Digital Identity Wallet Competition Internationally

1. Introduction

Digital identity wallets are software or hardware-based systems that allow individuals to store, present, verify, and selectively disclose credentials such as identity documents, driving licences, professional qualifications, age credentials, health credentials, payment credentials, or other attributes.

Examples include government-backed digital identity wallets, private identity wallets, mobile-platform wallets, and interoperable credential systems based on standards such as verifiable credentials.

From a competition-law perspective, the important issue is not merely whether one company provides an identity wallet. The deeper concern is whether control over the wallet becomes a gatekeeping layer between individuals, governments, banks, merchants, employers, platforms, and other service providers.

Competition concerns can therefore arise at several levels:

1. Wallet-provider dominance
2. Mobile operating-system control
3. App-store restrictions
4. Default placement and pre-installation
5. Interoperability restrictions
6. Access to identity-verification infrastructure
7. Use of identity data to reinforce adjacent markets
8. Self-preferencing
9. Exclusion of competing wallets
10. Bundling identity, payments and authentication
11. Government-backed competitive advantages
12. Switching costs and ecosystem lock-in

There is not yet a large body of reported judgments specifically concerning digital identity wallets. Consequently, the most useful international competition-law analysis comes from applying established digital-platform, interoperability, essential-facility, tying, data-access and gatekeeper cases to identity-wallet markets.

2. What Is the Relevant Market?

A digital identity wallet can participate in several overlapping markets.

A. Digital identity-wallet market

The relevant product could be:

Software enabling consumers to store and present verified identity credentials electronically.

The market may contain:

• government wallets;
• bank-operated identity wallets;
• technology-company wallets;
• telecommunications identity wallets;
• independent credential wallets;
• browser-based identity systems.

The competitive question is whether these products are sufficiently substitutable.

B. Digital identity verification market

A separate market may exist for:

• identity verification;
• age verification;
• KYC;
• electronic signatures;
• authentication;
• credential verification.

A company controlling the wallet could therefore leverage its position into verification services.

C. Mobile identity infrastructure

Where a wallet operates principally through smartphones, competition may be affected by:

• mobile operating systems;
• secure hardware;
• NFC;
• biometric authentication;
• app stores;
• APIs;
• default applications.

This is particularly important because a wallet competitor may technically exist but remain commercially ineffective if the operating-system provider prevents it from accessing necessary functionality.

3. Why Digital Identity Wallets Create Competition Risks

3.1 Network effects

Identity wallets become more valuable as more:

• citizens use them;
• governments recognise them;
• banks accept them;
• merchants verify them;
• employers rely upon them.

This produces two-sided or multi-sided network effects.

A dominant wallet can therefore become progressively harder to challenge.

3.2 Identity-network effects

Identity infrastructure has a particularly powerful network effect because verification depends upon acceptance.

For example:

More users → more relying parties → more credentials → greater utility → more users

Once a critical mass is reached, competing wallets may find it difficult to attract users even if their technology is superior.

4. The Gatekeeper Problem

A mobile operating-system company may control:

• the device;
• operating system;
• secure enclave;
• biometric authentication;
• NFC;
• app distribution;
• default applications;
• APIs.

If it also operates its own identity wallet, it can potentially favour that wallet over competitors.

The competition-law concern is therefore:

Can an infrastructure provider simultaneously operate the infrastructure and compete against companies dependent upon that infrastructure?

This is closely related to the reasoning developed in European digital-platform cases.

5. Major International Case Laws

Case 1: Google Shopping — European Union

Google Search (Shopping), Case AT.39740 / Google Shopping

The European Commission and EU courts examined Google's preferential treatment of its own comparison-shopping service within its dominant general-search service.

Competition principle

The case is important for digital identity wallets because it demonstrates the concern with self-preferencing by a dominant infrastructure platform.

If a dominant operating-system or platform provider controls the principal access point to identity services, it could potentially:

• rank its own wallet more prominently;
• give it privileged system access;
• favour its own verification credentials;
• make third-party wallets harder to discover.

Relevance

The identity-wallet analogue is:

Dominant digital infrastructure + preferential treatment of vertically integrated wallet = potential exclusion of competing wallets.

The underlying competitive harm is not necessarily an explicit prohibition of competitors. Preferential treatment can itself alter competitive conditions.

6. Case 2: Google Android — European Union

Google Android, Case AT.40099

The European Commission's Android decision concerned Google's practices involving Android devices, Google Search, Chrome, licensing arrangements and restrictions affecting competing search providers.

Competition principle

The case demonstrates how control over an operating-system ecosystem can be used to influence competition in adjacent markets.

Relevant mechanisms included:

• tying;
• contractual restrictions;
• incentives;
• control of distribution;
• ecosystem leverage.

