Apple Sued By DOJ For Illegally Throttling Competition And Stifling Innovation

The United States Department of Justice (DOJ) has filed a comprehensive antitrust lawsuit against tech giant Apple, alleging that its regulations in the app market and its perceived monopoly have unfairly suppressed competition and hindered innovation.

Filed on March 21st in a federal court in New Jersey, the complaint, supported by 16 state attorneys general, contends that the dominance of Apple within the smartphone market has been exploited to compel developers to utilize its payment system, thereby locking in both developers and users to its platform.

Manipulating The Market

According to the DOJ, the App Store guidelines and developer agreements impose a range of evolving rules and restrictions, enabling the company to charge higher fees, impede innovation, provide a less secure or diminished user experience, and stifle competitive alternatives. This situation may be why numerous crypto-based apps currently offer only limited functionality on iOS devices.

The DOJ also asserted that the anticompetitive behavior exhibited by Apple not only restricts competition in the smartphone market but also has repercussions on industries affected by these limitations, including financial services. For instance, Apple has allegedly eliminated alternative payment systems in ways deemed anticompetitive and exclusionary.

A Chokehold On The Industry

The DOJ highlighted the 30% fee, commonly referred to as the Apple tax, which the company imposes on apps and in-app payments for content, products, or services it did not create. This fee is only compatible with fiat currencies and has effectively prohibited the use of cryptocurrency in apps or made it economically unfeasible for crypto-based apps to offer in-app purchases.

Apple does provide certain enterprise and public sector customers the option to offer their own apps through custom app stores, but iPhone users and developers are not granted access to such alternative app stores, according to the DOJ.

The DOJ further alleged that Apple often applies its App Store rules inconsistently and employs them to penalize and restrict developers leveraging technologies that threaten its monopoly power. Some NFT marketplaces, such as OpenSea, have disabled features on their iOS apps due to the 30% fee on NFT sales. The Bitcoin-friendly social app known as Damus also had to remove a BTC tipping feature after Apple removed its app for not utilizing its in-app payments function.