The Commission, in its order has stated that it has taken a prima facie view that Apple has violated provisions of Section 4 of the Competition Act, which deals with abuse of dominant position by an enterprise, and has directed the Director General to open an investigation into the company, a report for which needs to be submitted within 60 days of the order.
“At this stage, it appears that the lack of competitive constraint in the distribution of mobile apps is likely to affect the terms on which Apple provides access to its App Store to the app developers, including the commission rates and terms that thwart certain app developers from using other in-app payment systems,” the Competition Commission of India () said in its order. The investigation is expected to be completed in 60 days, it said.
The Commission ordered the probe after a complaint was filed by Jaipur-based non-profit Together We Fight Society. Emails to Apple did not elicit response till press time.
The order noted that with the App Store being the only source of downloading apps on the iPhone and iPad, Apple controls a significant volume of payments processed on its platform. It further noted that Apple’s own proprietary apps compete with third-party apps on the iOS platform, and the high 30% commission might affect the competitiveness of the company’s competitors.
Trusted by Industry Leaders
-
Ritesh Agarwal
Founder & CEO, Oyo
Deepinder Goyal
Co-founder & CEO, Zomato
“Such a policy of the App Store may disadvantage its competitors in the downstream markets, such as music streaming, video streaming, e-books, etc,” the order reads.
“If the application developers, in response, raise their subscription fees to offset these costs or remove/reduce premium/paid subscription offers for users, it may affect user experience, cost and choice. Alternatively, if the app developers decide to internalise the cost, it would affect their profitability and thus their ability to invest in innovation…” the order added.
The antitrust regulator is also probing similar charges of anti-competitive behaviour by Apple’s rival Google, which also charges a similar 30% commission from app developers to use its Play Store billing system. Google has however delayed the implementation of its latest policy which mandates all developers to integrate with its own billing system till October 31, 2022.
ET reported on December 22 that the Competition Commission of India has begun in-person depositions from a slew of local internet startups in the investigation into Google’s alleged malpractices. In a detailed questionnaire sent to these startups, CCI had sought information about their financials and the impact of Google’s Playstore commission, management structure and whether their apps are also downloaded from other app stores apart from Google.
Google petitioned on December 27 the Karnataka High Court, seeking more time to respond to the Competition Commission of India (CCI)’s queries into its Play Store rules.
The company has argued that since it has voluntarily delayed implementation of its latest Play Store policy in India till October 31, 2022, there is no “urgency” in the matter.
The CCI’s order on Friday said Apple had made submissions claiming that its market share in smartphones in India was less than 5% and “there is no market for app stores for Apple smart mobile OS in India”. However the regulator dismissed this claim saying that its investigation is based on allegations pertaining to abuse of dominance by Apple in relation to the app developers and not end users.
The regulator rejected Apple’s request for a preliminary conference hearing before the order was passed. However, the Commission, based on the information available on the record (including the submissions made by Apple), is prima facie convinced that a case is made out for directing an investigation by the DG. Apple would be at liberty to make further submissions before the DG during the investigation wherein the same would be appropriately examined.
