Apple hit with EU charge over mobile payments

European Commission antitrust regulators have charged iPhone maker Apple with allegedly restricting rivals’ access to its technology used for mobile wallets.

Apple now faces the possibility of a large fine from the EU and may be forced to open its mobile payment system to competitors.

Apple could face a fine up to 10% of its global turnover or $36.6 billion based on its revenue last year, Reuters reported, although EU penalties rarely reach the cap.

Apple said it would continue to engage with the Commission.

“Apple Pay is only one of many options available to European consumers for making payments, and has ensured equal access to NFC while setting industry-leading standards for privacy and security,” the company said in a statement.

The Commission said in a statement: “The European Commission has informed Apple of its preliminary view that it abused its dominant position in markets for mobile wallets on iOS devices.

“By limiting access to a standard technology used for contactless payments with mobile devices in stores (Near-Field Communication (NFC)’ or ‘tap and go’), Apple restricts competition in the mobile wallets market on iOS.

“The Commission takes issue with the decision by Apple to prevent mobile wallets app developers, from accessing the necessary hardware and software (‘NFC input’) on its devices, to the benefit of its own solution, Apple Pay.”

The Commission’s executive vice-president Margrethe Vestager said: “Mobile payments play a rapidly growing role in our digital economy.

“It is important for the integration of European Payments markets that consumers benefit from a competitive and innovative payments landscape.

“We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple’s devices.

“In our Statement of Objections, we preliminarily found that Apple may have restricted competition, to the benefit of its own solution Apple Pay.

“If confirmed, such a conduct would be illegal under our competition rules.”

Apple Pay is Apple’s own mobile wallet solution on iPhones and iPads, used to enable mobile payments in physical stores and online.

The EU said Apple’s iPhones, iPads and software form a “closed” ecosystem.

“Apple controls every aspect of the user experience in this ecosystem, including mobile wallet developers’ access to it,” said the Commission.

“The Commission preliminarily considers that Apple enjoys significant market power in the market for smart mobile devices and a dominant position on mobile wallet markets.

“In particular, Apple Pay is the only mobile wallet solution that may access the necessary NFC input on iOS.

“Apple does not make it available to third-party app developers of mobile wallets.

“The NFC ‘tap and go’ technology is embedded on Apple mobile devices for payments in stores.

“This technology enables communication between a mobile phone and payments terminals in stores.

“NFC is standardised, available in almost all payment terminals in stores and allows for the safest and most seamless mobile payments.

“Compared to other solutions, NFC offers a more seamless and more secure payment experience and enjoys wider acceptance in Europe.

“The Commission’s preliminary view is that Apple’s dominant position in the market for mobile wallets on its operating system iOS, restricts competition, by reserving access to NFC technology to Apple Pay.

“This has an exclusionary effect on competitors and leads to less innovation and less choice for consumers for mobile wallets on iPhones.

“If confirmed, this conduct would infringe Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position.

“The sending of a Statement of Objections does not prejudge the outcome of an investigation.

“Today’s Statement of Objections takes issue only with the access to NFC input by third-party developers of mobile wallets for payments in stores.

“It does not take issue with the online restrictions nor the alleged refusals of access to Apple Pay for specific products of rivals that the Commission announced that it had concerns when it opened the in-depth investigation into Apple’s practices regarding Apple Pay on 16 June 2020.”

 

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.