Apple faces fresh lawsuit over Apple Pay's monopoly

An antitrust lawsuit has been filed against Apple for abusing its market power in mobile devices to fend off competition for its Apple Pay mobile wallet. According to multiple sources such as Reuters and Bloomberg, the lawsuit filed by Affinity Credit Union accused Apple of coercing consumers who use its devices into using Apple Pay for contactless payments. This is in contrast to makers of Android-based devices that let consumers choose wallets such as Google Pay and Samsung Pay.

For instance, iPhone users must use Apple Pay if they wish to make a purchase by tapping the phone against a terminal in a store. Meanwhile, other iPhone payment services such as PayPal and Square and financial institutions such as Citi and American Express cannot launch tap-to-pay iPhone apps with their own features and interface. Additionally, Apple's anticompetitive conduct forces the more than 4,000 banks and credit unions that use Apple Pay to pay at least US$1 billion of excess fees annually for the privilege. Apple charges issuers 0.15% on credit card transactions and 0.05% on debit cards. On the other hand, Google Pay and Samsung Pay don't charge card issuers any fees.

According to Bloomberg, this lawsuit marks the latest antitrust battle for Apple after facing increased scrutiny over its App Store policies from government regulators in recent years. After a nearly two-year investigation, European regulators also found on a preliminary basis that Apple abused its dominant position with Apple Pay in the market for tap-to-pay apps or mobile wallets.

Affinity Credit Union will be represented in the lawsuit by Hagens Berman. The law firm previously helped plaintiffs reach a US$400 million settlement against Apple in 2016 over eBooks price fixing, a US$100 million deal in 2021 for small App Store developers, and a US$95 million settlement this year over product warranties, Bloomberg reported. The lawsuit seeks unspecified triple damages and a halt to Apple's alleged anticompetitive conduct.

Separately, Apple updated its policies on App Store in May this year, which allows subscriptions to auto-renew without permission from users, whether the developer has raised the monthly or annual subscription fee. Apple issued a statement then explaining it could save consumers the hassle of having their subscriptions automatically cancelled when they didn’t see the notification or email that asked them to opt into the price increase, “This has led to some services being unintentionally interrupted for users and they must take steps to resubscribe within the app, from Settings on iPhone and iPad, or in the App Store on Mac,” the company added.

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