The European Commission sent today, May 2, a statement of objections to Apple with the preliminary view that the company has abused its dominant position for mobile wallets on iOS devices.
The EU regulator alleged that by limiting access to standard technology used for contactless payments with mobile devices in stores — Near-Field Communication (NFC) or “tap and go” — Apple has restricted competition in the mobile wallets market on iOS.
In view of the Commission, Apple’s decision to prevent mobile wallets app developers from accessing the necessary hardware and software (NFC input) on its devices has the effect of benefiting of its own solution, Apple Pay.
“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,” said Executive Vice-President Margrethe Vestager.
In a statement sent to PYMNTS, an Apple spokesperson said Apple Pay is among the payment choices European consumers have.
“We designed Apple Pay to provide an easy and secure way for users to digitally present their existing payment cards and for banks and other financial institutions to offer contactless payments for their customers. 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,” according to the statement, “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 Commission’s decision comes just one month after the approval of the Digital Markets Act (DMA), which includes the prohibition of practices like the one now under scrutiny by the European Commission. However, regulators have also warned that the adoption of the DMA, which seeks to tackle industry-wide problems, wouldn’t prevent them from opening new probes if they find any specific anticompetitive behavior.
Interestingly, the press release also mentioned the importance of the integration of the European Payment market, a top priority for the European Commission since the publication of the Retail Payment Strategy in 2020. In that paper the regulator already rose some flags with the NFC technology, “payment service providers’ access to Near Field Communication technology in mobile phones is restricted by some providers of mobile devices,” reads the Commission’s communication.
In its preliminary analysis, the European Commission has found 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.
As Apple doesn’t provide access to the NFC features to anybody other than Apple Pay, according to the Commission, this may have an exclusionary effect on competitors — and in some circumstances, this may constitute an abuse of a dominant position, forbidden under EU law.
The statement of objections is just the first formal step of an antitrust investigation, and the company can still rebut the Commission’s preliminary findings. There is not a strict deadline for the investigation, which could still take years, but if the company is found to have breached EU antitrust rules, it could be fined up to 10% of the company’s annual global turnover and be ordered to open the NFC technology to mobile wallet app developers.
The European Commission also clarified that this statement of objections refers only to the access to NFC input by third-party developers of mobile wallets for payments in stores. It does not refer to other concerns the regulator has regarding online restrictions and possible refusals of access to Apple Pay for specific products of rivals. These other concerns were announced by the Commission when it opened the in-depth investigation into Apple’s practices regarding Apple Pay on 16 June 2020. The press release doesn’t indicate if the Commission is still investigating these concerns as a separate probe.
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