The EU Goes Fishing for an Antitrust Case Against Apple - But There's One Problem
by Alec Stapp, Chief Economic Strategist
On Tuesday, the EU announced it had opened two antitrust investigations into Apple — one concerning the company’s mobile payment system, Apple Pay, the other looking into Apple’s conduct in managing its App Store and how it treats third party developers.
For some apps, Apple requires developers to use its proprietary in-app purchase system and forbids developers from telling users in the app that they can make purchases outside the app (and thus let the developer avoid paying Apple’s fee). The European Commission will investigate whether these policies violate EU competition rules.
The announcement from the EU offers no details on what the Apple Pay investigation will entail, but it might look into the limits Apple has placed on access to the Near Field Communication (NFC) functionality — which enables contactless payments — of its iPhone and Apple Watch devices.
In the US, under the consumer welfare standard, an investigation like this would need to show (1) that Apple was dominant in a relevant product market, (2) that its conduct was anticompetitive, and (3) that it harmed consumers. In a hypothetical US case, Apple could plausibly argue in its defense that a tight integration between hardware and software is a key selling point for consumers, including Apple Pay for payments. Apple might also point out that a tightly curated App Store benefits consumers by improving security and increasing trust.
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