EU Hits Apple with Antitrust Objections Over Mobile Payments

European regulators on Monday hit Apple with an antitrust charge, alleging it has created a “closed system” for contactless mobile payments. The so-called statement of objections says the iPhone maker has abused its market power by favoring its Apple Pay for mobile contactless payments to the detriment of third-party services like PayPal, which reportedly helped initiate the charges. The European Commission says it has reason to believe Apple withheld access to its NFC inputs in order to suppress other mobile-wallet app developers from competing with Apple Pay, which the Commission called “a closed ecosystem.”

San Jose-based PayPal, which offers contactless payment for Android phones, was one of several companies that made informal complaints about Apple to the EC, according to Bloomberg, citing sources “who asked not to be identified because the discussions were private.” PayPal wants to be able to offer tap-to-pay features to iPhone users.

“If found guilty of abusing its dominance in connection with the payment service, Apple could be subject to a fine of as much as 30 percent of the revenue generated from its mobile wallets and related services,” The Wall Street Journal reports, adding that the Commission didn’t specify whether the penalty would be calculated based on revenue from the EU or worldwide market.

“Apple controls every aspect of the user experience in this ecosystem, including mobile wallet developers’ access to it,” said a statement from the European Commission, which is the EU’s executive branch. “Apple restricts competition in the mobile wallets market on iOS.”

The statement of objections “preliminarily found that Apple may have restricted competition to the benefit of its own solution Apple Pay,” EC executive vice president in charge of competition policy Margrethe Vestager said, adding that, “if confirmed, such a conduct would be illegal under our competition rules.”

“Apple will have an opportunity to respond to the Commission’s objections and can request an oral hearing before any final judgment is issued,” writes WSJ, adding that “the tech giant said that its payment system is one of many options available to European consumers and that it has ensured equal access to the underlying technology, near-field communication, ‘while setting industry-leading standards for privacy and security.’”

In the EU, a statement of objections marks the opening of a formal investigation. This new complaint is separate from “the alleged refusals of access to Apple Pay for specific products of rivals” that the Commission opened a separate investigation on in June 2020.

Reuters writes that last year EU regulators accused Apple “of distorting competition in the music streaming market following a complaint from Spotify.” In the U.S., Apple was sued by Epic Games over payment policies, resulting in a federal judge in September ordering the company to ease restrictions as to how developers can be paid for products offered through the App Store, while finding in Apple’s favor on several counts.

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Europe’s Top Court Unblocks More GDPR Litigation Against Big Tech, TechCrunch, 4/28/22