Where is the Apple payment and Crypto suit headed?

Apple is facing a new class-action lawsuit by users of Venmo and CashApp, who claim that Apple conspired to limit peer-to-peer (P2P) payment options on its devices, and specifically limited crypto payment solutions. According to the complaint, Apple’s agreements limit “feature competition” within P2P payment apps, including prohibiting existing or new platforms from using “decentralized cryptocurrency technology.” As a result, users have reduced access to various payment vehicles, which means artificially increased prices when they go to send money or trade cryptocurrencies.

“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,” the complaint said.

What the Suit Is Seeking

The lawsuit seeks an injunction that, if successful, could force Apple to divest or segregate its Apple Cash business. The lawsuit also claims that Apple has excluded at least two Bitcoin wallet apps, Zeus and Damus, from its App Store. The plaintiffs hope to force Apple to permit the usage of the crypto wallets that have heretofore been unavailable.

The complaint was filed by the users of Venmo and Cash App on November 17 in a California District Court. Apple has entered into anti-competitive agreements with both those payment platforms. Significantly, the lawsuit did not include PayPal, the owner of Venmo, or Block, the owner of CashApp. Apparently, the plaintiffs feel that Venmo and CashApp were coerced into this arrangement.

The lawsuit also accused Apple of forcing any new P2P apps for its devices to exclude any potential crypto functionality. The plaintiffs allege that in its restraints, Apple forced new payment apps to prohibit crypto trading “as a condition for entry.”

Increased Scrutiny for Payment Apps

This all comes against the backdrop of the Consumer Financial Protection Bureau’s proposal earlier this month to regulate all payment apps and digital wallets—including Apple Pay, CashApp, and Venmo—just as it would any other financial institution. Under the proposal, all “general purpose digital consumer payment applications” would be subject to the same compliance rules as banking institutions and credit card companies. Apple and its partners would likely prefer to avoid that.

There seems to be little chance of the lawsuit against Apple succeeding. And Apple has recently been working to further integrate Venmo into its functionality. But in the interest of deterring further scrutiny and regulatory encroachment, don’t be surprised if Apple makes some changes to broaden access to different payment apps, and to extend its crypto capabilities—even if the changes are only cosmetic.