US Government Sues Apple for Sherman Antitrust Act Section 2 Violation
"Apple Pay Uses Monopoly Power to Collect Fees from Banks"
The U.S. Department of Justice (DOJ) filed an antitrust lawsuit against Apple last month, highlighting the company's closed ecosystem as the biggest issue. The lawsuit alleges that Apple excluded products and services from other companies and exploited its dominant position for financial gain. The DOJ particularly emphasized Apple's closed and monopolistic practices in its payment services by comparing them to Samsung Electronics.
According to the complaint submitted by the DOJ to the federal court in New Jersey, the authorities believe Apple violated Section 2 of the Sherman Antitrust Act, which prohibits the abuse of market dominance to restrict competition. Section 2 of the Sherman Antitrust Act forbids expanding market share and monopolization through unfair competition and also restricts conspiracies and attempts.
This behavior was especially prominent in the Apple Pay service. The DOJ argued that Apple Pay used its monopolistic position to reduce consumer welfare, comparing it to other companies like Samsung Electronics. When payments are made through Apple Pay, each bank must pay Apple a 0.15% fee per transaction. In contrast, Samsung Electronics and Google's payment applications charge no fees. The DOJ stated, "Apple's fees represent a significant expense for banks, effectively reducing the funds available for benefits that could be passed on to iPhone users." In 2022, payments made through Apple Pay in the U.S. approached $200 billion (approximately 270.6 trillion KRW), and it is expected to grow by 150% by 2028.
The DOJ also determined that Apple restricted NFC (Near Field Communication) to prevent the spread of other payment apps. It is reported that Apple blocked the development of electronic wallets that could be used on both iPhone and Android-based smartphones. Additionally, it was found that Apple prevented third-party products like the Galaxy Watch from functioning properly within the Apple ecosystem, thereby blocking competition and hindering user attrition.
Criticism was also directed at iMessage. Apple is accused of maintaining a closed ecosystem by encouraging discrimination through "distinguishing" between iPhone users and users of other devices. Messages exchanged between iPhone users appear in blue bubbles, while messages from non-iPhone users appear in green on iPhones. This allows iPhone users to identify whether the recipient is also using an iPhone. The existence of iMessage has created social pressure to use only iPhones, with claims that discrimination has even emerged among teenagers.
Furthermore, the DOJ pointed to restrictions on the use of super apps and limitations on cloud streaming game services as monopolistic practices. As Apple’s unfair practices have come to light, U.S. iPhone users filed at least three class-action lawsuits in the California and New Jersey federal courts on the 22nd of last month, citing the DOJ’s claims.
Apple has responded to the monopoly allegations by arguing that these measures are "for security" and "to protect principles of differentiation." However, damage from the lawsuits appears inevitable. Professor Byungjun Yoo of Seoul National University’s Business School explained, "This lawsuit arose from the principle that the government can intervene when monopolies reduce the social welfare of the nation."
Within the industry, there are also predictions that if Apple loses, it could lead to corporate breakup or divestiture of business units. Previously, AT&T, which held an 80-90% market share in 1985, was split into eight companies after being sued for antitrust violations.
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