Apple has reached an agreement with the European Union (EU) to settle a competition investigation into its mobile payment and mobile wallet technology, Apple Pay. The EU had accused Apple of abusing its dominant position by blocking competitors from providing contactless payments on the iPhone. As part of the settlement, Apple has committed to implementing changes by July 25 that will allow developers of rival mobile wallets to offer contactless payment using NFC technology, as well as access key iOS features for authentication. Apple will also allow users to set a third-party wallet app as their default.
The EU’s investigation into Apple Pay began in June 2020 and focused on the use of Apple’s technology for contactless payments. In May 2022, the EU announced its preliminary findings, stating that Apple had unfairly blocked competitors from developing alternative mobile wallets. The EU called for Apple to provide full access to NFC to allow competitors to develop their own wallets.
In response to the EU’s findings, Apple offered to make changes aimed at settling the case in January 2024. The proposed changes included granting third parties access to NFC functionality on iOS devices through a set of APIs, while still barring access to a special chip called the secure element. Apple said it would provide “equivalent access” to NFC components through a mechanism called Host Card Emulation (HCE) mode.
The EU has accepted Apple’s offer after pressing for some improvements. Commission EVP Margrethe Vestager stated that by excluding competitors from the market, Apple may have harmed innovation and violated EU competition rules. Vestager emphasized the importance of choice and innovation for consumers and expressed satisfaction with Apple’s improved remedies.
The commitments made by Apple in the settlement include removing the requirement for developers to have a license or binding agreement with a payment service provider to access NFC input, evolving the HCE architecture to comply with evolving industry standards, and shortening deadlines for resolving disputes.
Since opening the Apple Pay antitrust case, the EU has passed an update to its competition rulebook known as the Digital Markets Act (DMA). The DMA aims to increase competition in digital markets by imposing upfront obligations on major platforms like Apple’s iOS. Apple has suggested that the changes it proposed for Apple Pay also comply with DMA requirements. Vestager confirmed that Apple’s commitments go beyond what is required by the DMA, including monitoring and dispute resolution mechanisms.
The commitments made by Apple are binding for ten years, and failure to comply could result in penalties. Apple has stated that it will continue to provide Apple Pay and Apple Wallet in the European Economic Area, offering users and developers a secure and private way to pay.
In conclusion, the settlement reached between Apple and the EU regarding Apple Pay is expected to promote competition and innovation in the mobile payment market. The commitments made by Apple will allow developers of rival mobile wallets to offer contactless payment using NFC technology and access key iOS features. The EU’s acceptance of Apple’s offer demonstrates the importance of antitrust enforcement and compliance with the Digital Markets Act in promoting fair competition. Consumers and wallet developers will benefit from increased choice and innovation while ensuring secure payments.
