Apple avoids EU antitrust threat by settling contactless payments investigation

(July 11): Apple Inc. avoided the threat of fines from European Union (EU) regulators by agreeing to make its mobile wallet technology available to other vendors for free for ten years.

The settlement ends an investigation into the US tech giant’s closely guarded payments technology. The EU has previously warned that restricting access to the technology was an abuse of its market power.

“Apple has committed to giving rivals access to the iPhone’s tap-and-go technology,” EU competition chief Margrethe Vestager said. The decision will prevent Apple from “excluding other mobile wallets from the iPhone ecosystem.”

Under the EU agreement, consumers in Europe will be able to use alternative digital wallets to pay for goods and services at checkouts. The commitments remain in force for 10 years, and Apple risks fines of up to 10% of its global annual revenue if it breaches the agreement.

The closure of the investigation marks a temporary break in relations between the EU and Apple, which have long been unable to agree on how the Cupertino, California-based company complies with regulatory rules in Brussels.

The company earlier this year challenged a 1.80 billion euro ($2 billion or RM9.15 billion) EU fine it received for thwarting fair competition from music streaming rivals including Spotify Technology SA. The fine comes after it was previously hit with a record tax bill of 13 billion euro in a dispute with EU regulators over Irish state aid.

The company was also forced to overhaul its iOS, Safari and App Store offerings in the EU to comply with the EU Digital Markets Act – a regulation against which it has filed a series of legal challenges.

Apple’s digital wallet lets consumers store virtual debit and credit cards on their iPhones, as well as book flights. Its bid for the EU would give third-party developers access to Apple’s payments technology to help them create alternative mobile wallets, the commission said on Thursday.

In response to the settlement, Apple said it was rolling out access to its payment chip in Europe, and would also allow contactless transactions using car and house keys, corporate IDs, loyalty cards and event tickets.

Since its debut a decade ago, Apple Pay has become the most dominant and widely used digital wallet on the market, with consumers across Europe now turning to the app to quickly tap and pay for everything from public transport to groceries and restaurant bills.

The new commitment could usher in a radical shift for the payments industry, which has long wanted the ability to leverage Apple’s near-field communication technology in its digital wallets.

With the new access, players such as PayPal Holdings Inc, Alphabet Inc’s Google Pay and Samsung Electronics Co. could be able to compete more effectively and encourage more European customers to use their apps instead of Apple’s when paying in stores.

If that commitment were to extend to the U.S. — where Apple is facing a similar complaint from the Justice Department — it would also help players like Square, owned by Block Inc., gain popularity among consumers.