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Tuesday, November 29, 2022

European Union says Apple violated competition law over cashless payments

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European Union (EU) regulators have accused Apple of violating competition law over contactless payments. The company could face fines of up to 10% of its global revenues, which totalled $365bn in 2021, if the charges are upheld.

European Union (EU) competition authorities have accused Apple with violating competition law by denying rivals access to technology critical to enabling contactless payments, so unfairly favoring its own Apple Pay service. The European Commission stated on Monday that Apple “sets the rules” on its closed platform and raised worry that it has limited access to near field communication (NFC), which rivals require for tap-and-go purchases at stores using mobile wallets.

Margrethe Vestager, executive vice-president in charge of competition policy at the European Commission, said, “On a preliminary basis, we judged that Apple misused its dominant position. Apple limited access to critical inputs required to design and manage mobile payments apps, sometimes known as’mobile wallets. According to evidence in our file, several developers did not proceed with their plans since they were unable to contact iPhone customers.”

According to the commission, Apple’s Apple Pay service is “by far the largest NFC-based mobile wallet on the market.”

Vestager explained, “The preliminary decision we reached today concerns mobile payments in retailers. By keeping others out of the game, Apple has unjustly protected its Apple Pay wallet from competition.”

If confirmed, this behavior would constitute abuse of a dominating position, which is prohibited by our guidelines.”

The commission has published a statement of complaints outlining the reasons it feels the business “may have illegally affected competition in the market for mobile wallets on Apple devices,” and has given the $2.5tn (£2tn) corporation a chance to react

If the allegations are sustained, Apple may face fines of up to 10% of its worldwide revenues, which totaled $365 billion in 2021.

A company representative stated, “We built Apple Pay to provide a simple and safe option for users to digitally display their current payment cards, as well as for banks and other financial institutions to enable contactless payments to their clients. Apple Pay is only one of several payment alternatives accessible to European customers, and it has secured equitable access to NFC while setting industry-leading privacy and security requirements. We will continue to work with the Commission to ensure that European customers have access to their preferred payment method in a safe and secure environment.”

Following a complaint filed by the music streaming service Spotify in 2019, European regulators are also looking into how Apple may be unfairly disadvantaged rivals by charging up to a 30% fee on purchases and subscriptions made through its App Store, which it discovered ultimately resulted in higher prices for consumers.

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