Application to identity wallets

Suppose a mobile operating-system provider makes its own identity wallet the default and requires manufacturers or service providers to use its authentication architecture.

This could raise:

• tying concerns;
• exclusionary-distribution concerns;
• interoperability concerns;
• foreclosure concerns.

The key question would be whether competitors can effectively reach users without access to equivalent functionality.

7. Case 3: Microsoft — European Union

Microsoft v Commission, Case T-201/04

The Microsoft litigation concerning Windows Media Player and interoperability remains highly relevant.

Competition principle

The case illustrates two major principles:

1. Tying can constitute an abuse of dominance.
2. Interoperability can become a competition issue where a dominant platform controls an important technical interface.

Digital identity application

A dominant identity-wallet infrastructure could potentially require users or relying parties to adopt additional services controlled by the same provider.

For example:

Operating system → mandatory authentication framework → proprietary identity wallet → proprietary verification service.

If competing wallets cannot obtain equivalent technical interoperability, competition may be weakened.

8. Case 4: Bronner — European Union

Oscar Bronner GmbH & Co. KG v Mediaprint, Case C-7/97

The Court of Justice established a demanding framework for refusal-to-supply claims involving essential facilities.

Competition principle

A refusal to provide access to infrastructure is not automatically abusive merely because competitors need it.

The traditional criteria include circumstances where:

1. access is indispensable;
2. duplication is practically or economically impossible;
3. refusal is capable of eliminating effective competition;
4. there is no objective justification.

Digital identity-wallet application

Suppose a dominant mobile ecosystem controls an identity-verification interface that competitors cannot realistically reproduce.

A competing wallet might argue that access to:

• secure hardware;
• NFC;
• biometric authentication;
• identity APIs;
• government credential interfaces

is indispensable.

The Bronner framework would be important in determining whether a competition-law duty to provide access exists.

9. Case 5: Slovak Telekom — European Union

Slovak Telekom a.s. and Deutsche Telekom AG v Commission, Joined Cases C-152/19 P and C-165/19 P

The case concerned exclusionary conduct involving access to telecommunications infrastructure.

Competition principle

The case is important because it demonstrates how competition law can address exclusionary conduct involving infrastructure where downstream competitors depend upon access.

Identity-wallet relevance

Digital identity infrastructure may similarly exhibit upstream/downstream dependency:

Identity infrastructure → wallet → verification service → downstream commercial services.

If the infrastructure controller selectively restricts access to competing wallets, it may distort downstream competition.

The important question becomes whether the infrastructure is being used to protect an adjacent market.

10. Case 6: Apple — App Store / Epic Games

Epic Games, Inc. v Apple Inc., 67 F.4th 946 (9th Cir. 2023)

The US litigation examined Apple's control over iOS app distribution and payment-related restrictions.

Competition principle

The case illustrates the significance of ecosystem control, distribution restrictions, and alternative access channels.

Although the judgment was not a digital-identity case, the underlying structural issue is highly relevant.

A wallet provider operating inside a dominant mobile ecosystem may depend upon:

• app-store distribution;
• operating-system APIs;
• payment functionality;
• authentication APIs;
• device-level permissions.

Identity-wallet application

If a platform restricts competing wallets from using APIs or distribution channels available to its own wallet, the resulting foreclosure could become a competition issue.

The analysis would depend upon the applicable jurisdiction and proof of competitive harm.

11. Case 7: Epic Games v Google — United States

Epic Games, Inc. v Google LLC, US federal litigation concerning Google Play.

The case provides another important example of competition concerns surrounding digital ecosystems.

Relevant principle

Control over an ecosystem's:

• distribution;
• payment architecture;
• developer access;
• technical interfaces

can significantly affect downstream competition.

Digital identity application

A digital identity wallet may depend upon precisely these same ecosystem functions.

For example:

Wallet developer → app store → operating system → secure hardware → authentication API → identity provider

If one company controls most of those layers, it can potentially influence the competitive viability of alternative wallets.

12. Case 8: IMS Health — European Union

IMS Health GmbH & Co. OHG v NDC Health GmbH & Co. KG, Case C-418/01

IMS Health concerned access to a protected information structure that competitors required to compete effectively.

Competition principle

The case developed the European approach to compulsory access involving indispensable infrastructure or information.

Identity-wallet relevance

Digital identity systems may involve proprietary:

• credential formats;
• identity schemas;
• verification databases;
• APIs;
• trust frameworks.

If a dominant undertaking controls an infrastructure that competitors cannot realistically replicate, refusal of access can potentially raise Article 102 TFEU issues.

However, mere possession of valuable data or infrastructure does not automatically create a competition-law obligation to share it.

13. Case 9: Google Search (AdSense)

Google Search (AdSense), Case AT.40411

The European Commission examined Google's restrictions concerning competing search-advertising intermediaries.

