Apple will try to talk its way out of a $40 billion fine on Tuesday

AppleInsider · February 13, 2023 8:56PM

Apple plans to defend its payment system Apple Pay in an upcoming hearing and argue that it doesn't block rivals from using NFC.

Apple Pay

Antitrust regulators in the European Union will have a closed session on Tuesday in which Apple executives and others will hear arguments before levying possible fines. The company will try to convince regulators that it doesn't block competitors' access to the Near-Field Communication (NFC) in its payment system, according to Reuters.

According to the EU's antitrust watchdog, the European Commission, Apple started engaging in anticompetitive behavior with the launch of Apple Pay in 2015. If the EU finds Apple guilty of antitrust violations, the company could face fines of up to 10% of its worldwide revenue, which would be roughly $40 billion.

In 2015, a coalition of major Australian banks sought to boycott Apple Pay in an attempt to negotiate third-party access to the NFC hardware within Apple devices. However, the banks eventually backed down after the Australian Competition and Consumer Commission denied their boycott request in 2017.

And in 2019, investigators started asking payment companies for feedback on Apple Pay, concerned that Apple's choice to limit the iPhone's built-in NFC chip to Apple Pay makes it impossible for third-party companies to break into the mobile payment market.

One of the companies that helped spur the EU antitrust complaint against Apple was PayPal, a rival payment platform. In 2020, its complaints claimed that Apple restricts competition in the mobile wallet market.

However, Apple has opened up its mobile payment system in other ways. It launched an iPhone feature called Tap to Pay in 2022, allowing consumers to receive contactless payments through Apple Pay and other apps without needing additional payment terminal hardware.

Read on AppleInsider

dolfke · February 13, 2023 9:03PM

So many companies have shameless copied the iPhone, now Apple is accused to setup a system for only themselves ???

Irony, they name is Governments.

xyzzy01 · February 13, 2023 9:20PM

dolfke said:

So many companies have shameless copied the iPhone, now Apple is accused to setup a system for only themselves ???
Irony, they name is Governments.

When it comes to abuse of a dominant market position, using said market position to get leverage in new markets is a big no-no.

I hope Apple loses this one, so other payment providers also can use the NFC capability. I really don't like Apple getting the ability to keep a cut on everything we spend

jfc_pa · February 13, 2023 9:33PM

You don’t like a store you pay money to for their services? Go somewhere else.

And that fine is insane. 10% of mobile pay perhaps but on EVERYTHING around the globe?

edited February 2023

ktr · February 13, 2023 9:36PM

The EU DOES NOT LIKE AMERICANS, they are using the legal system as a bullying tactic to gain the upper hand to gouge money. If Steve Jobs was still alive, he would stop all operations in the EU, and every one in the EU will lose out. They will have to find alternatives. Shut down the EU App Store. If it goes to trial. I hope apple wins….. there aren’t that many mobile OS’s out there. With the exception of Linux.

slurpy · February 13, 2023 9:41PM

40 BILLION? That's fucking insane. How much money does Apple Pay even make Apple? I think it's almost negligent. It's more of a value added feature for their ecosystem.

Pure insanity. Meanwhile companies that engage in actual egregious shit get no punishments, or pathetic slaps on the wrist.

ktr · February 13, 2023 9:47PM

The EU government just want free cash an they want a legal way to keep track people. More people more money on apple devices. My concern is security. Opening up your doors and windows will allow bad guys to steal your personal info, and 5he EU IS NOT WILLING TO take responsibility. And what intellectual property ownership rights?

ktr · February 13, 2023 9:55PM

xyzzy01 said:

dolfke said:

So many companies have shameless copied the iPhone, now Apple is accused to setup a system for only themselves ???
Irony, they name is Governments.

When it comes to abuse of a dominant market position, using said market position to get leverage in new markets is a big no-no.

I hope Apple loses this one, so other payment providers also can use the NFC capability. I really don't like Apple getting the ability to keep a cut on everything we spend

I have Citibank and td bank in my Apple Pay. So apple is not blocking others from using its technology. It’s up to other institutions to offer it or not. Yes, apple should het a cut. If we didn’t have the App Store, then what. It’s a safer way to not carry credit cards.

thoughts?

