Apple’s digital wallet monopoly: The juicy drama

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Apple’s digital wallet monopoly: The juicy drama


This content is contributed or sourced from third parties but has been subject to Finextra editorial review.

Digital banking is at the core in the war against Apple’s monopolisation of smartphones that has been occurring on a global scale. In the last few years, tech giant Apple has been hit by multiple lawsuits for monopolising the smartphone market by blocking third-party apps from offering contactless payments on their devices.

Russia and US pushback against the big bad tech giant

Russia’s antitrust regulator was the latest in a flurry of charges held against Apple for monopolisation. The Federal Antimonopoly Service accused Apple of removing banking and payments apps from the App Store, abandoning Russian Banks who offer digital services.

The US’s complaint, which was filed in March, accuses Apple of illegally withholding access points for developers and imposing restrictions on third parties on their smartphones. Apple Pay is the only tap-and-go payment service available on IOS devices, which restricts competition from other digital wallet payments apps. The DOJ alleged that Apple is monopolising the digital wallet market, keeping third-party developers from providing alternate payment methods for their users, and restricting the features and services available to their customers.

The lawsuit further detailed that Apple limits the functionality of non-Apple smartwatches by limiting mobile cloud streaming services and cross-platform messaging apps – holding IOS users hostage in a prison of only Apple products.

However, despite outrage against the tech company in Russia and the US, Apple has faced defeat in the EU. 

EU takes a hammer to Apple’s digital wallet monopoly

In 2022, the European Commission charged Apple for limiting access to NFC chip technology that is installed in iPhones to make digital wallet payments. The regulator called out Apple for disallowing competition in the digital wallet field, and if the tech giant failed to respond it could face billions of euros in fines.

In 2023, the Consumer Financial Protection Bureau (CFPB) issued the same grievance against Apple, dismissing its claim that the policy ensures security and privacy for their customers.

This year, the EU fined Apple €1.84 billion for breaching antitrust laws for music streaming services on IOS devices. The EC stated that Apple restricts music streaming app developers from offering cheaper and alternative subscription services to IOS users, and keeps them from including links in their apps that lead back to their websites.

Margrethe Vestager, EVP in charge of competition policy at the EC, commented: For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store. They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU antitrust rules, so today we have fined Apple over €1.8 billion.”

In January this year, Apple resolved the antitrust case to allow third-party mobile apps to access and use the NFC chip on Apple devices without charge, so that users would no longer be restricted to using only Apple Pay or Apple Wallet. The agreement will run for a decade, with developers within the EEA able to establish third-party apps on IOS devices for Apple ID registered users in the same region.

This move follows the enactment of the EU’s Digital Markets Act (DMA) which came into action on March 7, that called out big tech ‘gatekeepers’ Apple, Meta, and Amazon among others, for monopolising the digital market. The DMA is intended to open up the digital market for competition, and allow users a wider variety of services and features on their digital wallets rather than being restricting to a few mega-corporations. An outline of the DMA and the juicy drama between Apple and Spotify was detailed in an earlier long read.

In Apple’s announcement that it will comply with the demands of the EC mandate, the company stated tat it will allow music streaming app developers to link back to their website for purchases in Europe, which will allow more flexibility for music streaming apps, such as Spotify. However, Apple will still be charging a commission fee for the tech, tools, and services it provides.

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This content is contributed or sourced from third parties but has been subject to Finextra editorial review.