ABC backs decision to review Apple restrictions on banking apps

The ABC wants Apple to be part of the Electronic Payments Code, which is administered by the Australian Securities and Investments Commission to protect consumers. He also believes that the lessons of the media negotiation code should be applied by the new government to the payments sector, including ensuring fair transactions, creating a level playing field that equalizes bargaining power and ensuring processes are fair. .

During a parliamentary committee hearing last July, Mr Comyn called for more regulation for Apple, and the ABC’s criticism dates back to 2016, when Apple Pay was first introduced in Australia by ANZ. Other banks were forced to follow suit, dropping pennies for every $100 of payments flowing through iPhones to Apple. Apple forces all banking app payments through Apple Pay, which it claims secures payment.

But the ABC remains frustrated that Apple’s restrictions on access to the ‘near field communication’ (NFC) chip, which communicates with tap and go devices, are reducing the functionality of the banking app. of the ABC by not allowing it to make payments directly.

CBA also believes the restriction prevents it from adding loyalty features that connect to the point of sale as well as other features such as health claims to its app, the eighth most used app in Australia with 9, 4 million daily connections.

An ACCC investigation into Apple Pay was launched in September 2021 in response to Mr Comyn’s claims. It examines the design of iPhones, which only allow payment cards stored in Apple’s digital wallet to make payments.

At the summit, ACCC President Gina Cass-Gottlieb confirmed that the investigation was continuing and that the ACCC was working with the European Union.

“One area where Apple engages in self-preference and restricting competitors’ access to functionality is in its reservation of contactless and contactless payments using NFC. [near-field communication] chip on Apple mobile devices to its own Apple Pay app and Apple Wallet,” Cass-Gottlieb said.

EU antitrust chief Margrethe Vestager said on May 2: “We have indications that Apple has restricted third-party access to key technology needed to develop rival mobile wallet solutions on Apple devices. Apple … in our Statement of Objections, we initially found that Apple might have restricted competition, in favor of its own Apple Pay solution.

ACCC Chair Gina Cass-Gottlieb at the AFR Banking Summit on Tuesday: “As competition agencies around the world are well aware, this can involve a range of anti-competitive practices.” Michael Quelch

Ms Cass-Gottlieb said the ACCC had “close engagement with global competition agencies” investigating Apple, and pointed to ongoing legislative reform in several jurisdictions, including the Digital Markets Act of the European Union, which will regulate against self-preference and refusals to deal, including access to technology.

In a submission to the ACCC published last month, the ABC said: “As the role of digital platforms in payments and financial services continues to evolve, strong competition will be crucial to ensure that the many benefits that resulting from these technologies translate into better outcomes for consumers.

“However, this increase in digital payment services coincides with an incomplete and inconsistent regulatory treatment of these services, with some providers operating outside the existing formal and self-regulatory frameworks that govern payment systems in Australia.

“As in many areas of the digital economy where proposals to ensure open and fair access are sought to unlock value for the economy as a whole, fair, reasonable and open access to mobile device ecosystems will bring increased value to Australians in the financial services and payments sectors.”

Any Australian law, which could be recommended by the ACCC or the Reserve Bank, could potentially order Apple to open access to NFC to banks and other apps. Banks might still have to pay fees to Apple, but it would allow payments to be made natively from banking apps. Legislation could potentially require Apple to invest in maintaining local payment infrastructure.

“Refusal to deal”

In the ACCC’s Digital Platform Services Working Paper for September report, he suggested that Apple’s NFC restrictions could be a “refusal to deal.” “It is important that digital guardian platforms that control and compete in related markets ensure a level playing field on their platform and do not exploit their rule-making powers to extract inflated prices or to restrict unfairly competition,” the ACCC said.

“Concerns about this conduct and the potential implications for competition in the payments and financial services markets have been raised in a number of recent government, parliamentary and regulatory reviews in Australia.”

Apple said it has “serious concerns” about the ACCC’s approach. In a statement released last month, he said he was “perplexed that the Competition and Consumer Protection Agency is prioritizing alleged competition concerns that lack convincing evidence of harm, rather than clear and present serious damage to users that they experience every day”.

“Unfortunately, the regulatory interventions proposed in the Discussion Paper would fundamentally change iPhone and related Apple services (including iOS and the App Store) in an already highly competitive marketplace, and have substantial implications for consumers, including in terms of Apple’s industry-leading privacy and security standards, and would reallocate the distribution of app economy benefits from the broadest set of developers to a small set of successful incumbents.

“Apple urges the ACCC to undertake a deeper analysis of the benefits that Apple’s ecosystem brings to consumers and developers, and to objectively examine the ramifications of any proposed interventions on consumers and competition in the various markets that would be affected by the regulatory proposals in the discussion paper.

Apple Pay is a popular product.

— Maile Carnegie, ANZ

South Korea and Japan are also considering laws that could open up access to iPhone infrastructure.

During a question-and-answer session at the summit, Ms Cass-Gottlieb highlighted the action in the Netherlands over dating apps, where around $50 million in penalties had been slapped on Apple for not allowing data. other payment methods in the apps. “Although Apple responded in part by proposing two changes to in-app payments, the Dutch competition authority did not consider that it adequately addressed the issue,” she said.

Apple said it did not have a specific response to Ms. Cass-Gottlieb’s comments at the summit, where she also said the ACCC was reviewing Apple’s and Google’s respective control over the App Store and the Play Store, which allows anyone to impose conditions preventing app developers from using alternative payment systems for in-app payments.

Apple said it stood by its position set out in a document titled “The Facts About Apple Pay” filed with the Joint Business and Financial Services House Committee inquiry into mobile payments and digital wallets last year.

“At Apple, the customer remains our focus, and our approach, technical architecture, and user experiences are designed to improve the everyday lives of our customers with simplicity, privacy, and security at the heart of everything we do,” said Apple. tech giant in this submission. .

Test for Chalmers

Ms. Cass Gottlieb’s speech at the Summit also opened up old wounds between Apple and Google. The latter highlighted its more open approach that allows banking apps to access tap and go payments on Android phones.

“We believe that a competitive mobile payment and digital wallet environment provides consumers with greater choice and accelerates innovation. We welcome interest in this space and will continue to engage constructively in discussions about further enhancements,” a Google representative said in response to Cass Gottlieb’s speech.

Resolving the dispute between one of Australia’s biggest companies and one of the world’s biggest companies will be a first test for Mr Chalmers, who outlined Labour’s approach to payment policy at an event from the Australian Banking Association on March 11.

He said in that speech that Labor supported “the important role that established institutions play in ensuring the stability and resilience of the system; fostering innovation and competition from new and emerging technologies and successful small businesses; and empower regulators and facilitate regulation as nimble as the industry itself.”

Mr Chalmers also said Labor wanted to ensure that “payments regulation facilitates the integration of new and emerging systems into the regulatory structure, significantly advancing the ongoing conversation about a digital banking currency. and giving consumers greater control and protection of their data”.

Of around 4.5 million smartphones sold in the second half of 2021, Apple took a 43.8% share of sales. Samsung, which runs Google’s Android operating system, took 36%, and other companies around 20.2%, according to Telsyte Australian Smartphone. & Wearable Devices Market Research 2022.

In considering an intervention, the ACCC will need to take into account that Apple Pay remains very popular with users for the seamless way it works on payment terminals that do not require an iPhone user to open an app. before waving the phone over the terminal.

“I think overall Australians and our customers would thank us very much for taking the industry into Apple Pay, it’s a very popular product,” said Maile Carnegie, head of retail at ANZ. , at the summit. “I think there is scrutiny of these tech companies at all levels. It is a fascinating space.

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