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DOJ Files Antitrust Lawsuit Against Apple Over App Store Monopoly

On March 21, the United States Department of Justice (DOJ), backed by 16 state attorney generals, filed a comprehensive antitrust lawsuit against Apple Inc. in a New Jersey federal court. The lawsuit alleges that Apple has unlawfully maintained its monopoly in the smartphone market through restrictive app market rules, stifling competition and hindering innovation. According to the DOJ, Apple’s App Store guidelines and developer agreements impose “a series of shapeshifting rules and restrictions” that not only throttle competitive alternatives but also result in higher fees, compromised security, and a degraded user experience.

The lawsuit points out that Apple’s practices particularly limit the functionality of crypto-based applications on iOS devices by forcing developers to use its payment system. This, the DOJ argues, effectively locks in developers and users to Apple’s platform, leaving no room for competition. The complaint further elaborates on the 30% commission—referred to as the “Apple tax”—that the tech giant charges for apps and in-app purchases, a policy that has notably excluded or limited the use of cryptocurrencies within apps, making it economically unfeasible for crypto-based applications to offer in-app purchases.

Furthermore, the DOJ criticizes Apple for allowing certain enterprise and public sector customers to distribute their apps via custom app stores while prohibiting iPhone users and developers from accessing any alternative app stores. This policy is seen as a means to protect Apple’s fees and maintain its market monopoly. The lawsuit also accuses Apple of arbitrarily enforcing its App Store rules and leveraging these regulations to penalize developers who adopt technologies that could potentially disrupt Apple’s dominance in the market.

Notably, some platforms, like the nonfungible token (NFT) marketplace OpenSea, have had to disable certain functionalities on their iOS apps due to the imposition of the 30% fee. Similarly, the Bitcoin-friendly social app Damus removed a BTC tipping feature following its delisting from the App Store, as it circumvented Apple’s in-app payment system.

The lawsuit further alleges that Apple has exerted control over web applications by mandating that all iOS web browsers utilize its WebKit engine. This has not only restricted access to competing digital wallets offering enhanced features but has also barred developers from providing their own payment services.

In response, an Apple spokesperson refuted the DOJ’s claims, asserting that the complaint is baseless and that the company will robustly defend its practices, which they argue are in the interest of user privacy and security. Apple warns that the lawsuit could set a precarious precedent, potentially leading to excessive government interference in technology design and innovation.

This legal challenge comes at a time when Apple is already facing regulatory pressures in the European Union under the Digital Markets Act, which mandates the tech giant to offer alternatives for browser engines, payment functions, and app stores, albeit under Apple’s scrutiny to ensure user privacy and security. Following the announcement of the lawsuit, Apple’s shares experienced a 4% drop to approximately $171, remaining stable in after-hours trading, as per Google Finance data.

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