Apple is abusing its dominant position by restricting access to key hardware on iPhones, according to a new class-action lawsuit. The lawsuit was filed on behalf of financial institutions and credit unions that issued payment cards for Apple Pay.
Every modern iPhone has an NFC chip. Near Field Communication or NFC is the key driving factor behind the meteoric rise of cardless and contactless payments made through Apple Wallet.
Apple Pay and Apple Wallet are only available on the iPhone, and they work by securely communicating with a POS (Point of Sale) machine via an NFC chip. The lawsuit alleges that Apple refuses to provide access to the NFC chip to a third-party payment processing company. It also claimed that Apple Pay policies allowed the company to collect more than $1 billion in fees from card issuers.
Simply put, any and all financial services that want to work well on the iPhone must go through Apple’s channels. The lawsuit alleges that by denying access to the critical technology, Apple is preventing development of a competing mobile wallet app for Apple Pay on iOS devices. According to the complaint in the US District Court for the Northern District of California, this is a violation of federal antitrust law.
Having thus achieved a monopoly for Apple Pay, Apple charges card issuers who use the Apple Pay super-competitive fee for a service that’s available for free on Android devices… [Apple] Using its market power in the device markets requires that consumers of its mobile devices also acquire its own mobile wallet – Apple Pay – and prevents consumers from using competing mobile wallets capable of offering competitive Tap & Pay solutions. Is.
By denying rivals access to NFC systems and related communication systems, Apple could illegally profit from payment card issuers. If Apple provides access, developers could, in theory, develop a competing mobile wallet on iOS. This could potentially allow fintech companies to bypass Apple Wallet, and by extension, perhaps even the infamous “Apple Tax”.
The lawsuit states that Google does not restrict access to Android NFC technology. This allows for the thriving competition of wallet apps.
It is interesting to note that the law firm Hagens Berman, which successfully secured a $450 million settlement from Apple over alleged e-book pricing, is representing the class-action lawsuit.