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EU Antitrust Charges a Sign of Dangers Ahead

On Monday, regulators in the European Union (EU) determined Apple broke its antitrust laws by not giving other payment services access to iPhone technology. The commission ruled that Apple had unfairly advantaged Apple Pay, which lets users make purchases with a single tap, while not letting other services use that same technology. While this ruling was only a preliminary one – and Apple will have a chance to respond before it is finalized – it is an ominous sign of things to come for consumer device security.

The crux of this decision rests on Apple’s decision not to allow third parties access to its near-field communication (NFC) technology. NFC technology is the hardware and software that enables interactions with payment terminals. In short, EU regulators are going after Apple for safeguarding its payment processing systems from other – sometimes unverified – companies. They view this as anti-competitive behavior.

The issue with this, however, is that this is a common sense business practice on Apple’s part. Given how many people use Apple products and Apple payment processing systems, it is entirely reasonable for Apple to keep a close watch over who can access the technology involved. Opening up these systems leaves users open to a multitude of privacy invasions. It also invites the possibility of malware attacks or data hacks and leaks.

With geopolitical uncertainty abounding, cybersecurity ought to be of the utmost importance. The U.S. could potentially face cyber threats from a number of world powers, as well as independent hacking groups. The ability for private companies like Apple to erect barriers between their technology and malicious actors is critical in protecting Americans’ data from these adversaries. Sadly, this catchall antitrust approach taking place on two separate continents would make that more difficult.

This attack on reasonable security measures came under the current regulatory regime. The EU has recently come to a preliminary agreement on two pieces of legislation – the Digital Markets Act (DMA) and the Digital Services Act – that would make this issue exponentially worse.

The DMA in particular would prohibit companies from preferencing their own products or services, in much the same way as Apple uses its own Apple Pay. It would also require that smart phone providers allow sideloading of apps on their devices. Any security barriers to entry into various app stores will be forcibly torn down by European regulators should this legislation go through.

In essence, bills like the DMA would eradicate the ability of tech companies to vet potentially malicious actors. The elimination of these commonsense restrictions allows malware and hackers near unfettered access to software, technology, and data that may be particularly sensitive.  Not only that, but a number of interoperability provisions in the DMA have ease of access provisions and companies like Apple would have to provide their software to do it.

Unfortunately, this is not purely a European problem. A number of bills, spearheaded by Sen. Amy Klobuchar (D-Minn.), are making the rounds in the US Senate. These bills would accomplish largely the same objectives through similar means. However, the difference is that America – unlike Europe – has had a largely free market approach to tech until now. The Klobuchar bills would be a radical departure from this approach, hurting America’s thriving tech sector with Europe’s practically nonexistent one.

While the Apple Pay dispute in Europe may be the news of the day when it comes to tech, make no mistake. This is only a foretaste of what is to come if lawmakers in the US and the EU continue down the path they are currently walking. It will severely hamstring innovation and will have devastating consequences for cybersecurity.

Published on May 5, 2022