Apple sued for allegedly abusing its market power to curb mobile peer-to-peer payment competition

Image courtesy of TipRanks

Another day, another lawsuit. Apple has been sued by Venmo and Cash App customers in a proposed class action claiming the tech giant abused its market power to curb competition for mobile peer-to-peer payments, causing consumers to pay “rapidly inflating prices,” reports Reuters.

Four consumers in New York, Hawaii, South Carolina and Georgia filed the lawsuit on Friday in San Jose, California, federal court. They alleged Apple violated U.S. antitrust law through its agreements with PayPal’s Venmo and Block’s Cash App.

Here are some details from the lawsuit: Apple has entered into mirroring agreements with each of its horizontal competitors in the iOS Peer-to-Peer Payment Market, including PayPal (which owns Venmo), Block (which owns the Cash App), and Google (which owns Google Pay). These agreements limit feature competition—and the price competition that would flow from it—marketwide, including by barring the incorporation of decentralized cryptocurrency technology within existing or new iOS Peer-to-Peer Payment apps.

Further, because Apple uses technological and contractual restraints—including hardware-enforced App Store exclusivity and contractual limitations on web browser technology—to exercise unfettered control over every app installed and run on iPhones and iPads, it is able to (and does) extract the same agreement from any new iOS Peer-to-Peer Payment product as a condition for entry.

Absent Apple’s anticompetitive restraints, new entrants (or existing competitors) would introduce desirable new features in iOS Peer-to-Peer Payment products, including the use of decentralized blockchain/cryptocurrency technology to reduce transaction costs and increase throughput for peer-to- peer payments. The introduction of feature competition in the long-stagnant iOS Peer-to-Peer Payment Market would mitigate what consumers in this market have for years suffered due to Apple’s marketwide restraints: rapidly inflating prices, an absence of new products and competitors, and a glaring absence of feature competition among existing entrants.

In recent years, Apple Cash, Venmo, and Cash App have continuously raised transaction and service fees in near lockstep, without sacrificing market share. No new entrant has stepped in to constrain prices—and when new products (including one backed by Jack Dorsey, the founder of Block, the company behind Cash App) attempted to introduce feature competition by offering peer-to-peer services built on decentralized blockchain technology, Apple ejected them from its platform, citing the agreements challenged in this case.

7. At the same time, no new feature amongst legacy products has been introduced to engender competition in the iOS Peer-to-Peer Payments Market. And Apple’s mirroring agreements, which expressly limit the features and technologies that can be introduced in peer-to-peer payment apps, are to blame.

8. Apple’s horizontal agreements restraining competition in the iOS Peer-to-Peer Payment Market have allowed Apple’s own Apple Cash product, and the products of other entrenched competitors including PayPal (Venmo) and Block (Cash App), to repeatedly and significantly increase prices and to directly restrict the supply, output, and features of iOS Peer-to-Peer Payment apps and services.

The lawsuit seeks an injunction that could force Apple to divest or segregate its Apple Cash business.

Dennis Sellers
the authorDennis Sellers
Dennis Sellers is the editor/publisher of Apple World Today. He’s been an “Apple journalist” since 1995 (starting with the first big Apple news site, MacCentral). He loves to read, run, play sports, and watch movies.