The European Union competition commission has slapped Apple with an official Statement of Objections over its tight control of Apple Pay. The document alleges that the company has unfairly abused its dominant position in the “market for mobile wallets” by limiting third parties’ access to the iPhone NFC chip.
The EU alleges that the company limits competition for its proprietary service by only allowing Apple Pay to use the NFC technology built into the iPhone. This has led to unfairly higher adoption of the service compared to its rivals.
In other words, the Statement of Objection says the iPhone maker’s practices have had an “exclusionary effect on the competitors,” which in turn means consumers have fewer mobile wallets to choose from. It specifies that such practices which block off opportunities for rivals to compete would be illegal according to the EU competition rules.
“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. 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.”
This is merely the initial formal stage of the EU’s antitrust action against the iPhone maker. The EU can hit Apple with fines worth as much as 10 percent of the company’s global revenue, recently pegged at around $36 billion.
The EU competition commission is also in a position to force changes in the company’s business practices. Other similar authorities, such as the Dutch Authority for Consumers and Markets (ACM), failed to bring about significant change in the tech giant’s App Store policies. The EU’s Digital Markets Act also hopes to spur change in how Big Tech companies assert their market dominance. Meanwhile, Apple has been vocal in its opposition to such regulations.
In the Apple Pay dispute, the company’s statement said:
“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.”
The commission will give the Cupertino giant time to draft a formal response to the Statement of Objections.
Update: PayPal Supported Complaint against Apple Pay
Citing sources familiar with the matter, a Bloomberg report claims that PayPal was one of the companies that supported the EU’s antitrust complaint against Apple Pay. PayPal offers an NFC-based tap-to-pay feature on Android devices but is unable to extend its services to iPhones because the Cupertino-based firm doesn’t allow rival services to access the iPhone’s NFC chip.[Via The Verge]