Brussels accuses Apple of monopolistic abuse in its mobile payment system

The European Commission opened in June 2020 a formal investigation into possible monopolistic abuses of Manzana in relation to your Apple Pay payment services on iOS devices. Almost two years later, the Community competition services have sent a statement of objections to the company in which they conclude that the apple multinational abuses its dominant position by preventing its competitors from accessing standard technology to make contactless payments in stores through near field communication (NFC).

“We have indications that Apple has restricted third-party access to key technology needed to develop rival e-wallet solutions on Apple devices. As a preliminary, we consider that Apple could have restricted competition for the benefit of Apple Pay, its proprietary solution. If confirmed, this conduct would be illegal in accordance with our competition rules”, warned the vice president and head of competition, Margrethe Vestagerwhich has avoided ruling on the amount of the fine that Brussels could impose if the accusations are confirmed.

As he explained, although the computer giant justifies the restrictions for security reasons, the investigation to date “has not revealed any evidence that points to this greater security risk. On the contrary, the evidence in our file indicates that the Apple’s conduct cannot be justified on security grounds,” he added.

Payments in stores and online

Apple Pay is Apple’s own mobile wallet solution for iPhones and iPads, used for mobile payments both in physical stores and online. Apple’s iPhones, iPads and software form, according to Brussels, a “closed ecosystem” in which the IT giant controls all aspects of the user experience, including mobile wallet developers’ access to it. Hence, he considers, according to the preliminary investigation, that Tim Cook’s company enjoys a significant market power in the market for smart mobile devices and a dominant position in the markets for mobile wallets.

In particular, the Commission maintains, Apple Pay is the only mobile wallet solution that can access the necessary NFC input in the iOS operating system and Apple does not make it available to third-party mobile wallet application developers. NFC technology, explains the Commission, is integrated into Apple mobile devices for payments in stores. This is the technology that allows communication between a mobile phone and payment terminals in stores. NFC is standardized, available in almost all merchant payment terminals and allows for the safest and most fluid mobile payments. Compared to other solutions, NFC offers a more seamless and secure payment experience and is more widely accepted in Europe.

Less innovation and options

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The preliminary opinion of the Commission is that Apple’s dominant position in the market for mobile wallets on its iOS operating system restricts competition by reserving access to NFC technology to Apple Pay. “This has a foreclosure effect on competitors and leads to less innovation and fewer choices for mobile wallet consumers on iPhones,” the Commission warns. If confirmed, this conduct would violate article 102 of the Treaty on the Functioning of the European Union (“TFEU”), which prohibits the abuse of a dominant position in the market.

The sending of a statement of objections does not prejudge the result of an investigation and at the moment it only questions access to the NFC input by third-party developers of mobile wallets for payments in stores. However, it is a formal step in the investigation in which the company is informed in writing of the alleged violations so that it responds in writing to Brussels. The company also has the right to request an oral hearing. As always in these cases, there are no legal deadlines to complete the antitrust investigation and it will depend on a series of factors, such as the complexity of the case, the degree of cooperation of the affected companies with the Commission and the exercise of defense rights.