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Apple Avoids EU Antitrust Threat With Tap-and-Pay Probe Settlement

(Bloomberg) -- Apple Inc. has avoided the threat of fines from European Union regulators by agreeing to open up its mobile wallet technology to other providers free of charge for a decade.

The settlement brings to an end an investigation into the US tech giant’s closely guarded payments technology. The EU earlier warned that restricting access to the technology amounted to an abuse of its market power.

“Apple has committed to allow rivals to access the ‘tap and go’ technology of iPhones,” the EU’s competition chief Margrethe Vestager said. The decision will prevent Apple “from excluding other mobile wallets from the iPhone’s ecosystem.” 

Under the EU settlement, consumers in Europe will be able to use alternative digital wallets to pay for goods and services at checkouts. The commitments remain binding for 10 years and Apple risks a fine of as much as 10% of global annual revenue if it violates the agreement.

The closing of the investigation marks a brief respite between the EU and Apple, which have long been at loggerheads over how the Cupertino, California-based firm toes the regulatory line in Brussels.  

Earlier this year, the company challenged a €1.8 billion ($2 billion) EU fine it was hit with for thwarting fair competition from music-streaming rivals, including Spotify Technology SA. This fine came after it was previously handed a record €13 billion tax bill in a dispute with EU regulators over Irish state aid. 

The firm has also been forced to overhaul its iOS, Safari and App Store offerings in the EU in order to step in line with the bloc’s Digital Markets Act — a regulation against which it has filed a raft of legal challenges.

Apple’s digital wallet allows consumers to store virtual debit and credit cards on iPhones, as well as ticket bookings. Its offer to the EU would allow third-party developers access to Apple’s payment technology in order to help them create alternative mobile wallets, the commission said Thursday. 

What Bloomberg Intelligence Says:

The EU’s acceptance of Apple’s proposals to open iPhone tap-to-pay functionalities to rivals removes the threat of near-term fines, but does little to decrease overall friction between Apple and EU regulators.

— Anurag Rana and Tamlin Bason, BI technology analysts

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In response to the settlement, Apple said it is rolling out access to its payments chip in Europe while also allowing contactless transactions for car and home keys, corporate badges, loyalty cards, and event tickets.  

Since its debut a decade ago, Apple Pay has grown to become the most dominant and widely used digital wallets on the market. Across Europe, consumers now turn to the app to quickly tap and pay for everything from public transportation to groceries to restaurant bills. 

This new commitment, then, could spark a seismic change for the payments industry, which has long craved the ability to use Apple’s near field communications technology in their own digital wallets.

With the new access, players like PayPal Holdings Inc., Alphabet Inc.’s Google Pay or Samsung Electronics Co.’s Samsung Pay might be able to better compete and entice more European customers to use their apps instead of Apple when checking out in stores. 

Should the commitment extends to the US - where Apple faces a similar complaint from the Department of Justice - it would also aid players like Block Inc.’s Square to gain traction with consumers.

(Updates with Bloomberg Intelligence comment after the eighth paragraph)

©2024 Bloomberg L.P.

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