Apple settles antitrust case in India over in-app payments issues

Apple is facing an antitrust challenge in India for allegedly abusing its dominant position in the app market by forcing developers to use its in-app purchasing system, according to a source and documents seen by Reuters.

The allegations are similar to a case Apple faces in the European Union, where regulators last year launched an investigation into Apple’s imposition of a 30 percent in-app fee for paid digital content distribution and other restrictions.

The Indian case was brought by a little-known non-profit group, which argues that Apple’s rate of up to 30 percent hurts competition by increasing costs for app developers and customers, while acting as a barrier to market entry.

“The existence of the 30 percent commission means that some app developers will never make it to market … This could also result in consumer harm,” said the document, which was seen by Reuters.

Unlike Indian court cases, the records and details of cases reviewed by the India Competition Commission (ICC) are not made public. Apple and CCI did not respond to a request for comment.

In the coming weeks, the ICC will look into the case and may order its investigations arm to conduct a broader investigation, or reject it altogether if it does not find merit in it, said a source familiar with the matter.

“There are high chances that an investigation could be ordered, also because the EU is looking into it,” said the person, who declined to be identified because the details of the case are not public.

The plaintiff, the non-profit “Together We Fight Society”, based in the western Indian state of Rajasthan, told Reuters in a statement that he opened the case in the interest of protecting Indian consumers and start-ups.

In India, while Apple’s iOS only powered about 2 percent of the 520 million smartphones by the end of 2020 – with the rest using Android – Counterpoint Research says the US company’s smartphone base in the country has more than doubled in the last five years.

The case of Apple in India comes as South Korea’s parliament this week passed a bill banning large app store operators like Google and Alphabet’s Apple from forcing software developers to use their payment systems.

“Transaction Intermediary”

Companies like Apple and Google claim their fee covers the security and marketing benefits their app stores offer, but many companies disagree.

Last year, after Indian startups publicly expressed concerns about a similar in-app payment fee charged by Google, the CCI ordered an investigation into it as part of a broader antitrust investigation at the company. This investigation is ongoing.

India’s antitrust case against Apple also alleges that its restrictions on how developers communicate with users to offer payment solutions are anti-competitive and also hurt the country’s payment processors that offer services at prices lower in the 1- 5 percent.

Apple has hurt competitors by restricting developers from informing users of alternative purchase possibilities, thereby damaging “the app developers’ relationship with their customers by inserting themselves as an intermediary in all in-app transactions,” the document added.

In recent weeks, Apple has loosened some of the restrictions for developers around the world, such as allowing them to use communications — such as email — to share information about payment options outside of their iOS apps.

And on Wednesday, he said he would allow some apps to provide customers with an in-app link to bypass Apple’s purchasing system, although the US company has maintained its ban on allowing other forms of payment options within apps.

Gautam Shahi, a partner at the Indian law firm Dua Associates, said that even if companies change their behavior after opening an antitrust case, the CCI is still analyzing past conduct.

“The CCI will look at the past few years to see if the law has been violated and whether consumers and competition have been harmed,” Shahi said.

The CCI has plans to speed up all cases involving major technology companies such as Amazon and Google, posting additional employees and working to tighter internal deadlines, Reuters reported in June.

© Thomson Reuters 2021


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