The Competition Commission of India (CCI) on Friday ordered a detailed investigation against tech giant Apple over alleged unfair trade practices involving the App Store.
It has been alleged that Apple is using anti-competitive restraints and abuse of dominant practices in markets to distribute applications (apps) to users and in processing payments for digital content used in iOS mobile apps.
The complaint has been filed against Apple Inc and Apple India Pvt Ltd.
In a 20-page order, the watchdog said Apple’s App Store is the only channel for app developers to distribute their apps to iOS consumers, which comes preinstalled on every iPhone and iPad.
“In addition, third-party app stores are not allowed to be listed in Apple’s App Store, as the developer guidelines and the agreement prohibit app developers from offering such services… these restrictions imposed by Apple close the market for app stores for iOS off for potential app distributors,” the order stated.
According to the CCI, this prima facie deprives the potential app distributors/app store developers of market access in violation of competition standards.
Furthermore, on the face of it, such practices result in limiting/restricting the technical or scientific development of the services related to the iOS app store, due to reduced pressure on Apple to continuously innovate and improve its own app store, which is also in violation of competition rules, according to the order.
Citing these factors, the regulator has ordered a detailed investigation by the Director General (DG).
Apple did not respond to a question about the CCI probe.
In order to assess the complaint, the CCI has identified the “iOS app store market in India” as relevant.
The watchdog said the app developers seem to depend on Apple’s App Store to reach app users and that app users also depend on the App Store to download apps.
“The Commission therefore considers, prima facie, that Apple enjoys a monopoly position in the relevant iOS app store market in India. This reliance on the app developers appears to lead to acceptance of, among other things, the mandatory and non-negotiable Apple’s rules regarding the distribution of apps through the App Store, by the latter,” the order stated.
The watchdog found, among other things, that Apple makes the provision of app distribution services subject to the acceptance of additional obligations by the app developer that, by their nature or by commercial use, are unrelated to the subject matter of the agreement for the provision of distribution services.
“This appears to be contrary to Section 4(2)(d) of the Act. Furthermore, prima facie it also results in Apple’s use of its dominant position in the App Store market to expand its in-app market -enter/protect purchases in payment processing market, in violation of Section 4(2)(e) of the Act,” the order said.
Article 4, second paragraph, of the Competition Act concerns abuse of a dominant position.
With regard to Apple’s claims that it has a market share of only 0-5 percent, the injunction said the Commission believes Apple’s approach is completely wrong, as the alleged anti-competitive restrictions in this case were imposed on the app developers. in the form of App Store policies, by Apple”.
In other words, the CCI noted that the allegation in the present case relates to Apple’s abuse of dominance over the app developers.
Therefore, it appears at this stage that the relevant market should be defined from the perspective of the app developers and not from the perspective of end users.
Apple has argued that the complainant is likely to be collaborating with parties with which Apple has commercial and contractual disputes worldwide and/or who have filed complaints with other regulatory authorities.
In addition, the company told the regulator it should be wary of attempts by individuals using proxy parties as a cover rather than coming forward in their own name.
In this regard, CCI said that under the existing legal framework, the informant has a limited role and that the proceedings before the Commission are guided solely by the substance of the case in terms of the provisions of the law. “The Commission would intervene in a case only if it merits consideration under the relevant provisions of the Act”.
The complaint was filed by the NGO Together We Fight Society.