After a short-lived lull, the EU's antitrust regulators are reviving their campaign against American megatech companies - and the latest crackdown probably couldn't have come at a worse time, considering the Nasdaq just suffered its worst monthly drawdown since the great financial crisis.
In its latest campaign against Apple, the EU antitrust regulators led by Margrethe Vestager accused Apple of abusing its dominance in the consumer electronics space by refusing access to PayPal and other competitors to technology within its iPhones and Apple Watches that would allow users to make payments with a quick tap.
The latest charges against Apple, which were announced by Vestager on Monday, are the culmination of an investigation that began in 2020. In a statement, she highlighted the importance of mobile payments to the modern economy.
"Mobile payments play a rapidly growing role in our digital economy. It is important for the integration of European Payments markets that consumers benefit from a competitive and innovative payments landscape. We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple's devices. 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."
Here's the official statement from the European Commission released Monday:
The European Commission has informed Apple of its preliminary view that it abused its dominant position in markets for mobile wallets on iOS devices. By limiting access to a standard technology used for contactless payments with mobile devices in stores (‘Near-Field Communication (NFC)' or ‘tap and go'), Apple restricts competition in the mobile wallets market on iOS.
The Commission takes issue with the decision by Apple to prevent mobile wallets app developers, from accessing the necessary hardware and software (‘NFC input') on its devices, to the benefit of its own solution, Apple Pay.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Mobile payments play a rapidly growing role in our digital economy. It is important for the integration of European Payments markets that consumers benefit from a competitive and innovative payments landscape. We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple's devices. 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.”
Statement of Objections on Apple's access restrictions to mobile payment technology:
Apple Pay is Apple's own mobile wallet solution on iPhones and iPads, used to enable mobile payments in physical stores and online. Apple's iPhones, iPads and software form a “closed ecosystem”. Apple controls every aspect of the user experience in this ecosystem, including mobile wallet developers' access to it.
The Commission preliminarily considers that Apple enjoys significant market power in the market for smart mobile devices and a dominant position on mobile wallet markets.
In particular, Apple Pay is the only mobile wallet solution that may access the necessary NFC input on iOS. Apple does not make it available to third-party app developers of mobile wallets. The NFC ‘tap and go' technology is embedded on Apple mobile devices for payments in stores. This technology enables communication between a mobile phone and payments terminals in stores. NFC is standardised, available in almost all payment terminals in stores and allows for the safest and most seamless mobile payments. Compared to other solutions, NFC offers a more seamless and more secure payment experience and enjoys wider acceptance in Europe.
The Commission's preliminary view is that Apple's dominant position in the market for mobile wallets on its operating system iOS, restricts competition, by reserving access to NFC technology to Apple Pay. This has an exclusionary effect on competitors and leads to less innovation and less choice for consumers for mobile wallets on iPhones. If confirmed, this conduct would infringe Article 102 of the Treaty on the Functioning of the European Union (‘TFEU') that prohibits the abuse of a dominant market position.
The sending of a Statement of Objections does not prejudge the outcome of an investigation.
Today's Statement of Objections takes issue only with the access to NFC input by third-party developers of mobile wallets for payments in stores. It does not take issue with the online restrictions nor the alleged refusals of access to Apple Pay for specific products of rivals that the Commission announced that it had concerns when it opened the in-depth investigation into Apple's practices regarding Apple Pay on 16 June 2020.
In a reply to the EU complaint, Apple said that it provided an "easy and secure" way to make payments, and that its policies did not restrict competition.
"Apple Pay is only 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," the statement said.
"We will continue to engage with the commission to ensure European consumers have access to the payment option of their choice in a safe and secure environment," Apple said.
This is just the latest crackdown to target Apple: Last year, Vestager brought antitrust charges against Apple in response to complaints by Spotify and others about the 30 percent commission the company levies on purchases made inside apps, which echoed the court battle being waged by Fortnite maker Epic Games against Apple in the US.