CCI set to investigate Apple’s App Store Policies on unfair trade practices

The Competition Commission of India (CCI) has directed investigations into Apple’s App Store policies. This is in regards to the allegations of unfair trade practices, raised by Together We Fight Society – a non-governmental organization.

It has alleged in the affidavit that Apple uses a barrage of anti-competitive retrains and abuse dominate practices in markets for distribution of application for users of smartphone and tablets, and processing of consumers’ payments for digital content used within the iOS mobile application

The complainant has contended that Apple imposed unreasonable and unlawful restraints on app developers from reaching users of its mobile devices unless they go through the App Store which is controlled by Apple itself. It claimed that for selling digital in-app content, the app developers are supposed to use a single payment processing option offered by Apple with a 30% commission.

However, the complainant acknowledged that there is no such restriction for Mac or MacBook. In such cases, the app developers can make their products available to users of Apple personal computer devices in an open market, through a variety of stores, or even through direct downloads from a developers website, with a variety of payment options and competitive processing fees that average 2-5%. This is 10 times lower than the exorbitant 30% fees which Apple charges for in-app purchases on mobile devices.

Apple, in an affidavit, said the company is focused on making its devices as attractive as possible by developing all the components in-house, in an integrated ecosystem that can be differentiated from its competitors. The iPhone maker highlighted that the relevant market definition put forth by the informant was excessively narrow.

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Apple’s market share is 0-5% of the appropriate relevant market for smartphones in India, thus the informant’s allegation of use of dominant position does not hold ground. It said no evidence has been adduced to show that Apple’s practices are abusive. The affidavit stated that the App Store guidelines are not unfair or arbitrary and have been formulated to ensure that the App Store is a safe and secure place for consumers to discover and download apps, and purchase digital content.

Moreover, it cited Epic Games Inc. Vs. Apple INC., highlighting a judgment passed by the United States District Court to demonstrate that it had made findings with respect to App Store’s business model, which undermine allegations made by the informants.

The CCI observed that in many cases Apple’s proprietary apps are competing with third-party apps on the iOS platform. It said such high commission would indeed increase the cost of Apple’s competitors and would eventually affect the competitiveness vis-a-vis Apple’s own apps. The watchdog also noted that the conditions imposed by Apple were to limit the developers from offering payment process solutions of their choice. It considered that Apple might have access to data collected from the users of downstream competitors which would enable it to improve its own services giving it advantages over its competitors.