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EU takes aim at Apple in antitrust complaint

Dispute centers on mobile payments by The Washington Post | May 3, 2022 at 2:21 a.m.

European regulators have accused Apple of abusing its dominant position to restrict competitors' ability to access the digital wallet technology behind Apple Pay, a move that potentially opens it up to significant fines.

In a "statement of objections," which represents a preliminary conclusion to an investigation, released Monday, the European Commission said Apple tried to restrict the "tap and go" technology that plays a major role in its success in mobile wallets -- a fast-growing segment of the economy.

The global mobile payment market, which was valued near $1.8 billion in 2021, is expected to swell past $6 billion in the next five years, according to ResearchAndMarkets.com. The explosive growth reflects the rise of online shopping, boosted by technological advancements, in a field that includes PayPal, Mastercard, Google Wallet and other providers. Apple Pay claimed more than 500 million users in 2020, but some consumer research has suggested active usage rates are low.

Margrethe Vestager, Europe's antitrust chief, said that Apple may have restricted third parties from accessing the key technology needed to develop mobile wallet alternatives for its devices.

"Apple may have restricted competition, to the benefit of its own solution Apple Pay," Vestager said in a statement. "If confirmed, such a conduct would be illegal under our competition rules."

In a statement emailed to The Washington Post, Apple said its mobile payment platform facilitates "a very small fraction of transactions in Europe" and is "only one of many options available to European consumers for making payments."

The Cupertino, Calif.-based company said it has "ensured equal access" to the technology in question while "setting industry-leading standards for privacy and security." Apple said that many other mobile payment options have "found success on iOS," from PayPal to European alternatives such as MobilePay, Swish and Payconiq.

"We will continue to engage with the Commission to ensure European consumers have access to the payment option of their choice in a safe and secure environment," Apple said in the statement.

The complaint outlined Monday stems from a 2020 investigation. Apple can submit a written response or request a private hearing before the final judgment is announced. It could face fines of as much as 10% of its revenue.

Last week, Apple reported a record $97.3 billion in revenue during its fiscal second quarter, up 9% from the previous year. The world's most valuable company, with a market capitalization of more than $2.5 trillion, Apple raked in more than $378 billion in revenue in 2021.

The move comes as Europe takes the reins on regulating the digital economy, with the landmark Digital Services Act going into effect next year. The legislation imposes new transparency obligations on the companies, forcing them to provide information to regulators and outside researchers about how algorithms that control what people see on their sites work. It also creates new regulations on how companies target online ads.

Also included in the legislation is the Digital Markets Act, a competition bill that would establish new rules to prevent "gatekeepers" from abusing their power to squash smaller rivals.

Rasmus Andresen, a member of European Parliament, applauded the EU complaint but said it shows how sorely the Digital Markets Act is needed.

"Instead of lengthy investigations, we need the new rules to be implemented quickly," Andresen said in a statement. "In the future, the DMA will make it illegal to keep app developers out of stores if they don't accept certain payment systems."

U.S. lawmakers have yet to advance comprehensive legislation despite years of promises to crack down Big Tech, while giants such as Apple, Google, Facebook and Amazon amassed power and influence with minimal oversight. (Amazon founder Jeff Bezos owns The Washington Post.)

Now, regulators in the EU, which passed its first landmark privacy law five years ago, are leading the way. The recent agreement on the Digital Services Act in Europe could change the tenor of regulatory debate in the United States.

Though investors don't seem too concerned about the risk, it will grow over time for the tech behemoths, according to Dan Ives, managing director at Wedbush Securities.

"The EU continues to have a bullseye on Big Tech stalwarts," Ives told The Post in an email. "This Apple antitrust charge is another overhang that speaks to this elongated battle between the EU and Big Tech hitting another chapter, as it clearly is not ending anytime soon."

Apple has found itself in the European Commission's crosshairs before. Last spring, the regulator accused it of using its App Store rules to disadvantage music streaming rivals.

The European Commission has made similar accusations against Google, which is currently fighting a $1.58 billion fine over findings it abused its dominance in online advertising for roughly a decade. Last year, Google lost a fight in Europe over fines exceeding $2.5 billion after an investigation into its price comparison shopping service.

In September, Europe's second-highest court will rule on Google's appeal of the record 4.3 billion euro fine levied for anti-competitive practices with its Android operating system, after a four-year legal battle.

Print Headline: EU takes aim at Apple in antitrust complaint

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