iosdevswe · February 13, 2023 10:02PM

I’m an iOS developer working for the government in the EU. Because of my job I often meet Apple that asks us about possible way to improve our use of iPhones. Last meeting I had with a woman that came especially from Apple London, the question of NFC came up. For us obviously we are not interested in using NFC for a payment solution but for writing NFC Desfire cards to replace keycards. That person told me it was not possible as it’s interfering with Apple Pay… and now they say they do not?
And please, keep away your comments “we hate Americans” because it is not true. I do not want to use Android phones but because of the way Apple has closed NFC we still have to use droid phones as well for some use cases (which sucks).
The solution is actually really easy as I mentioned to her: create a programme where companies get granted a special entitlement (like critical notifications) that can easily be revoked if a company is not following Apple’s guidelines. I’m still waiting for the response from Apple on this one. In the meantime I didn’t know they were going to trial because of that. I would say it’s a pity, Apple should listen more to its premium users and government agencies requests (as long as it’s reasonable like in my case, I’m not asking for backdoors in their iPhones 😉)

mustseeuhdtv · February 13, 2023 10:12PM

iOSDevSWE said:

I’m an iOS developer working for the government in the EU. Because of my job I often meet Apple that asks us about possible way to improve our use of iPhones. Last meeting I had with a woman that came especially from Apple London, the question of NFC came up. For us obviously we are not interested in using NFC for a payment solution but for writing NFC Desfire cards to replace keycards. That person told me it was not possible as it’s interfering with Apple Pay… and now they say they do not?
And please, keep away your comments “we hate Americans” because it is not true. I do not want to use Android phones but because of the way Apple has closed NFC we still have to use droid phones as well for some use cases (which sucks).
The solution is actually really easy as I mentioned to her: create a programme where companies get granted a special entitlement (like critical notifications) that can easily be revoked if a company is not following Apple’s guidelines. I’m still waiting for the response from Apple on this one. In the meantime I didn’t know they were going to trial because of that. I would say it’s a pity, Apple should listen more to its premium users and government agencies requests (as long as it’s reasonable like in my case, I’m not asking for backdoors in their iPhones 😉)

I wonder why what you are working on is any different than Hotel using the NFC as keycards….or Transit as passes, or cars for keys….all of which being done with iPhone already.

jcc · February 13, 2023 10:18PM

slurpy said:

40 BILLION? That's fucking insane. How much money does Apple Pay even make Apple? I think it's almost negligent. It's more of a value added feature for their ecosystem.

Pure insanity. Meanwhile companies that engage in actual egregious shit get no punishments, or pathetic slaps on the wrist.

In return for Apple paying $40 billion, we should tell Europe to pay us $4 trillion for NATO or else we let Putin roll his tanks into Paris.

22july2013 · February 14, 2023 12:25AM

MustSeeUHDTV said:

iOSDevSWE said:

I’m an iOS developer working for the government in the EU. Because of my job I often meet Apple that asks us about possible way to improve our use of iPhones. Last meeting I had with a woman that came especially from Apple London, the question of NFC came up. For us obviously we are not interested in using NFC for a payment solution but for writing NFC Desfire cards to replace keycards. That person told me it was not possible as it’s interfering with Apple Pay… and now they say they do not?
And please, keep away your comments “we hate Americans” because it is not true. I do not want to use Android phones but because of the way Apple has closed NFC we still have to use droid phones as well for some use cases (which sucks).
The solution is actually really easy as I mentioned to her: create a programme where companies get granted a special entitlement (like critical notifications) that can easily be revoked if a company is not following Apple’s guidelines. I’m still waiting for the response from Apple on this one. In the meantime I didn’t know they were going to trial because of that. I would say it’s a pity, Apple should listen more to its premium users and government agencies requests (as long as it’s reasonable like in my case, I’m not asking for backdoors in their iPhones 😉)

I wonder why what you are working on is any different than Hotel using the NFC as keycards….or Transit as passes, or cars for keys….all of which being done with iPhone already.

I agree, the lack of information in his post makes it seem very suspicious.

coolfactor · February 14, 2023 1:22AM

10% of all revenue is unfair. At the most, it should be 10% of Apple Pay revenue. This is a major cash grab.

Regarding the openness of NFC, Apple has worked hard to enable NFC for many purposes, but it's understandable that they won't allow it to just be opened up for any purpose that any app developer dreams of. That would be majorly misused, and be a very likely attack vector, too.

amar99 · February 14, 2023 1:31AM

So why stop at 10%? Why not 20% or 30%? Who gets to set the rules for these people for what an "appropriate" fine even looks like? I understand certain problems may exist with companies, lack of competition, etc. But at a certain point this type of fine loses its sense of legitimacy and appears more like theft than lawful punishment.

edited February 2023

mikethemartian · February 14, 2023 1:33AM

jcc said:

slurpy said:

40 BILLION? That's fucking insane. How much money does Apple Pay even make Apple? I think it's almost negligent. It's more of a value added feature for their ecosystem.

Pure insanity. Meanwhile companies that engage in actual egregious shit get no punishments, or pathetic slaps on the wrist.

In return for Apple paying $40 billion, we should tell Europe to pay us $4 trillion for NATO or else we let Putin roll his tanks into Paris.

