EU to say Apple Pay breaks antitrust laws

AppleInsider · April 28, 2022 12:11PM

The European Union is reportedly about to accuse Apple of breaking the law over how Apple Pay is the only service allowed to use the company's payments system.

Credit: Apple

Apple Pay has been under EU scrutiny since at least 2019, but a new report claims that next week in May 2022, officials expect to formally accuse Apple of antitrust actions over it.

According to the Financial Times, EU investigators will announce charges relating to the iPhone's NFC ability, and Apple's refusal to allow third-party payment systems to use it.

The publication says that its sources report the investigators are intent on acting soon, but the timing of the announcement may yet be delayed.

Whenever it is made, Apple could potentially face fines of up to 10% of its global turnover, should the charges be upheld.

These expected charges come as the EU is also preparing its Digital Markets Act, which among much else, would require Apple to allow app developers to use third-party payment systems instead of Apple's own.

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rob53 · April 28, 2022 12:40PM

So stupid. Apple created a payment system, just like Pay Pal, Visa and MasterCard. Are these payment systems required to use each other’s payment systems? No. Then why is Apple being forced to allow other payment systems? The EU needs to go away. They are trying to dictate to companies how they have to be run. That sounds like a dictatorship or even poorly run communism.

foregoneconclusion · April 28, 2022 1:11PM

IMO, this is the type of regulation that at least has some sort of basis in reality for the purpose of competition versus forced side loading. For this, you can make the argument that competitors don't have access at all. That isn't the case with the App Store.

slurpy · April 28, 2022 1:11PM

So what I’m understanding from all these accusations and requirements, is that Apple is not allowed to design its own products anymore, or provide a good experience to customers. Amazing how of all the problems in the world, Apple making products ppl love to use is the one that needs to be eliminated.

urahara · April 28, 2022 1:17PM

rob53 said:

So stupid. Apple created a payment system, just like Pay Pal, Visa and MasterCard. Are these payment systems required to use each other’s payment systems? No. Then why is Apple being forced to allow other payment systems? The EU needs to go away. They are trying to dictate to companies how they have to be run. That sounds like a dictatorship or even poorly run communism.

I think as well: WTF.
As I understand it's not about Apple Pay, but about NFC. EU wants that Apple allows other payment systems to use iPhone's NFC.
But I still think, that why should Apple should offer this functionality. Apple doesn't even have the majority of the smart phone market. You can consider it a relatively small player (in terms of number of units).
FK EU government. As any other government.

ericthehalfbee · April 28, 2022 1:46PM

Another example that shows the EU is a joke.

Why no complaints about banks withholding their cards from iPhones? Why can they refuse to let customers add their bank card to the iPhone (and enjoy increased security/reduced fraud) yet complain that Apple won’t allow Apps access to NFC?

darelrex · April 28, 2022 1:47PM

I can't wait to see what happens when Apple get's fined 10% of its worldwide revenue over this. FYI, that's €35 billion ($37 billion), enough to buy more than seven of Apple's new spaceship ring campuses. And that's potentially just the first fine of many. Any chance at all Apple's going to pay that kind of money?

Vestager et al. have been spewing this bluster for years now. They need to stop flapping their yappers and start dishing out the giga-fines, to Apple, Microsoft, Google, Amazon, and Facebook. Show all those mean companies who's boss.

caskey · April 28, 2022 1:51PM

This is a total overreach. Would it be fair, for example, to force Square to allow other credit card processors like PayPal or Shopify’s software to use the Square credit card reader with their apps? There has to be a line drawn somewhere. Just because it’s popular to bash big tech does not mean it’s legal in this free market economy.

jfc_pa · April 28, 2022 2:07PM

Visa has access to the iPhone NFC chip. Mastercard has access to the iPhone NFC chip. American Express has access to the iPhone NFC chip. Soon NYC’s MetroCard will have access to the iPhone NFC chip, I think Tokyo’s rail system already does.

