European regulators are keeping a close eye on Apple Pay

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Apple Pay Germany
Apple Pay recently went live in Germany.
Photo: Apple

Tim Cook has admitted that Apple Pay hasn’t taken off quite as quickly as he would like. But that’s not stopping the European Commission from threatening that Apple’s mobile payments service could face challenges if it gets much more dominant.

Speaking this week, European Competition Commissioner Margrethe Vestager said that, while at “first glance, we couldn’t see Apple being dominant,” it will face ongoing scrutiny regarding Apple Pay.

The issue of potential marketplace antitrust dominance was leveled at Apple by the Danish Consumer Council. They raised the point that embedding an NFC chip in the iPhone could serve to make it the default payment method, thereby blocking out rivals.

At present, Apple’s mobile payment service is not enough of a leader to warrant too many concerns. But that could change. “Obviously if we had official complaints, we would take that seriously because the entire payment market is a very important payment market,” Vestager said.

This week, Apple Pay went live in Germany. This represents its 32nd worldwide market since the service launched in the U.S. back in late 2014.

Apple’s issues with the European Commission

The European Commission has proven to be a thorn in Apple’s side in recent years. Europe famously handed Apple a 13 billion euros ($15.5 billion) tax bill in August 2016, claiming that the company took advantage of illegal state aid that allowed it to route profits through Ireland.

The investigation alleged that Apple paid the equivalent of as little as 0.005 percent on all European profits in 2014. Apple has now paid the money it “owes,” although this will be held in escrow until the case is finally resolved.

At the start of this year, Apple Europe separately agreed to pay an additional $186 million, including interest on unpaid tax, after an “extensive audit” by HM Revenue and Customs, the U.K. government department responsible for the collection of taxes.

Vestager, in particular, has a reputation for being tough against companies who apparently break EU rules. However, she has also been criticized by some Eurosceptics for focusing too heavily on punishing American companies. For instance, in an early 2016 op-ed, former U.K. London Mayor Boris Johnson called Vestager a “crop-haired … Left-wing” character, “straight out of that Scandi-noir serial Borgen.” Johnson argued that the EU’s punishment of Apple (referring to its giant tax bill) was just, “the chance to bash a corporate American giant.”

Will Apple Pay represent a problem for Apple going forward? We’ll have to wait and see. But it seems that it’s being closely monitored just in case.

Source: Reuters