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NEW DELHI: Competition Commission of India‘s investigative arm has found tech giant Apple abusing market dominance and engaging in unfair business practices to the detriment of lakhs of app developers and consumers, opening the prospects of potential fines running into thousands of crores of rupees as well as restraining orders.
The probe, which has been on since 2021, now seems to be veering towards closure that will see the fair play watchdog take strict action against Apple, something it also did in the case of Google India which faced similar charges of abuse of dominance.
“…it can be concluded that by virtue of its dominant position in the market for app stores for iOS in India, Apple engaged in abusive conduct and practices in violation of Section 3(4) and Section 4 of the Competition Act,” a supplementary probe report by CCI’s investigation arm says, top sources told TOI.
“… investigation is of the opinion that Apple has entered into anti-competitive agreements with app developers which have the effect of causing ‘appreciable adverse effect on competition’ in the market,” sources said while adding that investigation report runs into 150-odd pages and censures Apple’s in-app purchase (IAP) mandate.
The probe found Apple’s App Store an “unavoidable trading partner” for app developers who have “no choice but to adhere to Apple’s unfair terms, including the mandatory use of Apple’s proprietary billing and payment system.”
Apple imposes ‘discriminatory’ commission on some app makers
In its submission in an investigation by the Competition Commission of India, Apple argued its in-app purchase (IAP) is the method by which the company collects its commission, which in turn allows it to maintain and develop the App Store as a “safe, trusted environment for users and developers”.
“Apple imposes several onerous conditions via developer program license agreement (DPLA) and Appstore review guidelines. The anti-steering provisions restrict the app developers from communicating alternative purchase methods within the app. Accordingly, no third-party payment processor is permitted to provide services for the digital content on iOS devices,” sources said on the findings.
They added that the iPhone maker also imposes “discriminatory” commission on certain app makers while gaining unfairly from their data. While charging a peak 30% commission from many digital apps, Apple does not charge any commission from its proprietary apps like Apple Music, Apple Arcade Games, which is seen as a violation of the provisions. The report also says that mandatory use of Apple’s in-app purchase (IAP) “adversely affects the app developers, end users and other payment processors which leads to unprofitable situations, hindering innovation and prohibiting expansion of markets” and resulting in violation of provisions under Section 4 of the Act.
“Such practice deters entry and innovation. Moreover, the restrictions imposed by Apple forecloses the market for third-party app stores and third-party payment processors which is in violation… .” The investigation says that since Apple has a monopoly over the distribution of iOS apps, the developers have “no choice but to assent to this anti-competitive tie-in-arrangement” while the company’s marketing curbs makes it difficult to inform their users about out-of-app purchases, all of which are violations.
The probe, which has been on since 2021, now seems to be veering towards closure that will see the fair play watchdog take strict action against Apple, something it also did in the case of Google India which faced similar charges of abuse of dominance.
“…it can be concluded that by virtue of its dominant position in the market for app stores for iOS in India, Apple engaged in abusive conduct and practices in violation of Section 3(4) and Section 4 of the Competition Act,” a supplementary probe report by CCI’s investigation arm says, top sources told TOI.
“… investigation is of the opinion that Apple has entered into anti-competitive agreements with app developers which have the effect of causing ‘appreciable adverse effect on competition’ in the market,” sources said while adding that investigation report runs into 150-odd pages and censures Apple’s in-app purchase (IAP) mandate.
The probe found Apple’s App Store an “unavoidable trading partner” for app developers who have “no choice but to adhere to Apple’s unfair terms, including the mandatory use of Apple’s proprietary billing and payment system.”
Apple imposes ‘discriminatory’ commission on some app makers
In its submission in an investigation by the Competition Commission of India, Apple argued its in-app purchase (IAP) is the method by which the company collects its commission, which in turn allows it to maintain and develop the App Store as a “safe, trusted environment for users and developers”.
“Apple imposes several onerous conditions via developer program license agreement (DPLA) and Appstore review guidelines. The anti-steering provisions restrict the app developers from communicating alternative purchase methods within the app. Accordingly, no third-party payment processor is permitted to provide services for the digital content on iOS devices,” sources said on the findings.
They added that the iPhone maker also imposes “discriminatory” commission on certain app makers while gaining unfairly from their data. While charging a peak 30% commission from many digital apps, Apple does not charge any commission from its proprietary apps like Apple Music, Apple Arcade Games, which is seen as a violation of the provisions. The report also says that mandatory use of Apple’s in-app purchase (IAP) “adversely affects the app developers, end users and other payment processors which leads to unprofitable situations, hindering innovation and prohibiting expansion of markets” and resulting in violation of provisions under Section 4 of the Act.
“Such practice deters entry and innovation. Moreover, the restrictions imposed by Apple forecloses the market for third-party app stores and third-party payment processors which is in violation… .” The investigation says that since Apple has a monopoly over the distribution of iOS apps, the developers have “no choice but to assent to this anti-competitive tie-in-arrangement” while the company’s marketing curbs makes it difficult to inform their users about out-of-app purchases, all of which are violations.
