Apple has been ordered to face a private antitrust lawsuit by payment card issuers accusing the company of stifling competition for its Apple Pay mobile wallet. U.S. District Judge Jeffrey White recently ruled that the plaintiffs can proceed with their case and attempt to prove that Apple violated the federal Sherman antitrust law by maintaining a 100% monopoly over the domestic market for tap-and-pay wallets for iPhones, iPads, and Apple Watches.
The lawsuit alleges that Apple coerces users of its devices into using its own wallet for tap-and-pay transactions, unlike Android-based devices that allow users to choose from various wallets such as Google Pay and Samsung Pay. The plaintiffs argue that this behavior limits competition and forces more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion in excessive fees. They also claim that consumers are harmed because the lack of competition reduces the incentive for Apple to improve the safety and usability of Apple Pay.
While Judge White dismissed a “tying” claim that accused Apple of requiring iOS device purchasers to buy Apple Pay or forgo purchases of competing wallets, he acknowledged that the plaintiffs had made plausible allegations regarding Apple’s refusal to allow alternatives to Apple Pay. He noted that increased competition could spur innovation and reduce prices.
Apple has not yet responded to requests for comment on the ruling. However, Steve Berman, a lawyer representing the plaintiffs, expressed satisfaction with the decision, stating that “There are billions at stake so getting by the motion (to dismiss) largely intact was huge for the class.”
This is not the first time Apple has faced antitrust allegations related to Apple Pay. European Union antitrust regulators accused Apple in May 2022 of abusing its dominance in iOS devices and mobile wallets. The regulators are currently conducting an ongoing investigation into the matter.
The class action lawsuit is being led by Illinois’ Consumers Co-op Credit Union, and Iowa’s Affinity Credit Union and GreenState Credit Union. The case is ongoing in the U.S. District Court, Northern District of California, with the number 22-04174.
It remains to be seen how this legal battle will unfold and what implications it may have for the mobile payment industry. As the case progresses, it will be important to closely monitor the outcome, as it could potentially impact the future of Apple Pay and competition within the market.