Over the table somewhere at Apple’s headquarters, someone probably stuck the slogan, “Another week, another lawsuit,” and this week doesn’t seem to be any different because the EU is targeting Apple Pay, or, to be more specific, as Apple restricts the use of the NFC chip inside iPhones.
What are the claims?
The second accusation in Europe this year is EU antitrust regulators claim that Apple is restricting competitors by denying access to NFC (Near-Field Communications) technology, which it uses in its mobile wallet.
Apple has sent a statement of objections in which regulators have described in detail how it abused its dominant position in the iOS mobile wallet markets in violation Article 102 TFEU.
Apple Pay has access to NFC input APIs that the company does not provide to third party payment companies. However, other platforms allow third parties to access NFC technology to make such payments.
The EU statement states that “does not apply to restrictions on the Internet or alleged denials of access to Apple Pay for specific products of competitors, which the Commission said it was concerned about when it launched an in-depth investigation into Apple’s practices.”
The case is different from the sentences inside EU law on digital marketsthat will also affect Apple’s business. Apple faces control and regulation in most of its major markets, including the UK, US, Korea, Europe, Japan and other countries.
What the EU says
“In our statement of objections, we previously found that Apple may have restricted competition in favor of its own Apple Pay solution. If confirmed, such behavior would be illegal under our competition rules, ”Executive Vice President Margrethe Westager said in a statement.
Regulators claim that Apple has significant market power in the mobile market and dominates mobile wallets. The commission alleges that the company is abusing these powers by leaving access to NFC technology on its Apple Pay devices, to the detriment of competitors and consumers.
Apple will now have time to investigate the allegations and answer them as part of an ongoing investigation.
The statement of objections should not be confused with the final decision – although Westager has already rejected counter-arguments regarding security and regulators, it seems deaf to the need for user privacy.
What Apple says
In a statement presented to me, Apple defended itself, saying: “We have developed Apple Pay to provide an easy and secure way for users to present their existing payment cards digitally and for banks and other financial institutions to offer contactless payments to their customers.
“Apple Pay is just one of many options available to European consumers to make payments, and provides equal access to NFC by setting industry-leading privacy and security standards. We will continue to work with the Commission to ensure that European consumers have access to the payment option of their choice in a safe and secure environment. ”
It’s worth noting that Apple recently unveiled an NFC chip for Apple developers for use with the Apple Tap to Pay feature, which turns the iPhone into a card reader. This does not yet allow competitors to use the NFC chip for payments from iPhones. An apple too recently published a report it showed how successful third-party programs can be on its platforms.
What’s the story?
Apple really began laying the groundwork for payment technology in the iPhone in the years before its introduction in 2014. Apple Pay. In 2010, she acquired VIVOtech’s contactless and close communication technology firm and soon recruited industry expert Benjamin Vigier as a mobile commerce product manager.
Vigier was probably a key employee for Apple’s plans; he also oversaw the development of mobile payment systems for Starbucks and Paypal. This hire was not accidental. By that time, Apple had already filed patents for the use of NFC technology, and speculation about Apple’s plans to keep tickets on iPhones already started.
When Apple launched the service, it lagged behind everyone else, but Apple Pay soon overshadowed a similar service from Samsung, HTC and others. It turned out that people who make mobile payments want trust in the brand, security and biometric identity to capture these transactions.
Since then, Apple Pay has perhaps become the most widely used NFC-based payment system in the world; It can be argued that the iPhone maker has done more than most to break the initial resistance of consumers to mobile payment systems.
Why is this happening?
Apple is a victim of its own success. When the company introduced the iPod and launched its iTunes ecosystem, it was a small company that fought for survival against Microsoft and others.
The same basic business plan that Apple used with iTunes was later moved to the iPhone and App Store. Today, the company has become the world’s most valuable technology company, which means it is under a different set of rules.
If before it was a small player who fought for the position, today it has become a large firm and must wait for control. He also needs to develop a new approach to this side of his business while increasing revenue elsewhere.
It seems inevitable that the space of mobile payments will become chaotic.
Perhaps most mobile payment systems have failed amid suspicions across the sector appeared in 2010. Apple has built a much deeper currency of trust in its customer base and seems to have greater ambitions in financial services. These ambitions inevitably undermine the campaign against the current rulers in spaceso it is not surprising to see that regulators are involved.
What is at stake?
Money. If the EU finds Apple guilty, it could be fined up to 10% of world turnover, but is unlikely to be punished to that extent. Apple Pay is used by more than 2,500 banks in Europe along with more than 250 applicant banks and fintech services.
In the background, we also continued to speculate about Apple’s plans introduce new payment services and expand the availability of Apple Cards outside the United States. Related to this, we also hear rumors that the company may intend to launch Apple’s plan as a service.
What can happen?
Apple seems ready to fight tooth and claw to defend its strategy of creating some features for the platform. Complete control of the ecosystem has always been part of his approach, so it is philosophically consistent with this strategy.
However, nuances of technical regulation cast heavy shadows on the company at this time, and, as in any case, conflict resolution will eventually be achieved through a combination of negotiation and regulation.
I think the main question will be how much Apple can charge third parties access to profitable parts of its system without being seen as anti-competitive. And to what extent do regulatory activities dilute the user experience?
In the course of events, I suppose Apple will try to say that those who complain about its business practices in the field of mobile payments are trying to benefit from its work, given other attempts to create the same popular systems as its own. have already failed.
This argument is unlikely to force regulators to take their position, but could help the company justify the right to claim parts of any future transactions made through its platforms on services provided by third parties. I doubt the latter will get free travel.
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