Home News Apple could give rivals access to its Apple Pay technology to address EU competition concerns

Apple could give rivals access to its Apple Pay technology to address EU competition concerns

by SuperiorInvest

Key takeaways

  • Apple proposed allowing third parties to use its Apple Pay technology in the European Union to address regulators’ competition concerns.
  • If accepted, the changes would be in effect for 10 years, and Apple could be fined up to 10% of its global revenue if it does not comply.
  • The proposed changes could affect Apple’s position in the payment services market.

Apple (AAPL) proposed allowing third-party payment service providers and mobile wallets to access its Apple Pay ecosystem in the European Union to resolve regulators’ concerns that it could stifle competition.

The European Commission said in its preliminary opinion that the iPhone maker “enjoys significant market power in the smart mobile device market and a dominant position in the mobile wallet markets on iOS” that could “restrict competition in the mobile wallet market on iOS devices”. ”

In response, Apple offered that it could allow third-party payment service providers and mobile wallets in the EU to “access and interoperate” through the Apple Pay application programming interface (API) “on iOS devices for free, without have to use Apple Pay or Apple Wallet.”

Apple said it would also provide “additional features and functionality” such as FaceID, as well as apply “fair, objective, transparent and non-discriminatory eligibility criteria for granting” third parties access to Apple Pay hardware, including a process to dispute their decisions.

The European Commission said it would accept public comments on Apple’s proposed commitments before determining whether the proposal adequately addresses competition concerns.

If accepted, the proposed commitments would be in effect for 10 years, and Apple could be fined up to 10% of its global revenue if it does not comply.

While Apple Pay represents a relatively small portion of Apple’s total revenue, it represents a source of potential growth for the company as the use of digital payments expands, and the proposed changes could impact Apple’s market share compared with other leading mobile wallet providers such as Google Pay by Alphabet (GOOGL), Venmo and PayPal (PYPL), among others.

“Digital wallet usage continues to rise, accounting for ~20% of non-cash transactions,” Jefferies analysts said in a research report earlier this week, noting that Apple Pay is accepted by 41% of merchants surveyed in Europe, with around one-fifth (19%) of merchants not yet accepting it saying they would consider accepting it within the next 12 months.

Apple Pay is estimated to bring Apple about $2.06 billion in revenue in 2023, up 39% from about $1.48 billion in 2022, according to consensus estimates compiled by Visible Alpha, and represents about 0.5% of Apple’s total revenue. Apple to $383 billion in 2023. .

Apple shares rose 1.6% to $191.56 per share on Friday and have gained more than 38% over the past year.

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