EU finds that Apple engaged in anticompetitive practices with Apple Pay

EU finds that Apple engaged in anticompetitive practices with Apple Pay

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The European Commission, the European Union’s executive arm, has formed the preliminary view that Apple Inc. used anticompetitive practices to give its Apple Pay digital wallet an edge over rivals.  

The European Commission released its findings today.

Apple Pay is a digital wallet app from Apple that enables iOS users to make purchases online and at retail stores. In stores, the app allows users to make a purchase by holding their iPhone or iPad close to a payment terminal. Apple Pay provides this latter feature using a near-field communication, or NFC, chip built into iPhones and iPads.

In 2020, the European Commission launched an antitrust investigation into Apple Pay. The preliminary view that the European Commission published today is the result of that investigation. 

Antitrust officials have found that Apple “abused its dominant position in markets for mobile wallets on iOS devices.” Apple Pay is the only digital wallet app that enables iOS users to make payments in stores by holding their device close to a payment terminal. Third-party digital wallets can’t provide the same capability because they have more limited access to the NFC chip in iPhones and iPads than Apple Pay, the European Commission determined. 

The European Commission has sent Apple a statement of objections outlining its findings. If the antitrust charges outlined are upheld, Apple could face fines equivalent to up to 10% of its annual worldwide revenue, which reached $378.35 billion last year. 

“We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple’s devices,” stated European Commission Executive Vice President Margrethe Vestager. “In our Statement of Objections, we preliminarily found that Apple may have restricted competition, to the benefit of its own solution Apple Pay. If confirmed, such a conduct would be illegal under our competition rules.”

Today’s development comes a year after the EU brought separate antitrust charges against Apple over the App Store’s terms of service. 

Music streaming apps listed on the App Store can only let their customers make in-app purchases, such as subscription purchases, if they use Apple’s IAP payment processing system. IAM takes an up to 30% cut from transactions. The EU found that most streaming apps pass on the cost of Apple’s transaction fees to customers, which raises prices.

Last month, Reuters reported that Apple could soon face an additional antitrust charge as part of the EU investigation into the App Store’s terms of service. The charge is expected to be published within weeks. The U.K.’s antitrust regulator, the Competition and Markets Authority, is also investigating whether Apple imposes unfair terms of service on iOS developers.

Photo: Unsplash

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