Competition principle

The case demonstrates how contractual restrictions imposed by a dominant platform can prevent competitors from accessing commercially important distribution channels.

Identity-wallet relevance

Comparable restrictions could arise where an identity platform contracts with:

• banks;
• governments;
• merchants;
• online platforms;
• telecom operators.

For example, contracts could effectively require partners to recognise only the dominant wallet.

This could produce ecosystem foreclosure even without formally prohibiting rival wallets.

14. Case 10: Qualcomm — European Union

Qualcomm (exclusivity payments), Case AT.39711

The EU Qualcomm litigation concerned exclusivity arrangements and their potential exclusionary effects.

Competition principle

Dominant firms may create competitive problems through incentives that discourage customers from dealing with rivals.

Digital identity application

A dominant wallet provider might offer:

• preferential transaction pricing;
• integration subsidies;
• rebates;
• certification benefits;
• API discounts

conditional upon exclusive or preferential use of its wallet.

The competition concern would be whether such arrangements foreclose equally efficient competitors.

15. Government Digital Identity Wallets

Digital identity wallets create an additional complication because the provider may be a government or government-backed entity.

A government wallet can have advantages unavailable to private competitors:

• statutory recognition;
• mandatory acceptance;
• access to government identity databases;
• public procurement preference;
• regulatory endorsement;
• nationwide user enrolment;
• integration with public services.

This raises a distinction between:

Legitimate public infrastructure

A government may legitimately establish a national identity system to achieve:

• security;
• inclusion;
• fraud reduction;
• administrative efficiency.

Competitive exclusion

The problem arises if government infrastructure is subsequently used to:

• exclude private providers;
• mandate unnecessary proprietary technology;
• prevent interoperability;
• favour a state-owned commercial provider;
• leverage public identity infrastructure into unrelated commercial markets.

16. State Aid and Competitive Neutrality

Government-supported identity wallets can also raise state-aid and competitive-neutrality concerns in jurisdictions such as the EU.

Suppose a government:

1. finances a public wallet;
2. gives it exclusive access to official credentials;
3. mandates acceptance;
4. permits it to provide commercial KYC services;
5. prevents private wallets from accessing equivalent credentials.

The public system could then evolve from a public-service infrastructure into a state-supported commercial competitor.

The competition assessment should therefore separate:

public authority functions

from

commercial economic activities.

17. Interoperability as the Central Competition Issue

Interoperability may be the most important competition principle for digital identity wallets.

A healthy competitive architecture could permit:

Wallet A ↔ Government credentials

Wallet B ↔ Government credentials

Wallet C ↔ Government credentials

and:

Merchant → verifies credentials from multiple wallets

Instead, a closed system might produce:

Government → Wallet A → Verification → Merchant

with Wallets B and C excluded.

The latter architecture increases dependency and potentially creates a digital identity bottleneck.

18. Data Portability and Switching Costs

Identity wallets can accumulate highly valuable information:

• identity attributes;
• authentication history;
• professional credentials;
• licences;
• memberships;
• verification relationships;
• transaction-linked identity information.

A user may therefore face significant switching costs.

If a consumer cannot easily transfer credentials from Wallet A to Wallet B, the wallet provider gains additional market power.

Competition law should therefore consider:

• credential portability;
• exportability;
• interoperable standards;
• machine-readable credentials;
• migration mechanisms;
• revocation portability.

19. Bundling of Identity and Payments

A particularly significant future competition problem is the combination of:

Identity + payments + authentication + communications + device ecosystem.

For example:

Smartphone → operating system → wallet → identity → payment → authentication → merchant access.

The same company could potentially control the entire consumer-access chain.

This creates opportunities for:

• tying;
• bundling;
• self-preferencing;
• exclusionary defaults;
• discriminatory API access;
• leveraging;
• discriminatory pricing.

The analytical framework developed in Microsoft, Google Android and other platform cases becomes particularly relevant.

20. Self-Preferencing

Suppose three identity wallets are available on a smartphone:

• Wallet A — platform's own wallet;
• Wallet B — bank wallet;
• Wallet C — independent wallet.

The platform could give Wallet A:

• default status;
• privileged NFC access;
• privileged biometric authentication;
• automatic credential prompts;
• system-level integration.

Wallets B and C technically remain available but are commercially disadvantaged.

This represents the classic gatekeeper/self-preferencing problem.

21. Default-Setting and Pre-Installation

Defaults are especially important in identity markets because ordinary users may have little reason to actively select another wallet.

A platform could therefore obtain a significant competitive advantage through:

• pre-installation;
• default selection;
• one-click activation;
• mandatory system prompts;
• automatic credential storage.

Competition authorities should examine whether users can:

• change the default;
• uninstall the wallet;
• select alternative wallets;
• use competing authentication systems;
• migrate credentials.

