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Apple Hit With EU Antitrust Complaint Over IPhone Payments (1)

May 2, 2022, 5:53 PM

Apple Inc. was hit by a formal antitrust complaint from the European Union over how it handles iPhone payment services, an area where regulators say the tech giant favors its own technology over rival platforms.

The European Commission sent a so-called statement of objections alleging that the company abuses its control over mobile wallets by limiting how third-party firms can provide services on the iPhone. The move escalates a probe that began nearly two years ago. If confirmed, the company could face hefty fines under EU antitrust rules.

The issue centers on Apple Pay, which customers can use via the iPhone’s near field communication chip. That allows them to tap to pay, something that isn’t available for rival services, such as PayPal. Apple is planning to open up the technology so vendors can use it to accept payments, but customers still won’t be able to use the tap feature to make payments with rival services -- a more pressing need for most phone owners.

The situation would seem to create an unequal playing field, EU regulators said.

“We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple’s devices,” EU antitrust chief Margrethe Vestager said in a statement Monday. The EU’s charge sheet makes a preliminary finding that the company “may have restricted competition, to the benefit of its own solution.”

The decision to ramp up its probe comes weeks after the EU approved sweeping new rules to rein in how U.S. tech firms operate in the region. The measures, designed to work alongside traditional antitrust powers, aim to prevent companies from abusing their power as gatekeepers to digital technology.

The Apple Pay probe was one of two cases that the European Commission opened in June 2020, part of efforts by Vestager to rein in powerful tech companies. It follows the EU’s decision in 2016 to hit Apple with a record 13 billion-euro ($13.7 billion) tax bill, which is subject to a pending court case following the company’s successful appeal at a lower EU court.

Read more: Apple keeps payments tech for itself and Europe has had enough

Apple defends its approach by noting the popularity of rival services on the iPhone. That includes PayPal, which is widespread in Europe, and some other options that are more popular than Apple Pay in certain European countries: MobilePay (Denmark), Swish (Sweden) and Payconiq (Belgium).

The company also said it gives all banks equal access to the payment system, with 2,500 banks in Europe connected, as well as smaller fintech companies and upstart financial services.

“We designed Apple Pay to provide an easy and secure way for users to digitally present their existing payment cards and for banks and other financial institutions to offer contactless payments for their customers,” Apple said in a statement, saying it 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.”

The EU move could pave the way for multibillion-euro fines and an order to change how Apple does business. But the company will have the chance to contest the EU’s findings in writing and at a hearing.

(Updates with more on Apple’s technology starting in third paragraph.)

--With assistance from Mark Gurman.

To contact the reporters on this story:
Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net;
Jillian Deutsch in Brussels at jdeutsch24@bloomberg.net

To contact the editors responsible for this story:
Jeremy Hodges at jhodges17@bloomberg.net;
Sarah Frier at sfrier1@bloomberg.net

Peter Chapman, Nick Turner

© 2022 Bloomberg L.P. All rights reserved. Used with permission.