokesperson stated that the DOJ’s complaint is inaccurate and that the company will vigorously defend itself against the allegations. Apple argues that the lawsuit could set a dangerous precedent by granting the government excessive control over technology design.
Following the news of the lawsuit, Apple’s shares (NASDAQ: AAPL) fell by 4% to approximately $171, remaining unchanged in after-hours trading, according to Google Finance.
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