The EU has accused Apple of abusing the market with NFC and Apple Pay

Someone at a desk somewhere at Apple headquarters has probably pasted the slogan, “Another week, another lawsuit” and this week doesn’t look any different because the EU is targeting Apple Pay, or more specifically, how Apple is blocking the use of NFC chips. Inside the iPhone.

What is the claim?

For the second time in Europe this year, EU antitrust regulators have accused Apple of restricting competitors by denying them access to NFC (near-field communication) technology used in their mobile wallets.

Apple has been sent a statement of objection detailing regulators how it violated Section 102 of the TFEU to abuse its dominance in the market for mobile wallets on iOS.

Apple Pay has access NFC input API, which the company does not make available to third party payment agencies. However, other platforms allow third parties to access NFC technology to make such payments.

The EU statement said that it had no problem with “online restrictions or the alleged denial of Apple Pay access to competitors’ specific products that the Commission announced during a thorough investigation of Apple’s practice.”

The next two issues were part of the investigation when it began in 2020, in response to allegations raised by PayPal.

The lawsuit differs from the proposals in the EU Digital Markets Act, which would also affect Apple’s business. Apple is facing scrutiny and control in most of its major markets, including the United Kingdom, the United States, Korea, Europe, Japan and elsewhere.

What the EU says

“In our statement of objections, we initially saw that Apple could limit competition for the benefit of Apple Pay, its own solution. If confirmed, such conduct would be illegal under our competition rules, “said Margaret Vesteger, executive vice president.

Regulators argue that Apple has significant market power in the mobile device market and dominates the mobile wallet. The commission argues that the company is abusing this power by protecting access to NFC technology on its devices at Apple Pay to the detriment of competitors and customers.

Apple will now have time to investigate the allegations and respond to them as part of an ongoing investigation.

The objection statement should not be confused with the final verdict – although Vestager has already rejected the counter-argument regarding security and regulators seem deaf to the need for user privacy.

That’s what Apple says

In a statement to me, Apple defended itself, saying: “We have designed Apple Pay to provide users with an easy and secure way to digitally present their existing payment cards and for banks and other financial institutions to make non-communicative payments to their customers.”

“Apple Pay is one of the many options available to European consumers to make payments and has ensured equal access to the NFC when setting industry-leading standards for privacy and security. We will engage with the Commission to ensure European customers access. Payment options. “

It’s worth noting that Apple recently unveiled the NFC chip for Apple developers for use with Apple’s Tap-to-Pay feature, which turns iPhones into card readers. It still does not allow competitors to use the NFC chip to pay from the iPhone. Apple recently released a report showing how successful third-party apps can be on its platforms.

What is history?

Apple really started laying the groundwork for payment technology on iPhones before the 2014 Apple Pay launch. In 2010, it acquired the contactless / near-field communication tech firm, VIVOtech, and soon hired industry expert Benjamin Vizier as its mobile commerce product manager.

Vigier was probably an original hire activating Apple’s plan; He led the development of mobile payment systems for Starbucks and PayPal. That rent wasn’t random. Apple has already filed a patent for the use of NFC technology and speculation has begun about Apple’s plans to keep flight tickets on iPhones.

When Apple launched the service, it was behind everyone else, but Apple Pay soon adopted similar services from Samsung, HTC and others. It appears that mobile payers require brand trust, security and biometric identification to seal these transactions.

Since then, Apple Pay has probably become the most used NFC-based payment system in the world; It is arguable that intoxicants of choice runs the taste in mobile phones.

Why is this happening?

Apple is the victim of its own success. When the company launched the iPod and launched its iTunes ecosystem, it was a small company fighting for survival against Microsoft and others.

The same basic business plan that Apple used with iTunes was later moved around the iPhone and the App Store. Today the company has become the most valuable technology company in the world, which means it is subject to a different set of rules.

Although earlier it was a small player fighting for position, today it has become a big firm and must expect verification-selection. It must develop a new approach to this side of its business, while reducing revenue elsewhere.

It seems inevitable that the mobile payment space will become cluttered.

Arguably, most mobile payment systems have failed in their skepticism about the entire sector that emerged in 2010. Apple has built a lot of deep trust across its customer base and seems to have great ambitions in financial services. These ambitions inevitably put pressure on the company against space officials, so it’s no surprise that regulators are involved.

What’s in danger?

Money. If the EU convicts Apple, it could fine up to 10% of its global turnover, although it is less likely to be penalized. Apple Pay uses more than 250 Challenger banks and more than 2,500 banks in Europe with Fintech services.

In the background, we also continue to speculate about Apple’s plans to launch a new payment service and increase the availability of Apple cards outside the United States. Added to that, we also hear rumors that the company wants to launch an Apple-a-service plan.

What could happen?

Apple seems ready to fight teeth and claws to protect certain feature-specific strategy. Complete control of its ecosystem has always been part of its approach, so it is philosophically aligned with that strategy.

Similarly, the shadows of technological control have cast a heavy shadow over the company at this time, and the resolution of any dispute will ultimately be reached through a combination of negotiation and control.

This may take several years, but the arguments made elsewhere about its ecosystem probably apply here as well.

I think the final question is how much Apple can charge third party companies for access to the profitable parts of its system without seeing it as anti-competitive. And how much will regulatory activity reduce the user experience?

During the event, I imagine that Apple will try to say that those who complain about its business practices in mobile payments are trying to capitalize on its work, other attempts to make its own popular system have already failed.

This argument may not win the position of regulators, but may support the company’s right to claim a slice of future transactions using its platforms in services provided by third parties. I doubt the next one will get a free ride.

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