In a significant development, Brazil’s Administrative Council for Economic Defense (CADE) has recommended imposing sanctions on Apple for allegedly engaging in anti-competitive practices related to its Near Field Communication (NFC) technology. This recommendation stems from a 2022 complaint by Latin American e-commerce giant MercadoLibre, which accused Apple of restricting access to the iPhone’s NFC chip and mandating the use of Apple Pay for in-app transactions.
Background of the Complaint
MercadoLibre’s complaint highlighted concerns that Apple’s policies create artificial barriers for competitors and stifle innovation within the digital payments sector. By limiting third-party access to the NFC chip, Apple effectively controls the tap-to-pay functionality on iOS devices, thereby restricting the development and deployment of alternative payment solutions. This control not only hampers competition but also limits consumer choice in payment methods.
CADE’s Findings and Recommendations
After a thorough investigation, CADE’s General Superintendence concluded that Apple’s practices constitute an abuse of economic power under Brazilian law. The agency’s report states that these restrictions make it challenging for new entrants to penetrate the market, thereby preserving Apple’s dominant position in the iOS ecosystem. The report further emphasizes that such behavior limits the options available to both developers and consumers, ultimately hindering innovation and competition.
In light of these findings, CADE has recommended that its internal tribunal impose financial penalties on Apple. While the exact amount of the proposed fines has not been disclosed, the agency suggests that remedies should include requiring Apple to open access to its NFC hardware and payment framework. This move aligns with similar regulatory actions in other jurisdictions, such as the European Union’s Digital Markets Act, which mandates that tech giants provide fair access to essential technologies.
Apple’s Response
In response to CADE’s recommendations, Apple has expressed concerns that the proposed measures could undermine the user experience and compromise privacy and security. The company stated, For more than 16 years, the App Store has provided our users in Brazil with a safe and trusted marketplace to discover new apps and has helped Brazilian developers build successful businesses. We are concerned that CADE’s proposed measures would harm the experience our users love and trust, while also introducing new risks to their privacy and security. We will continue to engage with CADE to defend the rights of users and developers on our platform.
Apple also contends that it does not hold a dominant position in Brazil, citing Android’s significantly larger market share in the country. The company argues that its NFC and Secure Element (SE) technology are integral to ensuring the security and privacy of its users, and that opening access to these components could introduce vulnerabilities.
Broader Implications
This case is part of a broader trend of regulatory scrutiny faced by Apple and other tech giants worldwide. In November 2024, CADE had already ruled that Apple must lift restrictions on in-app payment methods, following a complaint from MercadoLibre. The regulator mandated that Apple allow app developers to include external links for users to purchase digital goods or services outside the app and permit alternative in-app payment systems. Apple was given 20 days to comply with these measures or face daily fines of 250,000 reais (approximately $43,000).
Furthermore, in August 2024, Apple announced plans to open its iPhone’s tap-to-pay technology to third-party developers in multiple countries, including Brazil. This decision was influenced by regulatory pressures from authorities in the U.S. and the European Union, aiming to foster competition and innovation in the digital payments space.
Conclusion
CADE’s recommendation to sanction Apple over NFC restrictions underscores the growing global emphasis on ensuring fair competition within the digital economy. As regulatory bodies continue to scrutinize the practices of major tech companies, the outcomes of such cases could have far-reaching implications for the industry’s future landscape. For Apple, navigating these regulatory challenges will require balancing its commitment to user experience and security with the need to comply with evolving antitrust regulations.
