Apple Pay in the sights of the European Union
apple pay in the sights of the european union

While it is open for third-party developers on Android, anyone wishing to have access to the NFC functionality must necessarily go through an Apple Pay account. A measure that surprised the European Commission which launched, in June 2020, an investigation into the bank payment system of the Cupertino company. According to Reuters, Apple is at risk of an antitrust charge from the European Union.

A survey to understand Apple’s intentions to limit the use of NFC

This is not the first time that the European Commission has looked into the case of large technology groups. On three occasions, in June 2017, in July 2018 and in March 2019, Google was fined a record amount of 7.7 billion euros. This time, it is Apple’s turn to be in the crosshairs of one of the main institutions of the European Union.

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Indeed, the terms of use of Apple Pay were the subject of an investigation launched by Margrethe Vestager, known to be the leader in the fight against antitrust in the EU. The latter declared in 2020 that he “It is important that Apple’s measures do not deprive consumers of the benefits of new payment technologies, including better choice, better quality, innovation and competitive prices”.

Apple introduced a limit on access to the Near Field Communication (NFC) functionality, which puzzled the European Commission. Thanks to NFC, it is possible to pay for a service or an object using your smartphone by bringing it close to a payment terminal. On Android, the functionality is open to any third-party developer while for iPhone users, it is necessary to go through an Apple Pay account. Thus, banks and other operators cannot offer other payment services on these terminals.

Unfair practices?

This particular situation poses a problem with regard to competition since the contactless payment market has been growing strongly since the start of the Covid-19 pandemic. To justify this restriction on its devices, the firm chaired by Tim Cook evokes the security argument. According to her, access by other payment applications could be at the origin of the creation of security holes, and consequently increase the risks of fraud.

The European Commission has undertaken two other investigations around the Apple case for its position in the music streaming market. Here too, the company is accused of having distorted competition by abusing its dominant position for the distribution of music streaming applications through its App Store. Apple Music is in direct competition with Spotify which filed a complaint with the EU in 2019.

If the investigation tends to prove these antitrust accusations, the European Commission could impose a fine of up to 10% of its turnover, or $ 111.4 billion in 2020. In addition, it could force the brand Apple to open its payment system to other operators. By comparison, in South Korea, a law passed in August requires Google and Apple to accept the use of third-party payment systems for purchases. In Germany, a law forced Apple to open its mobile payment system to its competitors for a reasonable price. More recently, Apple allowed certain applications to bypass its in-app payment system.

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