So the accusation seems ill informed.

darelrex · April 28, 2022 2:16PM

caskey said:

This is a total overreach. Would it be fair, for example, to force Square to allow other credit card processors like PayPal or Shopify’s software to use the Square credit card reader with their apps? There has to be a line drawn somewhere. Just because it’s popular to bash big tech does not mean it’s legal in this free market economy.

I agree with your comment generally, but I would like to point out: Actually, for a long time the Square credit card swipe dongle could be theoretically used by anyone. It was just a coil of wire, and when you ran the magnetic strip by it, it induced a current in the wire that could be read by the iPhone's analog audio input that was part of the mini headphone jack. That's why Square could give those swipers away for free: they were incredibly cheap.

Now that iPhone doesn't have an analog jack, the new swiper connects to the Lightning port, and I don't think it's quite so cheap anymore. (And not sure if anyone but Square can use it now.)

madbum · April 28, 2022 2:23PM

Getting very tired of EU

These people are dumber than Monkeys. Say what you will about China and India, much smarter and reasonable people there

houttbe · April 28, 2022 2:56PM

Wow, really deep thoughts being thrown around here. Love to see people simplify issues to infantile chatter.

hucom2000 · April 28, 2022 3:08PM

houttbe said:

Wow, really deep thoughts being thrown around here. Love to see people simplify issues to infantile chatter.

Ok.. So what’s your contribution to the discussion, big mouth?

naiyas · April 28, 2022 3:54PM

I’m “technically” not opposed to this sort of action, forcing Apple (and by inference all others) to open up access to industry standard NFC technology to developers and other payment providers… however, there is potentially one critical flaw in the action.

It is only an antitrust violation if the NFC tech is actually industry standard. So far as I am aware, the NFC tech in an iPhone is integrated directly to the Secure Element in the SoC. It would therefore NOT be an industry standard implementation of NFC and by corollary not subject to antitrust violation legislation.

Either way, how it took 3 years to investigate something that could have been determined in less than a month tells you everything you need to know about the competency of the investigators. It is these needlessly long time lines that undermine public confidence in government of any sort.

mk67 · April 28, 2022 4:00PM

This is not black and white.
I already use Apple Pay a lot and can see myself and others also moving to Apple Card when that becomes available.
So eventually all payments on iPhone will be owned by Apple. And I guess the rest will be owned by Google, who knows.
Then we have almost a monopoly.

cropr · April 28, 2022 4:12PM

I do understand the EU.

I am an app developer. From an app developer perspective, I can choose my payment system provider I want if my app is running on Windows, on Mac, on Linux and even on Android (although Google does not like the latter), but I cannot choose my payment system provider on iOS.

This has nothing to do with security as a lot of you claim, because my preferred payment service provider is Ingenico (https://www.ingenico.com), a well established company with a proven security record.

The fact that for iOS I have to use Apple, has also a serious impact on my accounting system and my customer support. For Ingenico, all transactions are booked between the end customer and me, while Ingenico just lowers the transaction amount with its commission (<3%). For Apple, the transaction happens between the end user and Apple and Apple reimburses 70 or 85% of the amount to me.

In case of my customer contacts my customer support team for any question, the customer support team can immediately identify the all the payments the customer made, across all the apps on all devices the customer is using . With the Apple payment system such thing is possible.

This last point is fro me the main reason why I will never choose Apple as payment service provider, if I have the choice. If Apple would allow competition in the iOS payment service, the service towards the app developer could increase significantly.

The consequence of the current situation is that I am only investing in apps where I can avoid any payment on iOS.

y2an · April 28, 2022 4:31PM

cropr said:

I do understand the EU.

I am an app developer. From an app developer perspective, I can choose my payment system provider I want if my app is running on Windows, on Mac, on Linux and even on Android (although Google does not like the latter), but I cannot choose my payment system provider on iOS.

