The Economist May 7th 2022 Finance & economics 69lic’s large investment in il&fs, a
governmentsupported infrastructurein
vestment fund that went spectacularly
bust in 2018, and its majority stake in an
other formerly governmentcontrolled en
tity, idbiBank, which it bought as its con
tribution to a 2019 bailout. Also featured
are equity investments purchased over the
years for 8.8bn rupees ($115m), currently
valued at 2bn, and debt investments of
113bn rupees, 54bn of which are classified
as nonperforming assets.
A public listing, and the transparency
that must accompany it, may alter this ap
proach. But concerns about hidden pro
blems and continued interference by the
government are worrying investors, which
helps to explain why the offering is being
priced so low. Until recently there had been
expectations that licwould be valued at
three times its “Indian Embedded Value”,
an approach based on the present value of
future profits derived from expected pre
miums, like most other Indian private in
surance firms. Instead licshares are likely
to be sold at only 1.1 times, suggesting buy
ers have serious reservations.
Still, in time, the most salient detail
about the listing may have nothing to do
with price and size and everything to do
with the fact that it happened at all. When
the newly reelected administration of Na
rendra Modi first proposed a public sale of
a stake in lic, in early 2020, it was derided
as an empty political promise. Highly pub
licised efforts to flog other statecontrolled
assets, most notably Air India, had flopped
multiple times. In October of that year,
however, Air India was finally sold—to Tata
Group, from which it had been seized in
- lic’s return to the markets after al
most as long a gap is not withoutsnags. But
it suggests a cycle may havegenuinely, if
not entirely, come to an end.n
Making an entryApplePayTap dance
T
here is notyetanapptokeeptrackof
the growing number of antitrust com
plaints against Apple. But perhaps there
should be. On May 2nd the European Com
mission, the eu’s executive arm, added an
other to the pile. Following an investiga
tion begun in 2020, it sent the smart
phonemaker a “statement of objections”,
saying that, in the commission’s view, Ap
ple is abusing its power in the market for
smartphone payments.
At issue is Apple Pay, a contactlesspay
ment service introduced in 2014. Apple Pay
uses a specialised radio called a NearField
Communication (nfc) chip to allow an
iPhone to work like a contactless credit
card. Users who have loaded their banking
details onto their phones can wave them at
contactlesspayment terminals to pay for
things. Apple collects a fee from the user’s
bank for each transaction.
The service has quickly become popu
lar: in 2020 Bernstein, a financial firm, es
timated Apple Pay accounted for about 5%
of global card transactions, and forecast
that it might reach 10% by 2025. The pro
blem, in the commission’s view, is that ios,
the operating system used by iPhones, al
lows only Apple’s own mobilewallet soft
ware to make use of the nfcchip. That
freezes out rivals who might want to build
competing payment apps of their own. An
droid, a rival smartphone operating sys
tem maintained by Google, does allow
thirdparty apps access to a phone’s nfc
chip, meaning that Android users can
choose contactlesscapable smart wallets
from firms such as Google, Samsung, Pay
Pal and others.
The commission’s findings are only
preliminary. But if a full investigation
comes to the same conclusion, Apple
would be in breach of European competi
tion laws, and exposed—at least in theo
ry—to fines of up to 10% of its worldwide
turnover. The firm will have further chanc
es to argue its cornerbefore the commis
sion issues a final decision, a process that
could take many months.
The antitrust probe is the latest in a
string of attacks on Apple’s business model
by app developers, rival firms and govern
ments. Apple runs the iPhone as a “walled
garden”, in which the firm imposes tight
controls on which apps are allowed to run
on its devices, and on what those apps are
allowed to do. Apple says its restrictions
are there for the privacy and security of itsusers, an argument it has repeated in re
sponse to the commission’s allegations.
Others, though, allege less noble mo
tives. In 2020 Epic Games, the maker of
“Fortnite”, a popular video game, and “Un
real”, a software engine on which hundreds
of other video games are built, sued Apple,
claiming that its refusal to allow rival firms
to process payments made from within
apps was anticompetitive. (Epic had want
ed to offer Fortnite players a rival, cheaper
payment system.) After losing the initial
case, Epic has appealed—this time with
support from Microsoft, America’s Depart
ment of Justice and 35 individual states.
Similar complaints by Spotify, a music
streaming firm, helped prompt another eu
antitrust investigation in 2020; a third is
under way in Britain. Following a com
plaint from Match Group, an operator of
dating sites, Dutch trustbusters found Ap
ple’s inapp payments policies to be anti
competitive in October. They fined the
firm €5m a week every week between Janu
ary and March 28th (when it reached the
€50m maximum fine, a cap the watchdogs
have not yet raised).
Investigations and court cases, of
course, are not foregone conclusions. But
even if Apple wins some battles, it could
still lose the war. On March 24th the eu
agreed the text of the Digital Markets Act
(dma), a bumper piece of legislation de
signed to force big tech firms to open their
platforms up to competition. One of its
themes is to try to forbid companies from
giving preferential treatment to their own
apps and services. The dmawould require
Apple to allow users to install apps from
places other than Apple’s own App Store,
and force it to allow rivals to providein
app payment tools of their own. Thewalls
are not looking as solid as they were. nTrustbusters take aim at Apple’s clout
in contactless payments