USPTO states that "Trademark Act Section 2(d) bars registration of an applied-for mark that so resembles a registered mark that it is likely that a potential consumer would be confused or mistaken or deceived as to the source of the goods and/or services of the applicant and registrant.
In this case, the following factors are the most relevant: similarity of the marks, similarity of the goods and/or services, and similarity of trade channels of the goods and/or services.
The USPTO argued that a simply deletion of a word -- Kronos-- will not be sufficient for Apple to overcome confusion with the Touch ID name. Apple now has six months to either fix their fingerprint trademark on Touch ID (which would likely require renaming the feature) or make Kronos an offer that they can't refuse.
Analysts and Rumors point to Touch ID being a major aspect of its iOS lineup in the future, so it will be interesting to see how Apple moves forward.