This has nothing to do with security as a lot of you claim, because my preferred payment service provider is Ingenico (https://www.ingenico.com), a well established company with a proven security record.

The fact that for iOS I have to use Apple, has also a serious impact on my accounting system and my customer support.    For Ingenico, all transactions are booked between the end customer and me, while Ingenico just lowers the transaction amount with its commission (<3%).    For Apple, the transaction happens between the end user and Apple and Apple reimburses 70 or 85% of the amount to me.

In case of my customer contacts my customer support team for any question, the customer support team can immediately identify the all the payments the customer made, across all the apps on all devices the customer is using . With the Apple payment system such thing is possible.

This last point is fro me the main reason why I will never choose Apple as payment service provider, if I have the choice. If Apple would allow competition in the iOS payment service, the service towards the app developer could increase significantly.

The consequence of the current situation is that I am only investing in apps where I can avoid any payment on iOS.

It’s the same for a third party seller on Amazon. Amazon handles the payment transaction. This eliminates the risk of non-payment of fees by the seller as they receive the proceeds net of fees. Overall this reduces operating costs since there is no chasing of delinquent sellers.

I think there is a mythical belief that alternative payment systems would eliminate fees to Apple (or Google for the Android store) but this is false. The stores have operating costs for hosting, distributing and providing upgrades to app developers, and for services like push notifications. Developers would most likely still owe fees, but the fees payment process would be more complex and costly. I see this as pressure from other payment processors to deliver business to them which is really just self-serving lobbying, not a real benefit to consumers.

edited April 2022

lkrupp · April 28, 2022 5:07PM

Why doesn’t the EU just go ahead and ban Apple from doing business in their territory? They seem to hate everything the company stands for. Their regulations will undoubtedly cause confusion and anger for users. So you have a third party payment system that uses iOS NFC. Who does the user complain to when things go south? Same goes for third party app payments. Your kid runs up a $1K tab buying tokens for some game but you installed the app outside the App Store and paid for it outside the App Store. When you call in the news media to get your revenge who do you blame for the ripoff? Apple?

edited April 2022

avon b7 · April 28, 2022 5:23PM

rob53 said:

So stupid. Apple created a payment system, just like Pay Pal, Visa and MasterCard. Are these payment systems required to use each other’s payment systems? No. Then why is Apple being forced to allow other payment systems? The EU needs to go away. They are trying to dictate to companies how they have to be run. That sounds like a dictatorship or even poorly run communism.

The last time I paid using a contactless system I wasn't asked what hardware my 'card' required and the sales assistant didn't go searching for a specific machine because EMV works over hardware from different manufacturers even though the card issuers are limited in the case of EMV.

It seems that the point of the the EU is Apple restricting NFC for its own system and not allowing it to be used for other payment systems.

To me, it would seem to be akin to Apple only letting the WiFi on its phones connect to Apple certified routers.

The problem does not appear to have anything to do with Apple Pay itself.

lam92103 · April 28, 2022 7:44PM

Glad at-least the EU govt still has their balls intact, and will actually put public interest over companies

edited April 2022

jintech · April 28, 2022 8:02PM

lkrupp said:

Why doesn’t the EU just go ahead and ban Apple from doing business in their territory? They seem to hate everything the company stands for. Their regulations will undoubtedly cause confusion and anger for users. So you have a third party payment system that uses iOS NFC. Who does the user complain to when things go south? Same goes for third party app payments. Your kid runs up a $1K tab buying tokens for some game but you installed the app outside the App Store and paid for it outside the App Store. When you call in the news media to get your revenge who do you blame for the ripoff? Apple?

And if this said case happened, chances are the developer is in another country than your own, and good luck getting those funds back. It will allow developers to write such long-winded Terms of Conditions, filled with anything they want, including "All Sales Final" and they know that the end-user likely will not read them, and then this. Not to mention other blatant fraud. Who will then be blamed sued for it?

EU to say Apple Pay breaks antitrust laws

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