When Apple Pay launched in 2014, it was touted as the future of mobile payments. With a simple tap of an iPhone to a payment terminal, users could complete transactions quickly and securely using near-field communication (NFC) technology built into Apple’s devices.

For Apple, Apple Pay was more than just a new service – it was a key way to expand its growing services ecosystem. By controlling access to the iPhone’s NFC chip, Apple could not only popularize mobile wallet usage but ensure that all transactions flowed through its own payment infrastructure.

This strategy brought record revenues from services. But it also caught the attention of regulators in the European Union, who opened a formal antitrust investigation in 2020. At the heart of the case was a classic platform question: Should Apple allow third-party apps access to key iPhone features like NFC tap-to-pay, or can it build exclusive functionality for its own apps?

When the investigation was announced, EU antitrust chief Margrethe Vestager indicated she would come down hard on exclusivity. “The Commission takes issue with the decision by Apple to prevent mobile wallets app developers, from accessing the necessary hardware and software (‘NFC input’) on its devices, to the benefit of its own solution, Apple Pay,” she said.

The investigation has dragged on for nearly four years. Sources with knowledge of the inquiry say frequent meetings have occurred, including talks between Vestager herself and Apple CEO Tim Cook during his visit to EU headquarters in Brussels last week.

Now, in an apparent bid to satisfy investigators and avoid hefty fines or business model changes, Apple has proposed to open up NFC access to third parties – with some strings attached.

Under the proposed commitments revealed today, developers based in the European Economic Area (EEA) will have the option to apply for a special entitlement allowing them to utilize iPhone tap-to-pay functionality directly in their apps. Users with European Apple IDs would then be able to add cards and pay at terminals by tapping, just like Apple Pay.

To ensure security and prevent fragmentation, Apple’s APIs and security measures would need to be used, rather than allowing developers to access the hardware directly. Still, this could enable alternative payment methods like Square and PayPal to achieve feature parity with Apple Pay for the first time.

According to the European Commission, which is soliciting feedback on the offer over the next few weeks, Apple has committed to opening NFC for a decade – an eternity in the fast moving tech industry.

For Vestager’s team, making concessions under threat of a fine would represent a major win in their battle to prevent platform owners from unfairly self-preferencing their own services.

But for Apple, it risks giving up control of key technology relied upon by over 500 million iPhone users globally to make the seamless, integrated experiences that set it apart from Android and other platforms.

And many open questions remain about how exactly the new entitlement would work, how Apple would vet applicants, and how developers could actually differentiate their offerings beyond processing backend payments.

Regardless of the final details, Apple’s opening NFC access marks a potential inflection point in how the company develops products integrating hardware, software and services. With antitrust scrutiny rising across regions, Apple’s ability to restrict third-party access to the iPhone’s capabilities is under threat.

And if regulators ultimately deem iPhone tap-to-pay an essential facility that Apple can’t exclusively control, it could force a change in strategy away from end-to-end differentiation.

What’s clear is that with intensifying legal pressure in the EU and lawmakers proposing major tech regulation in the United States, the closed ecosystem approach that defined Apple’s services boom over the past decade may no longer fly.