An update on Apple Pay antitrust lawsuits

Back in July last year, Apple was sued in a proposed class action by payment card issuers accusing Apple Pay of abusing its market power in mobile devices to thwart competition for its mobile wallet.

According to a complaint filed in San Francisco federal court, Apple “coerces” consumers who use its smartphones, smart watches and tablets into using its own wallet for contactless payments, unlike makers of Android-based devices that let consumers choose wallets such as Google Pay and Samsung Pay.

The plaintiff said Apple’s anticompetitive conduct forces the more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion of excess fees annually for the privilege.

It also said Apple’s conduct minimises the incentive to make Apple Pay work better and make it more resistant to security breaches.

The lawsuit seeks unspecified triple damages, and a halt to Apple’s alleged anticompetitive conduct.

According to the complaint, Apple charges issuers a 0.15% fee on credit transactions and a flat 0.5 cent fee on debit transactions using Apple Pay, while Android-based rivals charge nothing.

Late last week, Apple moved to dismiss a similar suit brought by French app developers and a French association representing app developers, contending that their claims are barred by the Foreign Trade Antitrust Improvements Act (FTAIA), among other defences.

Apple said that suit unfairly seeks to dovetail on claims resolved with domestic app developers but is not sufficiently different to give rise to a new, timely action subject to the jurisdiction of the California federal court where the French plaintiffs filed suit.

As previously reported, the complaint took issue with Apple App Store practices and policies, and chiefly, the up to 30% commission Apple extracted from the plaintiffs and other French app developers on both app sales and in-app purchases for more than a decade.

In addition, the class action cited the minimum price for apps, a $99 annual fee assessed to app developers, Apple’s interference between developers and end-users, and its App Tracking Transparency (ATT) feature, which allows users the chance to opt out of certain third-party tracking by developers, as problematic.

The company already faces a possible heavy fine after European Union regulators on May 2 said it had abused its dominance in iOS devices and mobile wallets by refusing to give payment rivals access to its technology.

The plaintiff is represented by the law firms Hagens Berman Sobol Shapiro and Sperling & Slater.

Last August, they helped obtain a $100 million settlement for smaller iOS developers that claimed Apple overcharged them on commissions.

January 31, 2023
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