EU’s latest Big Tech crackdown targets Apple contactless payments
European Commission vice-president Margrethe Vestager on EU objections accusing Apple of blocking rivals from its popular “tap-as-you-go” iPhone payment system, opening a fresh battlefront between the US tech giant and Brussels. (Photo by Kenzo TRIBOUILLARD / AFP)
- The EU’s competition watchdog has specifically charged the iPhone maker with preventing competitors from trying to enter the contactless market “to the benefit of its own solution, Apple Pay”
- Any company wanting to enable contactless payments on iPhones needs to go through Apple for a fee
- The EU’s antitrust chief says the Apply Pay wallet is “unfairly shielded” from competition, a charge that is leveled against other aspects of the Apple ecosystem like its music streaming and e-book businesses
The European Union’s (EU) anti-competition authority has accused the world’s most valuable company, Apple of blocking rivals from its popular “tap-as-you-go” iPhone payment system, Apple Pay, opening a fresh battlefront between the US tech giant and Brussels.
“The preliminary conclusion that we reached today relates to mobile payments in shops, by excluding others from the game,” said Margrethe Vestager, the EU’s antitrust chief.
“Apple has unfairly shielded its Apple Pay wallets from competition. If proven this behavior would amount to abuse of a dominant position, which is illegal under our rules,” Vestager told reporters.
The European Commission, the bloc’s competition watchdog, specifically charged the iPhone maker with preventing competitors trying to enter the contactless market “from accessing the necessary hardware and software … to the benefit of its own solution, Apple Pay”. The accusation is the latest salvo against US tech giants by EU regulators, who have also taken aim at Apple’s music streaming and e-book businesses.
The company is also a primary target of the new Digital Markets Act, a landmark EU law that will prohibit Apple and other US tech giants from privileging their own services in its products and platforms. The EU’s outline of the case came after the commission launched an investigation in 2020 that was fuelled by complaints from European banks that resist paying a fee to Apple in order to reach their customers via apps.
The battle comes as tech giants eye personal finance as a new moneymaker — with Google, Amazon and Facebook owner Meta also seeking ways to replace credit cards or the need of carrying a wallet. Launched in 2014, Apple Pay allows iPhone or Apple Watch users to make payments at retailers by touching their devices to the same terminals currently used for credit and debit cards.
Apple Pay, one of many options in crowded field
The technology at the heart of concerns in the Apple Pay case is “near-field communication”, or NFC, which permits devices to communicate within a very short range of each other, usually less than 10 centimeters (four inches). On iPhones, the use of NFC is blocked for payments except by Apple Pay and any company wanting to use the technology must pass through Apple for a fee.
Vestager said that by restricting the access to the NFC to themselves, “this market is really not developed because it’s not possible for other app developers to get access to the NFC.”
Apple said that its first priority was security and that the Apple Pay system offered a level playing field between all actors using its products. “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.
“We will continue to engage with the commission to ensure European consumers have access to the payment option of their choice in a safe and secure environment,” the iPhone maker added.
There is no deadline for the EU’s continued investigation. If found guilty, Apple would have to remedy its practices, or face fines that could reach as high as 10% of annual sales.
The EU statements came this week just ahead of the Dutch consumer watchdog saying it had launched a preliminary investigation into Google over its Play store, after the Match Group — which owns dating site Tinder — lodged a complaint saying that Google only allowed its own payment system to be used when purchasing apps.
The Netherlands fined Apple a total of 50 million euros (US$52 million) between January and March this year for similar conditions relating to payments on Apple’s App Store.
The Authority for Consumers and Markets watchdog said app developers must be able to use other payment systems than Apple’s. Apple has still not complied, and the Dutch regulator is now considering a further fine, the Dutch regulator’s spokesman Murco Mijnlieff said.
6 March 2024