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  • Thierry Spanjaard

Apple’s NFC under EU investigation

News emerged recently that the European Commission was planning to charge Apple over its NFC chip technology, according to Reuters. Actually, since the introduction of NFC on iPhones, many have complained they could not get a full access to NFC functionalities preventing them from developing applications.

Apple repeatedly mentioned privacy and safety issues to justify its policies on Apple Pay and, more generally, on NFC features access:

· Security: Apple’s doctrine is that they can only ensure security if they have a full control over the hardware, the software and operations of everything security-sensitive in a handset; payment obviously falls in this category,

· Privacy: Apple positions itself as the defender of privacy, especially as a matter of differentiation against other members of the GAFAM: Google, Amazon, Facebook and Microsoft.

In June 2020, the European Commission announced it had opened a formal antitrust investigation to assess whether Apple's conduct in connection with Apple Pay violates EU competition rules. Fines imposed by the EU can be up to 10% of the targeted corporation global revenue, which, in the case of Apple, could mean US$ 27.4 billion (EUR 23.7 billion), based on 2020 results, enough to help boost the EU coffers!

Margrethe Vestager, EVP and Commissioner for a Europe fit for the digital age and competition, has extensive track records on her fight

against dominant positions and monopolies. For instance, the EU is in the process of imposing a single USB-C connector for all smartphones, tablets, cameras, headphones, portable speakers and handheld videogame consoles. In the past, they were able to impose significant fines such as EUR 4.34 billion on Google for taking advantage of its mobile operating system to support its own apps, or EUR 1.06 billion on Intel for anti-competitive behavior against rival AMD, among many others.

In fact, the core issue is that an Apple Pay payment can only be completed on an Apple device and requires merchants to formally support Apple Pay.

The EU competition authority is now preparing a “statement of objections,” which could be sent to Apple next year, according to Reuters. Such documents typically set out practices considered anti-competitive by the regulator.

So, in the future, shall we be able to execute Apple Pay on an Android handset? This would have huge consequences as security of Android handsets can hardly be guaranteed, especially as many vendors have elected to use HCE software-based solution.

Also, shall we be able to execute Android Pay on an Apple handset? This would mean Apple would have to give access to its secure element to its long-term enemy Google!

Of course, one may question the actual background reason behind these investigations: many analysts envision that by adding piece after piece in the payment value chain and gathering more consumer information that the banks could ever get, Apple could not only replace traditional financial institutions but also be in a situation where this replacement would allow them to perform a lot better than incumbent banks when it comes to adapting services and ads to each individual.

Photo credits: Photo by Blake Wisz - by Jonas Leupe - by CardMapr on Unsplash

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