Brazil’s antitrust watchdog says Apple must face penalties over NFC restrictions

Apple’s week is off to a rough start. First, Proton filed a class action lawsuit in the U.S. Almost simultaneously, a judge in New Jersey rejected Apple’s attempt to dismiss a federal antitrust case.

And on Monday night, things got a little worse: CADE, Brazil’s antitrust watchdog, formally recommended that Apple be sanctioned for restricting access to the iPhone’s NFC chip and forcing developers to use Apple Pay.

In its ruling, CADE’s General Superintendence said Apple’s behavior creates “artificial barriers” for competitors and stifles innovation in digital markets tied to iOS, which Apple “fully controls.”

The agency says the company’s practices make it harder for new players to enter the market and limit options for both developers and users.

The original inquiry followed a 2022 complaint filed by e-commerce giant MercadoLibre

The Latin American company alleged that Apple abused its dominance in the iOS app distribution market by restricting the sale of third-party digital services, and requiring developers to exclusively use its own payment system for in-app transactions.

CADE concluded that this set of restrictions amounts to an abuse of economic power under Brazilian law.

Its report accuses Apple of artificially preserving its dominant position in iOS-related markets, and of making it unnecessarily difficult for competitors to operate on the platform. Particularly when it comes to digital payments:

“With these restrictions,” CADE wrote, “Apple makes it harder for new players to enter the market, preserves its dominant position artificially, and limits choices available to developers and users.”

The authority has now asked its internal tribunal to impose a financial penalty (amount not yet disclosed) and adopt remedies to address the antitrust violations. That could include requiring Apple to open access to its NFC hardware and payment framework, much like what the EU is already enforcing under the Digital Markets Act.

Apple responds

In a statement shared with Brazilian tech website Tecnoblog, Apple defended its policies and warned that CADE’s proposals could undermine the user experience it has worked to build (translation ours):

“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 has argued that it doesn’t hold a dominant position in Brazil, pointing to Android’s significantly larger market share in the country. It also claims that its “NFC & SE” platform is available to third parties for payment processing, though only under its own terms.