Apple's Pledge to EU: Open Access to Mobile Payments
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Apple has made commitments to the European Union to address concerns raised in an antitrust case regarding its Apple Pay mobile payment system. The European Commission had accused Apple of abusing its dominant position by limiting access to its mobile payment technology. The proposed changes by Apple are being reviewed by the EU, and if accepted, they would be in effect for a decade. These changes would apply to rival mobile wallet makers as well as iOS users in the EU and associated countries.
The proposed commitments include allowing third-party mobile wallet and payment service providers access to its Apple Pay ecosystem in the European Union. This move aims to address concerns about stifling competition. The European Commission is particularly concerned about Apple’s significant market power and dominant position in the mobile wallet market on iOS devices. If accepted, Apple’s proposed commitments would be in effect for 10 years, and the company could face fines if it fails to honor them.
Apple’s offer aims to enable third-party developers in the European Economic Area to provide NFC contactless payments from within their iOS apps. This move would allow consumers to choose between Apple’s service and other NFC-enabled applications through their bank or card issuer. The implementation of these commitments, if approved, will be monitored by a trustee reporting to the Commission. The case aligns with the objectives of the Digital Markets Act (DMA), as Apple has been designated as a “gatekeeper” under the DMA.
The European Commission is seeking feedback on concessions offered by Apple to settle EU antitrust charges related to NFC technology access. Apple’s commitments include providing third-party developers in the European Economic Area with an option to enable NFC contactless payments from within their iOS apps. This access to NFC technology is offered to developers of payments, banking, and digital wallet apps in the European Economic Area. Consumers will have the ability to choose between using Apple’s service or another NFC-enabled application through their bank or card issuer.
The case predates the Digital Markets Act (DMA), but aligns with its objectives, as Apple has been designated as a “gatekeeper” under the DMA. The Commission has opened a consultation seeking feedback on Apple’s offer and is allowing a month from the publication of the full text of Apple’s proposed commitments in the EU’s Official Journal for submissions to be made. The DMA puts a series of up-front obligations on gatekeepers, including requiring they do not unfairly flex their market muscle by forcing business users to use their own services.
Apple’s proposal to allow third-party mobile wallet and payment service providers access to its Apple Pay ecosystem in the European Union comes at a time when digital wallet usage continues to increase. According to Jefferies analysts, digital wallet usage continues to increase, with Apple Pay being accepted by 41% of merchants surveyed in Europe. This move represents a significant shift and could impact Apple’s market share compared to other leading mobile wallet providers.
In terms of financial impact, Apple Pay is estimated to have brought Apple roughly $2.06 billion in revenue in 2023, up 39% from about $1.48 billion in 2022. The proposed changes by Apple would last for a decade and apply to rival mobile wallet makers as well as iOS users in the EU and associated countries. Breaches of EU competition law can result in fines worth up to 10% of a company’s annual global revenue, emphasizing the significance of Apple’s proposed commitments in addressing the antitrust concerns.
Apple’s proposed commitments to address EU antitrust concerns regarding its mobile payment system are a significant step toward fostering competition and ensuring fair access to NFC technology. The potential impact on Apple’s market share and the financial implications of these changes underscore the importance of these commitments for both the company and the broader digital payments landscape. As the EU reviews and considers Apple’s proposals, the outcome of this case will be closely watched by industry stakeholders and consumers alike.
The information provided is for general informational purposes only and should not be considered as investment advice.