Apple Pay facing additional scrutiny by EU regulators over competition questions

Apple Pay is facing increased scrutiny by European regulators as officials are looking deeper into concerns that the mobile wallet may be using its dominant position in certain markets to crowd out competition from rival services that operate on the Android platform.

Commissioner Margrethe Vestager, the lead competition regulator in the EU, said during a press conference at the Web Summit in Lisbon that there have been additional questions raised about Apple’s market behavior of late.

Asked if regulators now consider Apple Pay as dominant market player that merits scrutiny, Vestager said it varies based on the marketing question. She said payments markets are developing and they would take a second look. 

“We’ve been asking quite a number of questions because we get many, many concerns when it comes to Apple Pay for pure competition reasons,” she said. “People see that it becomes increasingly difficult to compete in the market for easy payments.”

“The Commission monitors possible anti-competitive market practices and abusive content,” a spokesperson told Mobile Payments Today. “In this context, the Commission is actively monitoring the development of mobile payment solutions, the behavior by operators active in the payments sector, including mobile payments.”

She also confirmed the report from Reuters that regulators had sent out a questionnaire to market participants during the month of August to find out if they had been asked whether Apple limited their options for mobile payment use. 

Adoption soars

During the company’s quarterly investor call, Apple CEO Tim Cook said that Apple set a new record for payment revenue. He said transactions more than doubled to more than 3 billion transactions in the September quarter, exceeding PayPal’s transactions and growing four times as fast.

He said Apple Pay was now live in 49 markets around the world with more than 6,000 issuers on the platform. 

“We believe that Apple Pay offers the best possible mobile payment experience and the safest, most secure solution on the market,” Cook said on the call. 

Apple officials did not immediately return a request for comment. 

Apple Pay recently overtook the Starbucks mobile app as the leading app in the U.S. with a payment component, according to eMarketer. The report shows Apple Pay will have 30.3 million users in the U.S., representing a 47% share of the mobile payment market. In contrast, Google will have 12.1 million in the U.S., while Samsung Pay will have 10.8 million. 

At least one analyst says the issue may center around access to near field communication chips, which are lacking in the iPhone.

“While the EU Commissioner’s comments are somewhat unspecific in terms of the particular area around Apple Pay, there are some areas which have potentially diminished competition,” Nick Maynard, lead analyst at Juniper Research, told Mobile Payments Today via email. “In particular the lack of third-party access in the NFC chip in iPhones means effectively Apple Pay is the only option on iPhones, monopolizing NFC payments for the large Apple user base.”

Maynard said this is generally consistent with Apple’s history of tight control over its own ecosystem and stands in stark contrast to Android devices, where multiple OEM pay services can be installed, such as Google Pay on Google devices or Samsung Pay on Samsung smartphones.

During the press conference Vestager said regulators were still reviewing a prior complaint against Apple by streaming music service Spotify.

Cover image: Apple.