Apple can’t catch a break. But in Europe, no American tech company can. This year, the European Commission is on a tear, introducing new rules that would force big tech companies to open up their platforms and police them aggressively for allowing illegal content. But this week, it’s Apple; specifically, that’s under the microscope.
Apple’s latest antitrust fight is over Apple Pay. The European Commission announced yesterday that it believes Apple is violating antitrust rules by refusing to allow rival mobile wallets to offer tap-to-pay functionality on the iPhone. Apple allows developers to access the iPhone’s NFC chip but not connect to physical store payment systems. That means Apple Pay is the only option on iPhones — and the EU is not happy about it.
The commission sent its "preliminary view" to Apple, saying that the company "abused its dominant position" in giving a boost to its own contactless payments system. Now Apple has the chance to address the EU’s concerns. The company can also request an oral hearing.
“Apple has built a closed ecosystem around its devices and operating system,” said EU antitrust chief Margrethe Vestager, the bloc’s commissioner overseeing the competition. “Apple controls the gates to this ecosystem, setting the game's rules for anyone who wants to reach consumers using Apple devices.”
If the EU finds Apple guilty of anticompetitive behavior, it could be forced to pay up to 30% of its revenue from Apple Pay. That’s not a massive amount of money for Apple, at least compared to its income from hardware.
Apple says consumers have other options. They can, for instance, buy another phone that leverages a different payment system. Apple also told The Wall Street Journal that it is "setting industry-leading standards for privacy and security” while providing would-be competitors access to the technology on the same terms as it operates.
The pushback echoes Apple's defense in other antitrust cases, including those targeting its App Store: The company often insists that features that create a closed ecosystem funneling consumers through its products are merely security protections.
The charges come as Europe is taking a big swing at U.S. tech giants. Yesterday’s "statement of objections" comes almost exactly a year after complaints from the EU about Apple's handling of rival music apps, which also came amid prior antitrust cases and charges.
Officials also agreed in March to new competition rules that would require significant changes to the App Store and iMessage and services from Google and Amazon.
Apple Pay is under scrutiny at an exciting time. Apple is getting ready to allow iPhone users to receive contactless payments through the built-in NFC technology without additional hardware.
Although it would serve as a replacement for Square's dongle and other terminals for cash and credit card payments, it wouldn't directly replace the software and services that Square and others provide.
Apple’s move could encourage Square’s competitors. It picked Stripe and Shopify as initial partners for its new tap-to-pay service. Apple could sell more iPads as retail registers, with its favored software partners providing the payments plumbing.
Meanwhile, NFC is fading as the hot new technology for payments. QR codes, first popularized in Chinese payment apps, have spread to other systems worldwide. Developers don’t need the phone maker’s permission for QR codes, and consumers like them.
That highlights the problems regulators have with keeping up with fast-moving technology. Instead of asking questions about NFC mobile wallets, the EU could be digging into how Apple settles on Stripe and Shopify for early access to its newest tap-to-pay service or if issues are discouraging the rollout of QR-code payments. There’s a tendency to fight the last fight instead of the next one in Washington and Brussels, and it’s not the big tech companies that pay.
— Ben Brody (email | Twitter)
