US Sues Apple over ‘Shapeshifting’ Rules Throttling Crypto Apps

The United States Department of Justice (DOJ) has filed an antitrust lawsuit against Apple, accusing the tech giant of creating a monopoly in the smartphone market and stifling competition and innovation. The lawsuit, supported by 16 state attorney generals, alleges that Apple’s app market rules and restrictions force developers and users to use its payment system and limit alternative options. These policies have also hindered the functionality of crypto-based apps on iOS devices. The DOJ claims that Apple’s actions not only affect competition in the smartphone market but also have a negative impact on other industries, including financial services.

The DOJ specifically points out the 30% fee that Apple charges for apps and in-app payments, even for content, products, or services that it did not create. This fee, along with Apple’s payment systems being fiat-compatible only, has prevented the use of cryptocurrencies in apps or made it economically unfeasible for crypto-based apps to offer in-app purchases. While certain enterprise and public sector customers are allowed to offer their own app stores, iPhone users and developers are prohibited from using alternative app stores that would compete with Apple’s fees.

The lawsuit also accuses Apple of enforcing its App Store rules unfairly and penalizing developers that use technologies that threaten its monopoly power. This has led to some NFT marketplaces and social apps, such as OpenSea and Damus, disabling functionality on their iOS apps or removing certain features because they don’t comply with Apple’s rules and fees. Even web apps accessible through web browsers are still under Apple’s control as the company requires all iOS web browsers to use its WebKit browser engine.

Apple has been accused of denying access to competing digital wallets and preventing developers from offering their own payment services to customers. In response to the lawsuit, an Apple spokesperson stated that the allegations were incorrect and that they would vigorously defend against them. The Digital Markets Act in the European Union has already forced Apple to offer alternative options for browsers, payment functions, and app stores. Apple maintains an approval process, citing concerns over user privacy and security.

Following the announcement of the lawsuit, Apple’s shares fell 4% to around $171, although they remained unchanged in after-hours trading.