U.S. regulators find themselves in a tussle with major tech conglomerates over their intention to monitor firms like Apple (NASDAQ:AAPL) and Alphabet’s (NASDAQ:GOOG) Google, who offer digital wallets and payment apps. The proposed oversight plan, brought forth by the U.S. Consumer Financial Protection Bureau (CFPB), has sparked exasperation from the tech industry’s trade association group, CCIA, as it potentially poses a threat to innovation and market accessibility.

Ruffling Feathers

The Computer & Communications Industry Association, also known as CCIA, which boasts members such as Amazon, Facebook Meta Platforms, and X, (formerly Twitter), voiced its concerns regarding the CFPB’s proposal. The association argues that broad, stringent digital regulations may impede new entrants into the market and stifle U.S. innovation and economic growth.

The regulatory watchdog’s concerns stem from the fact that smartphone payments and wallet services presented by these tech giants are vying with traditional payment methods without providing comparable consumer protections. The CFPB’s proposal seeks to address this disparity by subjecting these companies to the same level of supervision currently enforced on banks. This entails scrutiny into compliance with laws governing unfair or deceptive practices, privacy protections, and executive conduct.

Resistance and Rebuttal

“We would urge regulators to tailor new regulations to specific problems they want to fix as broad, overly burdensome, or heavy-handed digital regulation could significantly hinder new startups in this industry, and harm U.S. innovation and economic growth,” remarked Krisztian Katona, CCIA Vice President of Global Competition and Regulatory Policy.

Officials at the CFPB anticipate that the proposed oversight would encompass 17 companies responsible for processing an estimated 13 billion payments annually.

Notably, the proposal, which is still in the draft stage, has encountered resistance from the Financial Technology Association (FTA), whose members include industry heavyweights like PayPal, owner of Venmo, and Block, operator of Cash App. The FTA echoed CCIA’s sentiments, urging the CFPB to reconsider the expansive nature of the proposed rule and its failure to distinctly define the market or identify specific consumer risks not already mitigated by existing regulations.