Apple hit with EU anti-trust charge on mobile payments technology

Bloc says iPhone manufacturer prevented developers from gaining access to hardware and software to benefit Apple Pay

The European Commission said Apple's devices and software form a closed ecosystem and the company controls every aspect of the user experience. Reuters
Beta V.1.0 - Powered by automated translation

The EU slapped Apple on Monday with anti-trust charges for abusing its dominant position in the mobile wallets market by restricting competition.

The 27-nation bloc's executive arm, the European Commission, said Apple had restricted competition in the mobile wallets market by limiting third-party access to key technology necessary to develop rival mobile wallet solutions on Apple's devices.

The iPhone manufacturer deliberately prevented app developers from gaining access to the hardware and software (near-field communication ortap and go” technology) on its devices to benefit Apple Pay, the commission said.

Apple Pay, the California-based company’s mobile wallet solution on iPhones and iPads, enables mobile payments in physical stores and online channels.

“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,” said Margrethe Vestager, the European Commission’s executive vice president and in charge of competition policy.

Margrethe Vestager, the European Commission’s executive vice president and in charge of competition policy. AP

“We preliminarily found that Apple may have restricted competition, to the benefit of its own solution Apple Pay. If confirmed, such conduct would be illegal under our competition rules,” said Ms Vestager.

A mobile or digital wallet stores users’ credit and/or debit card information and links it to a payment gateway to allow purchases at a point of sale. Similar to credit cards, they only work at merchants that accept them as a payment method.

Google was the first major company to launch a mobile wallet in 2011. Today, consumers have a number of digital wallets to choose from, including Samsung Pay, PayPal and Apple Pay.

Consumer spending through digital wallets is expected to reach more than $10 trillion in 2025 — up from $5.5tn in 2020, a 2021 report by UK-based Juniper Research showed.

The commission said Apple's iPhones, iPads and software form a “closed ecosystem” and the company controls every aspect of the user experience.

“Apple Pay is the only mobile wallet solution that may access the necessary [near-field communication] input on iOS [Apple’s operating system] … [it] does not make it available to third-party app developers of mobile wallets,” the commission said.

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

If confirmed, Apple’s conduct would infringe on Article 102 of the Treaty on the Functioning of the EU, which prohibits the abuse of a dominant market position.

The current charge sheet, known as a statement of objections, considered- only issues with access to near-field communication by third-party developers.

It does not take into account the “online restrictions nor the alleged refusals of access to Apple Pay for specific products of rivals” that the commission voiced concern with when it started an in-depth investigation into the matter in June 2020.

Updated: May 03, 2022, 10:04 AM
NEWSLETTERS
MORE FROM THE NATIONAL