P2P app users sue Apple over rising transaction costs

Category: Blockchain Crypto Regulatory

Venmo and Cash App customers filed a class action lawsuit against Apple Inc. on November 17, alleging that the company misused its market influence to curb competition in the mobile peer-to-peer payments sector, resulting in consumers paying higher prices.

The 58-page lawsuit outlines the development of peer-to-peer payment apps and Apple’s involvement in this sector. According to users, Apple, Venmo, and Cash App have repeatedly increased “transactions and services with no competitive check.”

Users argue that Apple maintains complete control over apps on iPhones and iPads through technological and contractual restrictions. They also alleged Apple made agreements with Venmo parent company PayPal, Cash App parent firm Block, and Google Pay to limit the use of decentralized crypto technology in their payment applications.

These agreements limit feature competition—and the price competition that would flow from it—marketwide by barring the incorporation of decentralized cryptocurrency technology within existing or new iOS Peer-to-Peer Payment apps,” the filing said.

The legal action aims to force Apple to separate or split its Apple Cash business. Apple did not immediately reply when asked for comments. PayPal and Block were not part of the lawsuit and did not respond to comment requests.

This lawsuit adds to Apple’s recent antitrust issues. In April, the Ninth Circuit Court of Appeals determined that Apple breached California’s competition laws by restricting apps from guiding users to payment solutions not affiliated with Apple.

In September, a U.S. judge in California allowed payment card issuers to sue Apple over alleged unfair practices tied to its Apple Pay mobile wallet. This decision followed Epic Games’ loss in a 2021 trial against Apple regarding its popular game Fortnite.

The trial concerned Apple’s insistence that developers exclusively distribute software through its App Store. Apple then asked the U.S. Supreme Court to overturn a ruling in the Epic lawsuit, which challenged restrictions on in-app payment processing.

Apple’s previous crypto cases

Apple has specific rules about sharing fees, requiring all app developers to give Apple 30 percent of their transaction revenues. This has been a significant obstacle for crypto firms aiming to offer services to iOS users.

Apple has previously removed certain apps from its application store, including the Bitcoin-friendly social media app Damus. The reason for its removal was its tipping feature, which allowed users to tip content creators using Bitcoin’s Lightning Network.

Apple claims this violates its guidelines, as it hinders developers from selling additional in-app content, insisting that all transactions go through its services for the 30 percent cut.

Since crypto payments bypass Apple, the big tech firm simply removes such apps. In October, Apple even removed MetaMask, a popular Ethereum wallet, although it was quickly restored.

Coinbase also accused Apple of demanding that the platform eliminate NFT transfers from its Wallet app on iOS. Coinbase argued that the demand was unfeasible for various reasons, including that Apple’s system does not facilitate cryptocurrency payments.

While some NFT marketplaces enable the purchase of digital tokens using traditional fiat currencies like the U.S. dollar, the fees mentioned by Coinbase are distinct. On blockchains like Ethereum — a network commonly used by NFT projects — any transaction incurs a fee paid to those validating it, collected in cryptocurrencies like Ether (ETH).

Analysts say that even if the NFT is transferred for free, the gas fee does not benefit Coinbase or the recipient. Moreover, the fee fluctuates based on cryptocurrency prices and transaction demand — something Apple’s in-app purchase system cannot handle. Despite the challenges, Apple instructed Coinbase to modify its NFT transfer system.

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