Brussels, 2 May 2022
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 MargretheVestager, 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 Payon 16 June 2020.
Background and statement by the EU Commission –>
Article 102 of the TFEU prohibits the abuse of a dominant position. The implementation of these provisions is defined in the Antitrust Regulation (Council Regulation No 1/2003), which can also be applied by the national competition authorities.
A Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them. The addressees can examine the documents in the Commission’s investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities. Sending a Statement of Objections and opening of a formal antitrust investigation does not prejudge the outcome of the investigations.
There is no legal deadlines for bringing an antitrust investigation to an end. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence.
For More Information
More information on the investigation is available on the Commission’scompetition website, in the public case register undercase number AT.40452. A periodic compilation of antitrust and cartel news is available in theCompetition Weekly e-News.
Remarks by Executive Vice-President Vestager on the Statement of Objections sent to Apple over practices regarding Apple Pay
Brussels, 2 May 2022
Today, the Commission has sent a Statement of Objections to Apple. We are concerned that Apple may have illegally distorted competition in the market for mobile wallets on Apple devices.
Apple Pay case
In June 2020, the Commission opened an investigation to assess whether Apple’s conduct in connection with Apple Pay violates EU competition rules.
On a preliminary basis, we have found that Apple abused its dominant position. Apple restricted access to key inputs that are necessary to develop and run mobile payment apps, so-called ‘mobile wallets’. Mobile wallets allow for payments with a mobile device, in shops and online. Mobile wallets can integrate complementary services, such as ‘buy now pay later’, transaction alerts, easily accessible financial overviews, as well as boarding passes, tickets and loyalty cards.
In Europe, most payments in brick-and-mortar shops made with a mobile phone rely on a wireless technology called ‘Near Field Communication’ – NFC. This functionality enables communication between a customer’s mobile phone and the shop’s payments terminal. In essence, it allows you to ‘tap and go’. NFC technology was developed by third parties, is standardised and available in almost all payment terminals in Europe. There are other technologies, such as those based on QR code, that can be used for mobile payments. But NFC technology is the most widespread in the EU, and allows for the safest and most seamless experience.
Apple has built a closed ecosystem around its devices and its operating system, iOS. And Apple controls the gates to this ecosystem, setting the rules of the game for anyone who wants to reach consumers using Apple devices. But other app developers depend on the access to this ecosystem to develop innovative mobile wallets.
The potential for innovation in this space is enormous. But this innovation has been prevented by Apple refusing others to access NFC on its devices. As a result, various features of mobile wallets, such as financial complementary services, are simply not available. Because Apple is not challenged, it has little incentives to innovate itself.
And this is important. Because this market is growing fast. Today, Apple Pay, is by far the largest NFC based mobile wallet on the market.
We have analysed the market for smart mobile devices, as well as for the NFC input and for mobile wallets on iPhones. We have come to the preliminary conclusion that Apple holds a significant position on the device market and a dominant position in NFC input and wallets on iOS.
In Europe, NFC functionality is vital for developing a viable payment app on mobile phones. Neither the NFC standard nor the terminal infrastructure are property of Apple. Our concerns relate to Apple’s decision to block access to the NFC technology for payment purposes and use it solely for its own mobile wallet, Apple Pay. As a result, users of Apple devices can only pay with the ‘tap and go’ function using Apple Pay and not with other wallets. This is because competing wallet developpers need access to the NFC on Apple devices to reach Apple users.
Developing a mobile payment application is costly. Investment may only be worth it 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 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.
Apple claims that for security reasons it cannot provide access to NFC for payments. According to Apple, security risks would increase if access were to be granted to third parties. We take security very seriously. 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.
When it enters into the force, the Digital Markets Act will have a direct effect on digital payments. It will require companies designated as gatekeepers to ensure effective interoperability with hardware and software features they use themselves in their ecosystems. This includes access to NFC for mobile payments. The Regulation also contains safeguards related to the integrity of the device and security.
Today’s case addresses a conduct by Apple that has been ongoing since Apple Pay was first rolled out in 2015. This conduct may have distorted competition on the mobile wallets market in Europe. It prevented emergence of new and innovative competition that could have challenged Apple.
The Apple Pay investigation will inform the future application of the Digital Markets Act. It will set a precedent with regard to the analysis of the security concerns, and a recipe for effective and proportionate access to NFC for mobile payments.
The preliminary conclusion we reached today relates to mobile payments in shops. By excluding others from the game, Apple has unfairly shielded its Apple Pay wallet from competition. If proven, this behaviour would amount to abuse of dominant position, which is illegal under our rules.
Our action in this case contributes to the Commission’s wider objective of integrating the European payments market. It is important that consumers can fully benefit from secure, seamless and fast payments in their daily dealings.
Apple will now have the opportunity to respond to our concerns.
Statement des EU-Abgeordneten Markus Ferber (EVP/CSU) zum Wettbewerbsverfahren gegen Apple
Heute hat die Europäische Kommission in ihrem Wettbewerbsverfahren gegen Apple hinsichtlich der Nutzung des mobilen Zahlungssystems Apple Pay die nächste Phase eingeleitet. Der wirtschaftspolitische Sprecher der EVP-Fraktion im Europäischen Parlament Markus Ferber, erklärte dazu:
„Apple hat in der Vergangenheit viel Energie darauf verwendet, anderen Zahlungsdienstleistern den Zugang zur NFT-Schnittstelle und der „tap and go“-Technologie zu erschweren und damit den Wettbewerb zu Lasten des Kunden eingeschränkt. Mobile Zahlungen sind die Zukunft, ein funktionierender Wettbewerb in diesem Markt ist daher absolut entscheidend.
Der Apple Pay-Fall ist leider nicht das erste Mal, dass Apple seine dominante Marktposition dafür missbraucht hat, den Wettbewerb zu beschränken. Es ist gerade mal ein Jahr her, dass die Kommission Apple Music ins Visier genommen hat.
Bei Wiederholungstätern sollte die Strafe besonders heftig ausfallen. Die Kommission muss das mögliche Strafmaß voll ausschöpfen – nur dann stellt sich womöglich ein Lerneffekt bei den großen Tech-Konzernen ein. Wenn Unternehmen wie Apple jedes Mal mit einem blauen Auge davonkommen, gibt es keine Anreize sich an die Wettbewerbsregeln zu halten.“