An investigation by India’s antitrust body, the Competition Commission of India (CCI), has found that Apple has been exploiting its dominant position in the app store market on its iOS operating system. The confidential report, seen by Reuters, reveals that Apple engaged in abusive conduct and practices, significantly impacting app developers and consumers.
Key Takeaways
- India’s CCI finds Apple guilty of abusing its dominant position in the app store market.
- Apple forced developers to use its proprietary in-app purchase system.
- The investigation report is 142 pages long and not yet public.
- Apple can respond to the findings before a final decision is made.
- Potential outcomes include monetary fines and changes to business practices.
Background of the Investigation
The CCI has been investigating Apple Inc. since 2021 for possibly abusing its dominant position in the apps market. The investigation was triggered by complaints from a non-profit group called "Together We Fight Society," which argued that Apple’s in-app fee of up to 30% hurts competition by raising costs for app developers and customers.
Findings of the Report
The CCI’s investigations unit, in its 142-page report, stated that Apple wields significant influence over how digital products and services reach consumers, especially through its iOS platform and App Store. The report highlighted the following points:
- Apple App Store is an unavoidable trading partner for app developers.
- Developers have no choice but to adhere to Apple’s unfair terms, including the mandatory use of Apple’s proprietary billing and payment system.
- From the perspective of app developers, the Apple iOS ecosystem is indispensable.
Apple’s Defense
Apple has denied any wrongdoing, arguing that it is a small player in India, where phones using Google’s Android system are dominant. In its submissions to the CCI, Apple claimed its market share in India is an "insignificant" 0-5%, while Google commands 90-100%. Apple also argued that the in-app payment system allowed it to maintain and develop the safety of its App Store.
Global Context
The Indian investigation report comes as Apple faces increased antitrust scrutiny in other regions. In June, European Union antitrust regulators said Apple breached the bloc’s tech rules, which could result in a hefty fine for the iPhone maker. The company also faces an investigation into new fees imposed on app developers.
Next Steps
The CCI report is the most critical stage of the Indian investigation and will now be reviewed by the watchdog’s senior officials. Apple and other parties will be allowed to respond before a final decision is reached. Potential outcomes could include monetary fines and directives to change business practices.
Apple vs. Google in India
The CCI investigation team noted that no third-party payment processor was being permitted by Apple to provide services for in-app purchases. It added that in most cases, apps are also not allowed to include any external links that direct customers to other purchasing mechanisms, violating Indian competition laws.
Apple’s iOS powered about 3.5% of 690 million smartphones in India as of mid-2024, with the rest using Android. Despite its small market share, Apple’s smartphone base in the country has become five times larger in the last five years.
Conclusion
The findings of the CCI’s investigation into Apple’s practices in India mark a significant development in the global scrutiny of the tech giant’s market behavior. As the investigation progresses, the final decision could have far-reaching implications for Apple’s business practices in India and potentially other regions.