Apple will open its iPhone to rival digital wallets and payment technologies for free for a decade, following an agreement with the European Commission. This move comes after an antitrust investigation by the EU, which risked a fine of up to 10% of Apple's global annual revenue. The European Commissioner for Competition, Margrethe Vestager, acknowledged that this is the first time the Commission has reached such an agreement.
The investigation, opened in 2022, revealed that Apple was closing its devices to technologies and tools not from the Apple ecosystem, which Brussels deemed an abuse of market power and a violation of European competition rules. Under the new agreement, Apple will allow developers using 'tap-and-go' and NFC wireless communication technology to access Apple Pay and Apple Wallet.
This commitment, binding for a decade, aims to foster competition and innovation in the digital wallets sector, which has seen significant growth in recent years. Vestager highlighted that NFC technology enables the most secure and seamless payment experience and is essential for developing viable payment applications in the EU.
The European Commission has tested Apple's package of commitments and consulted with experts, banks, app developers, card issuers, and financial associations, receiving positive feedback. This agreement marks a significant change in how Apple operates in Europe and closes one of the disputes between the company and the EU.
Apple had previously resisted giving access to NFC technology on iPhones to rival digital wallets, reserving it for its own applications. This monopoly was seen as having a negative impact on innovation and competition. The fine for such practices could have cost Apple about $40 billion.
In addition to the digital wallets case, Apple faces other ongoing investigations from the EU. In March, the European Commission imposed a fine of 1.84 billion euros on Apple for abusing its dominant position in the streaming music market. The Commission found that Apple prevented competitors like Spotify from reaching potential customers using iPhones or iPads.
Apple's agreement to open its devices to rival payment technologies is part of a broader trend of increased scrutiny by the EU on trade practices that harm competition. The company had already conceded to EU pressure last September by agreeing to integrate the 'USB-C' universal charging port into its new iPhone range.
Other disputes continue, particularly regarding the App Store. The European Commission recently found that the App Store rules violate the new Digital Markets Regulation (DMA), preventing app developers from directing consumers to alternative distribution channels. This preliminary finding could lead to another significant fine for Apple.
- The European Commission's investigation into Apple's digital wallets practices began in June 2020 after complaints from European banks. The Commission's announcement on Thursday marks the end of this particular dispute.
- Apple Pay and Apple Wallet functions will remain available in the European Economic Area (EEA), which includes the 27 EU countries plus Iceland, Norway, and Liechtenstein. Users will now have the choice between Apple Pay and several other applications for making payments.
- Apple's closed ecosystem around the iPhone and iPad has been a cornerstone of its success, but it has also been a point of contention with European regulators. The company's philosophy of citing security imperatives and increased user comfort has often clashed with EU competition rules.
- The European Commission's increased scrutiny of trade practices aims to ensure a fair competitive environment. The recent fines and agreements with Apple are part of this broader effort to prevent monopolistic practices and promote innovation.
