The European Commission informed Apple on Monday 2 May of its preliminary view that the company was abusing its dominant position in the markets for mobile wallets on iOS devices (‘Statement of Objections’).
By restricting access to a standard technology for making contactless payments in shops using ‘Near Field Communication’ (NFC) or ‘tap and go’ mobile devices, Apple is restricting competition in the iOS mobile wallet market.
The Commission is challenging Apple’s decision to prevent mobile wallet app developers from accessing the necessary hardware and software (‘NFC input’) on its devices, in favour of its proprietary solution, Apple Pay.
Margrethe Vestager, Executive Vice-President for competition policy, said: “On a preliminary basis, we have found that Apple abused its dominant position”.
‘Mobile wallets’ allow payments to be made with a mobile device in shops and online.
Apple Pay is Apple’s proprietary mobile wallet solution, offered on iPhones and iPads. It allows mobile payments in physical shops and online. Apple’s iPhone, iPad and software form a ‘closed ecosystem’, in which Apple controls every aspect of the user experience.
The Commission’s preliminary view is that Apple has significant market power in the smart mobile device market and a dominant position in the mobile wallet market.
Apple Pay is the only mobile wallet solution to have access to the NFC input required on iOS. Apple does not make it available to third-party mobile wallet app developers. 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 shops. NFC technology is standardised, available in almost all in-store payment terminals and guarantees maximum security and fluidity for mobile payments. NFC technology offers a smoother and more secure payment experience and enjoys wider acceptance in Europe.
The Commission considers at this stage that Apple’s dominant position in the market for mobile wallets on its iOS operating system restricts competition by restricting access to NFC technology to Apple Pay.
This has an exclusionary effect for its competitors, weakens innovation and restricts consumer choice for iPhone mobile wallets. If confirmed, this behaviour would be contrary to Article 102 of the Treaty on the Functioning of the European Union, which prohibits the abuse of a dominant market position.
The Statement of Objections only addresses the restricted access of third-party mobile wallet developers to NFC input for in-store payments. The Commission is not taking issue with the online restrictions and refusals of access to Apple Pay allegedly faced by specific competitors’ products, about which the Commission opened an in-depth investigation on 16 June 2020.
Security. Developing a mobile payment app is expensive, Ms Vestager said. The investment may only be worthwhile if developers can reach both Apple and Android customers. “Evidence on our file indicates that some developers did not go ahead with their plans as they were not able to reach iPhone users. This behaviour stifled innovation and prevented competition in the mobile wallet market”. As a result, European consumers have little choice of mobile payment solutions when paying in shops.
According to Apple, the security risks would increase if access were granted to third parties. “Our investigation to date did not reveal any evidence that would point to such a higher security risk. On the contrary, evidence on our file indicates that Apple’s conduct cannot be justified by security concerns”, Ms Vestager also said. (Original version in French by Lionel Changeur)