The investigation has been open since June 2020 and concerns Apple’s anti-competitive practices with regard to the rules in force on the App Store and Apple Pay. The EU Commission returns specifically to the Apple Pay case in its latest statement of objections to the American company and informs it that it considers, on a preliminary basis, that it is abusing its dominant position in the market for mobile wallets on iOS devices by limiting rivals’ access to NFC contactless payment technology. Apple risks up to 10% of its worldwide turnover.
Full communication from the EU Commission
The European Commission informed Apple that it believed, on a preliminary basis, that the company was abusing its dominant position in the markets for mobile wallets on iOS devices. By limiting access to standard technology for making in-store contactless payments using Near Field Communication (NFC) or tap and go mobile devices, Apple is restricting competition in the wallet market. mobiles on iOS.
The Commission is challenging Apple’s decision to block developers of mobile wallet applications from accessing the necessary hardware and software (NFC input) on its devices, in favor of its proprietary solution, Apple Pay.
Margrethe Vestager, Executive Vice President for Competition Policy, said: Mobile payments are playing an increasingly important role in our digital economy. A competitive and innovative payments landscape for consumers is essential for the integration of European payments markets We have evidence that Apple has restricted third-party access to key technology needed to develop competing mobile wallet solutions on Apple devices. In our statement of objections, we considered, on a preliminary basis, that Apple may have restricted competition, to the benefit of Apple Pay, its proprietary solution. If confirmed, such behavior would be illegal under our competition rules.
Statement of objections on access restrictions put in place by Apple to mobile payment technology
Apple Pay is Apple’s proprietary mobile wallet solution, available on iPhones and iPads. It enables mobile payments in physical and online stores. Apple’s iPhones, iPads and software form a closed ecosystem, in which Apple controls every aspect of the user experience, including mobile wallet developers’ access to the ecosystem.
The Commission takes the preliminary view that Apple has significant power in the market for smart mobile devices and a dominant position in the markets for mobile wallets.
Most notably, Apple Pay is the only mobile wallet solution to have access to the necessary NFC input on iOS. Apple does not make it available to developers of third-party mobile wallet applications. NFC tap and go technology is integrated into Apple’s mobile devices for in-store payments. This technology allows communication between a mobile phone and payment terminals in stores. NFC technology is standardized, available in almost all in-store payment terminals and guarantees maximum security and fluidity for mobile payments. Compared to other solutions, NFC technology offers a smoother and more secure payment experience, and enjoys wider acceptance in Europe.
The Commission finds on a preliminary basis that Apple’s dominant position on the market for mobile wallets on its iOS operating system restricts competition, by reserving Apple Pay access to NFC technology. This creates crowding out effects for competitors, weakens innovation and restricts consumer choice when it comes to mobile wallets on iPhones. If confirmed, this behavior would be contrary to Article*102 of the Treaty on the Functioning of the European Union (hereafter TFEU), which prohibits the abuse of a dominant market position.
The sending of a statement of objections does not prejudge the outcome of an investigation.
The Statement of Objections presented today only addresses the restricted access of third-party developers of mobile wallets to NFC input for in-store payments. In this communication, the Commission does not return to the online restrictions or denials of access to Apple Pay that certain specific products of competitors would suffer, about which the Commission expressed its concerns when it opened the investigation. in-depth about Apple’s practices regarding Apple Pay on June 16, 2020.
Article 102 TFEU prohibits abuse of a dominant position. The implementation of these provisions is set out in the Antitrust Regulation (Council Regulation No 1/2003), which may also be enforced by national competition authorities.
The Statement of Objections is a formal step in the Commission’s investigations into alleged breaches of EU antitrust rules. The Commission informs the parties concerned in writing of the grievances raised against them. The companies concerned can examine the documents placed in the Commission’s file, respond in writing and ask to be heard in order to present their observations on the case to the representatives of the Commission and the national competition authorities. The sending of a statement of objections and the opening of a formal investigation into anti-competitive practices do not prejudge the outcome of the investigations.
There is no legal deadline for closing an investigation into anti-competitive practices. The duration of this type of investigation depends on various factors, including the complexity of the case, the degree of cooperation of the companies involved with the Commission and the exercise of the rights of the defence.
Apple puts forward the security argument: a repetition of its positioning to justify the weaning of developers from alternative payment systems within the App Store
Apple puts forward the user safety argument as justification for closing its ecosystem from third-party players. The situation is such that the company has now backed a coalition for the defense of freedom of choice and fair competition on the App Store, the Coalition for App Fairness. The coalition of companies, many of which are small software developers, aims to get Apple to relax the rules for software on iOS. For example, the App Store is the only method for customers to install software on iPads, iPhones and Apple Watches. And software developers can only accept payments for digital goods on iOS in one way: Apple’s payment service, which charges a fee on all transactions. Coalition members want other options. The Coalition for App Fairness aims to urge lawmakers to take action against Apple, either through new legislation or through legal action.
These anti-competitive behaviors will soon be prohibited by the Digital Markets Act which will come into force at the beginning of 2023. Very large tech players face fines of up to 6% of their annual global turnover.
What do you think of Apple’s overall approach to managing competition?
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