You sound like you want him to have it either way.

pmb01 · February 14, 2023 3:45AM

PayPal is one to talk. They steal money directly from their customers, ban them, then talk about "security" like it's an excuse for blatant fraud and robbery. The big banks are all awful too. Apple is the good guy here and the EU is once again overstepping.

mike eggleston · February 14, 2023 4:24AM

Maybe it has been a while since going over the ApplePay developer docs and what not; but I don’t recall that the developer is charged with a fee from using ApplePay, any sort of fees come from the credit card companies. As such, it seems to me like the EU is making a false claim here. Are they going after Google for GooglePay? What about Samsung and their SamsungPay? Wait, what about WalmartPay (which I can do from my iPhone)?

This seems like complete bullsh*t, if you ask me.

humbug1873 · February 14, 2023 4:52AM

slurpy said:

40 BILLION? That's fucking insane. How much money does Apple Pay even make Apple? I think it's almost negligent. It's more of a value added feature for their ecosystem.

Pure insanity. Meanwhile companies that engage in actual egregious shit get no punishments, or pathetic slaps on the wrist.

Those fines are supposed to REALLY hurt. So it makes sense they are based on a percentage of the worldwide revenue. Otherwise companies might just continue doing illegal business practices accepting 'low' fines as the cost of doing business. Since the EU cares about adherence to law more than about money, that makes sense.

humbug1873 · February 14, 2023 4:54AM

dolfke said:

So many companies have shameless copied the iPhone, now Apple is accused to setup a system for only themselves ???
Irony, they name is Governments.

Let's face it. Apple Pay is just an implementation of a common standard (Google pay ist Googles implementation of that same standard). So it's not really copying anything from Apple in that case.
In this case it needs to use a piece of iPhone hardware that has been limited by Apple. There is merit in that complaint.

humbug1873 · February 14, 2023 4:59AM

iOSDevSWE said:

I’m an iOS developer working for the government in the EU. Because of my job I often meet Apple that asks us about possible way to improve our use of iPhones. Last meeting I had with a woman that came especially from Apple London, the question of NFC came up. For us obviously we are not interested in using NFC for a payment solution but for writing NFC Desfire cards to replace keycards. That person told me it was not possible as it’s interfering with Apple Pay… and now they say they do not?
And please, keep away your comments “we hate Americans” because it is not true. I do not want to use Android phones but because of the way Apple has closed NFC we still have to use droid phones as well for some use cases (which sucks).
The solution is actually really easy as I mentioned to her: create a programme where companies get granted a special entitlement (like critical notifications) that can easily be revoked if a company is not following Apple’s guidelines. I’m still waiting for the response from Apple on this one. In the meantime I didn’t know they were going to trial because of that. I would say it’s a pity, Apple should listen more to its premium users and government agencies requests (as long as it’s reasonable like in my case, I’m not asking for backdoors in their iPhones 😉)

That argument 'it would interfere with ApplePay' is quite definitely wrong. How come that works for some US universitiesm, where they actually use that exact mechanism for students to get access to campus infrastructure.
See their press release here https://www.apple.com/newsroom/2018/10/apple-adds-support-for-contactless-student-id-cards-in-wallet/

davidw · February 14, 2023 4:59AM

xyzzy01 said:

dolfke said:

So many companies have shameless copied the iPhone, now Apple is accused to setup a system for only themselves ???
Irony, they name is Governments.

When it comes to abuse of a dominant market position, using said market position to get leverage in new markets is a big no-no.

I hope Apple loses this one, so other payment providers also can use the NFC capability. I really don't like Apple getting the ability to keep a cut on everything we spend

Just what "market" do you think where Apple is abusing their "dominate" position? Apple iPhone is only about 23% of the mobile phones in the EU. iPhone is not a "market". iOS is not a "market". Apple Pay is not a "market". Apple Pay is not even close to being the only way to pay for purchases. Not even on an iPhone. So please inform us exactly ...... what "market" are you referring to, (that Apple is abusing)?

If you don't like Apple because you think they are getting a cut of everything you spend, then don't buy and use Apple products. How hard is it use the platform that 75% of mobile users uses?

And by the way, when you use Apple Pay, Apple cut comes from the credit card issuer, not the person paying with Apple Pay (or the merchant accepting Apple Pay). That's why the banks are being the biggest crybabies about Apple Pay. And it's only .15% or $.15 for every $100, that the CC issuers have to pay Apple. And that comes out of the 3% that CC issuers charges the merchant. Plus it's not like the CC issuers are not getting anything for what they pay to Apple. Apple Pay is much more secure than regular CC transactions and Apple insures the transaction, so the CC do not have to pay for any fraudulent transactions done through Apple Pay.

edited February 2023

Apple will try to talk its way out of a $40 billion fine on Tuesday

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