Apple financial services – like Apple Card and the new savings account – are mostly limited to the US at present, but the UK regulator is already launching an inquiry into potential antitrust concerns.
Background
When I mused back in 2015 about the possibility of Apple becoming a bank, even I wondered whether I was being crazy to consider the scenario. Since then, however, Apple has made a number of notable moves in that direction.
Apple has become the biggest player in the mobile wallet field, launching a credit card, a buy-now-pay-later service, and most recently a savings account.
While the company partners with an existing bank for most of these services, Apple is acting as its own bank for Apple Pay Later. The latter move prompted the US consumer finance regulator to express antitrust concerns.
The Consumer Financial Protection Bureau (CFPB) said that Apple Pay Later raised “a host of issues,” including antitrust and privacy questions.
Earlier this year, Apple acquired Credit Kudos, a UK startup company that takes a new approach to assessing the creditworthiness of finance applicants. This seemed a clear pointer to plans to launch the Apple Card in the UK.
Among the issues the agency would consider was “whether it may actually reduce competition and innovation in the market”, CFPB director Rohit Chopra said in an interview.
In response to a question about the Apple launch, Chopra said Big Tech’s entry into short-term lending “raises a host of issues”, including how companies would use customer data. “Is it being combined with browsing history, geolocation history, health data, other apps?”
Apple financial services inquiry in the UK
The Financial Times reports that the UK’s financial services regulator is asking similar questions to those posed in the US.
As is often the case with early-stage antitrust investigations, the concern is that consumers may benefit in the short-term but be harmed in the long-term.
Tech giants may initially win business with attractive deals for consumers, including those who may struggle to get credit elsewhere. They may also prompt UK financial companies to improve their own offers in order to compete. But there’s a longer-term risk, suggests the FCA.
While acknowledging that customers might profit within the quick time period, the FCA means that Big Tech firms may have the ability to “exploit their ecosystems” and enormous information shops to “lock consumers in”, as in different markets the place they already face regulatory scrutiny, resembling cell app shops.
While antitrust is often misunderstood as addressing monopolies, it is in fact the opposite.
“Based on evidence in Big Tech firms’ core markets and their expanding ecosystems, there are competition risks arising from them rapidly gaining market share, markets ‘tipping’ in their favour and potential exploitation of market power,” the FCA wrote in its 61-page evaluation. “This could be harmful to competition and consumer outcomes.”
