European Union slaps Apple with antritus case over Apple Pay contactless payments

The EU accused Apple on Monday of blocking rivals from its popular “tap-as-you-go” iPhone payment system, 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,” Ms 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 main target of the 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 fueled 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 money maker, 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.

NFC blocked for payments

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.

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.

A woman stands on stage in front of a projected presentation with a smartphone screenshot
Apple offers a number of financial products including the Apple Card, seen here being promoted by Jennifer Bailey, vice president of Apple Pay.(Reuters: Stephen Lam)

Ms 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.

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 per cent of annual sales.

AFP

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