Apple Imposes Limitations on Third-Party E-Wallets, Preventing Enhanced Contactless Payments on Smartphones via Tap and Go
The European Commission has launched a full investigation into Apple's digital payment service, Apple Pay, to determine if it is anticompetitive. This move comes as the Commission has expressed concerns about Apple's restrictive policies towards third-party mobile wallet apps.
The investigation was initiated on May 2, 2022, when the Commission sent a statement of objections to Apple. This statement outlined the Commission's preliminary view that Apple has abused its dominant position in the market, leading to less choice for consumers.
Apple Pay is the only software that can access the near field communication technology used for contactless payments or "tap and go" at payment terminals in stores. This exclusive access has been a point of contention for the Commission, which believes it restricts competition.
The Commissioner, Executive VP Margarethe Vestager, stated that there are indications Apple has restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple's devices.
This investigation is not the first time Apple has faced scrutiny from the EU over anticompetitive practices. In 2020, the EU imposed a near-$16 billion tax bill on Apple, a decision that Apple won in court. However, the EU is currently appealing that decision.
The EU Parliament passed the Digital Markets Act in March 2022, which aims to restrict companies like Apple from linking apps to hardware. This Act narrows the crosshairs on tech companies with revenue above a €75 billion threshold.
Apple has defended its policies, stating that Apple Pay was designed 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.
However, the EU body has also criticised Apple's love affair with proprietary hardware and has proposed a plan in 2021 to force the company, among others, to adopt charging cable standards.
Apple has ensured equal access to Near Field Communication while setting industry-leading standards for privacy and security. The company has also made some adjustments to increase interoperability and access for third-party payment providers in response to the EU's investigation.
The spokesperson for Apple stated that they will continue to engage with the Commission to ensure European consumers have access to the payment option of their choice in a safe and secure environment. There is no set deadline for the investigation, and the preliminary accusation from the Commission should not influence the result of the subsequent investigation.
This investigation is a significant development in the ongoing debate about competition in the tech industry and the role of dominant players like Apple. The outcome of this investigation could have far-reaching implications for Apple and the digital payment market in Europe.
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