Apple Pay targeted by EU Antitrust for “abuse of a dominant position” – EURACTIV Italia

The European Commission sent to Apple on Monday (May 2nd) the preliminary results of a competition investigation against its mobile payment system, Apple Pay, suggesting that the American technology giant has “unfairly protected” its system from competitors and has therefore drowned out innovation.

The EU executive launched an antitrust proceeding on its own initiative in June 2020, as part of a broader goal of integrating the European payments market. The research relates to Apple Pay, the mobile payment system that allows users to make in-store payments directly through electronic devices.

For the Commission, Apple has created “closed ecosystems” with iPhone and iPad operating systems, gaining absolute control over the user experience. This is also true for its mobile wallet solution since its launch in 2014.

The investigation is based on concerns that Apple has deliberately restricted access to technology that has become the industry standard for contactless payments with mobile devices, Near-Filed Communication (NFC), known to consumers. com “tap and go”. .

“Apple unfairly protected its Apple Pay portfolios from competition. If proven, this behavior would amount to an abuse of a dominant position, which is illegal under our rules,” said Commission Competition Commissioner Margrethe Vestager, at a press conference.

According to the Commission’s assessment, NFC is the safest and fastest solution on the market. Preventing other developers from using NFC has actually led to undermining competitors because the solutions are not as efficient or as widely used.

An Apple spokesman told EURACTIV that “Apple Pay is just one of the many options available to European consumers to make payments, and has guaranteed equal access to NFC and, at the same time, high industry standards for privacy and security reasons “.

The EU executive has sent a communication to Apple about the allegations made against the technology giant, a first step in informing the affected company of alleged breaches of EU antitrust rules. Apple will now be able to respond in writing.

“We will continue to work with the Commission to ensure that European consumers have access to their preferred payment option in a secure environment,” the Apple spokesman added.

Vestager declined to comment on the level of the fine Apple could face. Any penalties will be calculated based on what Apple Pay charges users for their services.

He noted that the development of mobile payment technology is a costly endeavor that requires a larger customer base than just Android users, where market competition is guaranteed.

Android is estimated to account for about 70% of the global market share of mobile operating systems, leaving the rest to Apple’s iOS operating system. However, the percentage of iPhone users tends to increase as revenue increases, which means that they are predominantly present in the most profitable markets.

Therefore, the Commission found that due to Apple’s closed system, several developers refrained from creating their own payment technology, to the detriment of technological innovation and consumers’ freedom of choice.

Apple justified the exclusion of competitors from NFC technology based on security issues, noting that its payment system guarantees virtually zero fraud thanks to a special security chip that interacts with NFC to protect user data.

For Apple, the “open” model of Android is more susceptible to attacks that could compromise the information contained in customers’ credit cards.

“We take security very seriously. Our research so far has not revealed any evidence of such a high risk. On the contrary, the evidence in our file indicates that Apple’s conduct cannot be justified by security concerns.” Vestager added.

In March, EU lawmakers reached a political agreement on the Digital Markets Act (DMA), a set of pre-rules for technology giants like Apple.

One of the provisions of the new legislation, which is expected to become binding in about two years, would oblige the listed companies to ensure the interoperability of their hardware and software systems with third-party services.

For Vestager, the ongoing investigation will support the Commission in enforcing the rules set by the WFD. This could also allow the Commission to better assess Apple’s argument about opening iOS to alternative app stores, another DMA obligation that Apple opposes for security reasons.

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