By Michael Scott
The US Department of Justice (DOJ) opened charges against tech giant Apple Inc alleging its App Store is enforcing arbitrary rules that restrict developers of applications competing with its monopoly power.
The charges brought by the Justice Department feature an extensive antitrust lawsuit alleging the app market rules exhibit the tech is exercising monopoly power. The DOJ submits that Apple Inc is yielding monopoly power to illegally strangle competition, thereby suffocating innovation.
The complaint filed by DOJ on Thursday March 21 in the New Jersey federal court features support from 16 state attorneys generals.
DOJ Files Lawsuit Alleging Apple’s Restrictive Rules
The filing alleges that Apple yields monopoly within the smartphone space it leverages in forcing developers to utilize an inhouse payment system that locks developers and users in the closely knit platform.
The DOJ alleges that the guidelines applied by Apple in its App Store impose shapeshifting restrictions to users and developers through agreements that allow it to generate higher fees. The regulator submitted that the agreements thwart innovation while yielding less security.
The DOJ considers the developer agreements yield degraded user experiences as it eliminates competitive alternatives. The filing affirms that the restrictive nature is the primary reason why the majority of crypto-based applications offer limited functionality available only on iOS devices.
DOJ Accuses Apple of Anticompetitive Conduct
The DOJ considers the anticompetitive conduct by Apple not only limits competition within the smartphone segment but also reverberates in other industries. The DOJ indicates that the restrictions affect other related industries such as financial services providers.
The DOJ filing indicates that the Apple restrictive policies have ultimately ousted alternative payment systems yielding exclusionary and anticompetitive context. The regulator cited the 30% Apple tax as restrictive being a fee charged to applications and in-application payments being contents, products and services created outside by non-Apple developers.
DOJ considers the fee and Apple’s payment systems are not only restrictive but are fiat-compatible only. The charges walled off the utilization of cryptocurrencies in applications and made it economically unviable for the crypto applications to offer the in-app purchases.
Apple is accused of offering particular enterprise and public sector users clients with capability to offer their own applications via custom application stores. However, the iPhone users and developers confront restrictions from accessing alternative application stores since they compete with the big tech player’s fees.
The DOJ illustrated that Apple enforces the rules arbitrarily in penalizing and restricting developers from leveraging innovative technologies. The technology threatens to disrupt, rival and disintermediate the monopoly power yielded by Apple.
Apple Forces Crypto Applications and Platforms to Exit
The Justice Department suit is timely given that several nonfungible token (NFT) platforms including OpenSea in the past confirmed disabling functionality on the iOS applications. The platform illustrates that NFT sales are subjected to the 30% tax fee.
The Bitcoin-friendly social application Damus replicated the move by OpenSea in terminating the Bitcoin tipping feature following the decision by Apple to delist the application. The latter alleged that Damus failed to route the in-app payments functionality allowing Apple to take its fees cut.
The Web applications though online-based and accessible via web browser and external of the application store are within Apple’s control. The DOJ indicates that Apple still exercises control as it mandates all iOS web browsers to utilize its WebKit browser engine.
The DOJ illustrated that Apple denied access to rival digital wallets that would offer diversified and enhanced features. Besides, Apple is alleged to bar developers from offering autonomous payment services to the clients.
Apple spokesperson faulted the DOJ’s complaint terming it as erroneous on the facts and law. The executive affirmed Apple’s resolve to defend against the complaint.
Apple claims the suit will set a dangerous precedent as it offers the government power to exercise a heavy hand to dictate technology designs.
The lawsuit by the DOJ is likely to replicate the European Union initiative via the Digital Markets Act that compels Apple to provide alternative browser engines.
The EU legislation offers payment functions and application stores though Apple deploys approval process in its claims that availing new options threatens user privacy and security.
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