Apple has successfully navigated an antitrust investigation by the European Union (EU) by agreeing to open its mobile wallet technology to other providers for free over the next decade, Bloomberg is reporting.
The EU had cautioned that Apple’s restriction of access to its “tap and go” technology constituted an abuse of its market power. By committing to share this technology, Apple has averted the threat of fine.
Margrethe Vestager, the EU’s competition chief, announced that “Apple has committed to allow rivals to access the ‘tap and go’ technology of iPhones.” This move is designed to prevent Apple from excluding other mobile wallets from its ecosystem.
Under the terms of the settlement, consumers in Europe will be able to use alternative digital wallets for their purchases at checkouts. This commitment will remain binding for ten years, with Apple facing fines of up to 10% of its global annual revenue if it violates the agreement.
This settlement offers a temporary truce between the EU and Apple, who have had a contentious relationship over regulatory compliance in Brussels.
Earlier this year, Apple contested a €1.8 billion ($2 billion) EU fine imposed for hindering competition from music-streaming services like Spotify. This fine followed a previous record €13 billion tax bill dispute over Irish state aid.
Apple’s digital wallet allows users to store virtual debit and credit cards, as well as tickets, on their iPhones. The settlement includes Apple’s offer to allow third-party developers to access its payment technology, enabling the creation of alternative mobile wallets.
The European Commission welcomed this move on Thursday, noting that it will foster competition and innovation in the digital payments market.
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Technically, Apple only allow third parties to use NFC via HCE (Host Card Emulation) but still restricts direct software access to devices' eSE (embedded Secure Element). The EU forcing Apple to open up NFC is just to expand the monopolies of EMV, MIFARE, Calypso, and other ISO/IEC 14443 compliant technologies and financial institutions. I.e. EU expanding monopolies of NFC Types A and B (Tag Types 1, 2, and 4) over Type F (Tag Type 3). Nothing would stop EU financial institutions, especially large establishments, from pulling out Apple Pay and Wallet support, and make respective clients use proprietary apps that can be clunky and not easily interoperable especially regarding online and in-app transactions. Also, regarding EU's open NFC goal, EU is still doing nothing to mandate device manufacturers who make NFC digital wallet capable devices to provide the same features and functions available abroad (e.g. Smart Octopus in Samsung Wallet (requires compatible Samsung Wallet Samsung device sold at authorized outlets in HKSAR), T-money in Samsung Wallet, CashBee in Samsung Wallet, EasyCard in Samsung Wallet (requires a Samsung Wallet compatible Samsung device sold in Taiwan), Suica in Google Wallet, Rakuten Edy in Google Wallet (requires Osaifu Keitai compatible Android smartphone), PASMO in Google Wallet (requires Osaifu Keitai compatible Android smartphone), QUICPay in Google Wallet (requires Osaifu Keitai compatible Android smartphone), etc.) to EU devices. Furthermore, EU is still not ensuring certain NFC types doesn't have unfair advantages over others in various applications especially public transit ticketing where NFC Types A and B compliant technologies (EMV (Mastercard, Visa, etc.), MIFARE (e.g. OV-Chipkaart), Calypso (e.g. Navigo), etc.) currently have a monopoly.