Apple Inc. has now decided to loosen up after facing antitrust scrutiny from Government authorities and app Store developers in recent years.
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Two years ago, the company allowed users to choose third-party email apps and web browsers as their default system. This meant that if one clicked a link in a message, it would open in Google Chrome instead of safari. When one wants to click on an email address, the message will open in Microsoft outlook and not in Apple Mail.
As per Bloomberg News, last year, Apple allowed users to choose music apps such as Pandora or Spotify for use in Siri. This year Apple took a dramatic step of allowing third-party apps to point to the web for completing subscriptions and bypassing the Apple Store fees by 30%.
These key changes were, however, forced upon the company. Many, including the U.S. government, had questioned Apple why users could not switch to default apps. Spotify Technology SA attacked Apple Inc. over its practices. The Epic Games Inc. ruling and change in subscription app payment in the Japanese trade commission settlement pushed the company in a new direction.
The next antitrust battle faced by Apple Inc. is overpayments, and it controls the iPhone chip that handles near-field communication or NFC. Currently, iPhone users must use Apple Pay if they want to buy anything via the phone tap, and this has been frustrating competitors with financial apps.
Apple’s policy means that Square, PayPal, and other financial firms such as Citi Chase, and American Express cannot launch iPhone apps to pay with their interface and features. They also have to pay 0.15% for every credit card transaction on Apple Pay if they have to access the iPhone user base.
Apple does not want to open up the tap to pay feature to apps belonging to third-party service providers where there is revenue involved.
Sales from Apple Pay and third-party financial services are a small component of the company’s service business. With nearly $20 billion in overall profit for a quarter, a $1 billion service fee may look too small. Still, it is a deciding factor in achieving or falling short of the annual growth targets in the service segment.
Riding to Visa Inc, 20% of transactions in the U.S. are contactless this year. Imagine this percentage will be in the next 3 to 5 years. If Apple allows third-party apps to opt for the tap, the impact will be billions.
According to Apple, their insistence on reserving the tap to pay option only for Apple Pay is not for revenue but for security and privacy. It feels that opening the NFC will compromise its system and pointed to a report from 2016 where access to NFC on Android was hacked.