22. Exclusive Government Recognition

A particularly serious scenario would be:

Government recognises only Wallet A for official digital identity purposes.

If Wallet A is government-operated, this may be legitimate depending on the legal framework and policy objectives.

But if a private provider receives exclusive recognition without objective justification, the arrangement may raise concerns involving:

• public procurement;
• discrimination;
• state aid;
• abuse of dominance;
• competition neutrality;
• regulatory foreclosure.

23. Essential-Facility Analysis

A competition authority considering access to a digital identity infrastructure would normally examine questions such as:

1. Is the infrastructure indispensable?

Can competitors realistically reproduce it?

2. Is duplication economically feasible?

Can another company build an equivalent identity network?

3. Does refusal eliminate effective competition?

Would exclusion prevent rival wallets from competing?

4. Is there objective justification?

Could security, privacy, fraud prevention or national-security considerations justify restricted access?

5. Can access be technically provided?

Could interoperability be achieved without compromising security?

This is where Bronner, IMS Health and related EU jurisprudence become particularly useful.

24. Privacy and Competition Interactions

Digital identity wallets create a distinctive interaction between data protection and competition law.

A wallet may have access to extremely sensitive identity attributes.

Competition authorities therefore cannot simply assume that maximum data sharing is desirable.

Instead, competition remedies must preserve:

• data minimisation;
• purpose limitation;
• security;
• user consent;
• selective disclosure.

The optimal model may therefore be:

Interoperability without unnecessary centralisation of personal data.

25. International Regulatory Divergence

Digital identity wallets operate across borders, creating additional competition problems.

For example:

European Union

Focuses heavily on:

• interoperability;
• digital identity;
• platform gatekeeping;
• GDPR;
• DMA;
• competition law.

United States

Competition analysis is more heavily shaped by:

• Sherman Act;
• Clayton Act;
• FTC Act;
• platform litigation;
• state competition enforcement.

United Kingdom

The framework involves:

• Competition Act 1998;
• Enterprise Act 2002;
• Digital Markets, Competition and Consumers Act 2024;
• CMA digital-markets powers.

India

Relevant issues may arise under:

• Competition Act 2002;
• abuse of dominant position;
• denial of market access;
• discriminatory conditions;
• leveraging;
• tying/bundling;
• digital-platform ecosystems.

Australia

Competition issues may involve:

• Competition and Consumer Act 2010;
• misuse of market power;
• exclusive dealing;
• access and interoperability concerns.

Thus, a multinational identity-wallet operator may face different theories of harm across jurisdictions.

26. Main Theories of Harm

27. Competition Remedies

Authorities could consider several remedies.

A. Interoperability

Require dominant infrastructure providers to provide equivalent interfaces to competing wallets.

B. Non-discriminatory API access

Competitors should receive access on objectively equivalent technical conditions.

C. Choice screens

Users could be presented with competing wallet options instead of receiving one predetermined wallet.

D. Data portability

Users should be able to migrate credentials and relevant information between interoperable wallets.

E. Prohibition of discriminatory defaults

A platform should not automatically privilege its own wallet without objective justification.

F. Separation of infrastructure and commercial services

Where necessary, identity infrastructure could be structurally or functionally separated from downstream commercial wallet services.

G. Transparent certification

Government credential providers should use objective, technology-neutral certification standards.

28. Key Case-Law Principles at a Glance

29. Overall Legal Assessment

The central competition question is not simply:

“Is there a monopoly over digital identity wallets?”

It is more accurately:

“Does control over the digital identity wallet or the infrastructure surrounding it allow an undertaking or public authority to control access to identity-dependent markets and thereby exclude competing providers?”

Digital identity is unusually susceptible to concentration because it combines:

strong network effects + authentication infrastructure + sensitive data + government recognition + device integration + switching costs + trust requirements.

Consequently, a wallet that initially appears to be merely an authentication application can evolve into a general-purpose digital gatekeeper.

The most significant competition risks internationally are therefore likely to arise from interoperability restrictions, self-preferencing, exclusive recognition, discriminatory API access, tying to operating systems or payment systems, credential portability restrictions, and leveraging identity infrastructure into adjacent markets.

30. Conclusion

International competition law does not yet possess a large, dedicated body of jurisprudence labelled “digital identity wallet competition.” Nevertheless, established cases provide a strong analytical framework.

The combined lessons of Google Shopping, Google Android, Microsoft, Bronner, IMS Health, Slovak Telekom, Epic Games v Apple, Epic Games v Google, Google AdSense and Qualcomm indicate that digital identity wallets should increasingly be examined as part of a broader identity-platform ecosystem, rather than as isolated software products.

The greatest structural danger is the emergence of a single identity gatekeeper controlling the technical infrastructure through which citizens authenticate themselves to governments, banks, merchants, employers and online platforms.