Above a desk somewhere at Apple HQ someone has probably slipped the slogan, “Another week, another lawsuit,” and there seems to be no difference between this week and the EU focusing on Apple Pay, or more specifically, how Apple restricts the use of the NFC chip. inside iPhones.
What is the demand?
The second charge in Europe this year, EU anti-trust regulators have alleged that Apple restricts competitors by denying access to the NFC (Near-Field Communications) technology it uses in its mobile wallet.
A statement of protests has been sent to Apple detailing how regulators abused its dominance in iOS mobile wallet markets in violation of Article 102 TFEU.
Apple Pay has access to the NFC input APIs, which the company does not provide to third party payment firms. However, other third-party platforms allow access to NFC technology to make such payments.
The IS EU statement states that it has no issue with the online restrictions or allegations of denial of access to Apple Pay for specific competitor products which the Commission announced was concerned at the opening of the in-depth practice investigation Apple. ”
The situation is different from the recommendations within the EU Digital Markets Act, which will also disrupt Apple’s business. Apple is facing scrutiny and regulation in most major markets, including the UK, US, Korea, Europe, Japan, and elsewhere.
What the EU says
“In our Statement of Objections, we found in advance that Apple may have restricted competition, for its own Apple Pay solution. If confirmed, such conduct would be illegal under our competition rules, “Executive Vice President Margrethe Vestager said in a statement.
Regulators argue that Apple has significant market power in the mobile device market and dominates mobile wallets. The Commission argues that the company is abusing this power by reserving access to NFC technology on its devices on Apple Pay, to the detriment of competitors and consumers.
Apple will now have time to examine the allegations and respond to them as part of the ongoing investigation.
The Statement of Objections should not be confused with a final judgment – although Vestager has already rejected the security counter – arguments that regulators seem to have. deaf to the need for user privacy.
What Apple says
In a statement issued to me, Apple defended itself, saying: “We designed Apple Pay to provide users with an easy and secure way to digitally present their current payment cards to banks and other financial institutions. offer touchless payments to their customers.
“Apple Pay is just one of many options available to European consumers for making payments and has ensured equal access to NFC while setting industry-leading standards for privacy and security. We will continue to engage with the Commission to ensure that European consumers have access to their payment option in a safe and secure environment. “
It’s worth noting that Apple recently opened the NFC chip for Apple developers for use with Apple’s Tap to Pay feature, which turns iPhones into card readers. This still does not allow competitors to use the NFC chip to make payments from iPhones. Apple too recently published report which showed how successful third – party apps can be on their platforms.
What is history?
Apple actually started laying the foundations for payment technology in iPhones years before the 2014 introduction Apple Pay. In 2010, he acquired a touchless / new pitch communications technology firm, VIVOtech and soon industry expert Benjamin Vigier was recruited as a product manager for mobile commerce.
Hiring Vigier was probably a key to enabling Apple’s plans; he also led the development of a mobile payment system for Starbucks and Paypal. That hire was not random. Apple had already filed patents for the use of NFC technology by then, and speculation about Apple’s plans to keep flight tickets on iPhones had already begun.
When Apple launched the service, it did so far behind everyone else, but Apple Pay soon outperformed similar services from Samsung, HTC, and others. It happened that people making mobile payments wanted brand trust, security and biometric identity to seal these transactions.
Since then, Apple Pay has become perhaps the most widely used NFC-based payment system in the world; it could be argued that the maker of the iPhone has done more than most to break down the initial consumer resistance 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 struggling to survive against Microsoft and others.
The same original business plan that Apple used with iTunes was later transposed around the iPhone and the App Store. Today the company is the most valuable technology company in the world, which means it is subject to a different set of rules.
Although he was previously a small player fighting for the job, he is now a big firm and must look forward to scrutiny. It also needs to develop new approaches to this side of its business, and increase revenue elsewhere.
It seems inevitable that the mobile payments space would become messy.
It could be argued that most mobile payment systems have failed amid doubts about the whole sector emerged in 2010. Apple has built a much deeper trust currency across its customer base and seems to have more ambitions in the financial services space. These ambitions will certainly add to the company against occupants in spaceso it’s little surprise to see the regulators getting involved.
What’s in it?
Money. If the EU finds Apple guilty, it could be fined up to 10% of its global turnover, although it is unlikely to be penalized. More than 2,500 banks in Europe use Apple Pay along with over 250 competitor banks and fintech services.
In the background, we also have constant speculation about Apple’s plans to introduction of new payment services and expanding Apple Card availability outside the US. In connection with this, we also hear rumors that the company may intend to launch Apple-as-you-go service plan.
What would happen?
Apple seems ready to fight tooth and claw to defend its strategy of making some features platform specific. Total control of its ecosystem has always been part of its approach, so this is philosophically consistent with that strategy.
Similarly, the shadows of technological regulation cast heavy shadows on the company at this time, and as in any conflict resolution ultimately through a combination of negotiation and regulation.
I think the final question is how much can Apple charge third – party companies for accessing profitable parts of its system without being seen as anti – competitive. And to what extent will regulatory activity dilute the user experience?
During the proceedings, I imagine that Apple will try to say that the people who are complaining about their business practices regarding mobile payments want to take advantage of its work, in the light of other attempts to create systems as popular as its own. . that they have already failed.
That argument is unlikely to overpower the regulators, but it may help the company justify the right to wipe out any future transactions made using its platforms on services that provide demanding third parties. I doubt the latter will get a free ride.
Copyright © 2022 IDG Communications, Inc.
The EU accuses Apple of market abuse with NFC and Apple Pay
Source link The EU accuses Apple of market abuse with NFC and Apple Pay