EU Antitrust Probe Includes Apple Pay

Tuesday (June 16) is marking a bit of a one-two punch on the Continent for Apple. The European Union announced that it is opening not one but two antitrust investigations into the tech giant, focusing on the company’s App Store and Apple Pay.

“It appears that Apple sets the conditions on how Apple Pay should be used in merchants’ apps and websites,” European Commission Executive Vice President Margrethe Vestager, who focuses on competition policy, said in a statement announcing the probes. “It also reserves the ‘tap and go’ functionality of iPhones to Apple Pay. It is important that Apple’s measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices.”

With respect to Apple Pay, the EU wants to determine whether Apple is violating rules by limiting access other firms have to its Near Field Communication (NFC) functionality. Apple embeds NFC in devices like the iPhone and Apple Watch, and limiting access to it means banks and other firms offering consumers the ability to make payments can’t leverage the functionality into their own apps.

There are at least some indications that access to NFC chips will be broadening. In November, German lawmakers passed an amendment to anti-money laundering (AML) laws that would compel Apple to open up the technology to other mobile-payment firms.

Meanwhile, the EU also launched a separate investigation after firms like Rakuten and Spotify lodged complaints over the roughly 30 percent commission that Apple takes from product and services sales made through the App Store. Spotify has also alleged that Apple tamps down on competition by steering consumers toward Apple Music.

“We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers, for example with its music streaming service Apple Music or with Apple Books,” the EU’s Vestager said. “I have therefore decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules.”

An Apple spokesman told Reuters, “It’s disappointing the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride and don’t want to play by the same rules as everyone else.”

The antitrust probes come as Apple Pay may be finally catching a tailwind several years in the making.

PYMNTS surveyed 1,000 U.S. consumers in the fourth quarter and that while 81 percent of adult Americans owned smartphones, just 6 percent used Apple Pay at a physical store five years after the service debuted. And that was actually down from the 6.9 percent we found did so in 2017. Overall, PYMNTS found that Apple Pay accounted for only about 1.1 percent of all retail and food services sales excluding online and auto.

That’s a low base upon which to build — although it’s more than likely that Apple Pay usage has grown amid the post-pandemic rise in contactless payments.