Apple must fear a new billion-dollar fine for violating European competition rules. The American tech company is abusing its market power by reserving a chip that facilitates contactless payment with iPhones and iPads to its payment software, the European Commission said.
Apple Pay may only use the important NFC chip. This excludes other payment companies such as banks and the widely used PayPal. For example, they can work with QR codes, but that is less fast, safe, and convenient. Companies that want to use Apple Pay must pay Apple a commission. On Android phones, the NFC chip can be used in many more ways, such as checking in on public transport.
Apple does not want to share the chip with other ‘mobile wallets’ than Apple Pay because that would be less secure, says responsible European Commissioner Margrethe Vestager. But she sees no basis for that fear. Instead, apple thwarts innovation because competitors for Apple Pay with innovative ideas now ignore Apple devices and consumers have less choice, Vestager says.
The European Commission will now conduct further investigations. If that proves that Apple has indeed violated the competition rules, there is a risk of a large fine. This can amount to 10 percent of the annual turnover of one of the most valuable companies in the world.
Apple is already facing billions of fines for unfair competition in the music streaming and e-book markets. Earlier, the Commission fined the company in a tax case, although Apple successfully challenged it. In recent years, other large tech companies such as Facebook and Google have also been fined.