India competition regulator orders probe against Apple for commission on in-app payments
390097 / Pixabay
India competition regulator orders probe against Apple for commission on in-app payments

The Competition Commission of India (CCI) ordered Friday a detailed investigation against Apple over allegations that the commission policies of its App Store are anti-competitive. The order came after an NGO, Together We Fight Society, filed a plea alleging that Apple abused its dominant position in the market in violation of Section 4 of the Competition Act, 2002.

According to the CCI, app developers can only distribute their apps to iPhone and iPad users through Apple’s App Store. Further, users cannot download apps from any other app store. Since both app developers and users are dependent on the App Store, the CCI concluded that “Apple holds a monopoly position in the market for app stores for iOS in India.” Consequently, app developers have to accept Apple’s mandatory and non-negotiable rules relating to the distribution of apps through the App Store.

Further, the CCI observed that Apple makes it mandatory to use its proprietary in-app purchase system (IAP) for the distribution of paid content. It also charges app developers a commission of up to 30 percent on purchases made through its system. The CCI said that mandating app developers to use Apple’s IAP for in-app purchases limits their ability to choose a payment mechanism of their choice. As App Store is the only way to download apps for iOS devices, Apple controls a large portion of the market’s payments and can use its dominant position to advance its own interests.

Moreover, the CCI noted that third-party apps on the iOS platform have to compete with Apple’s proprietary apps as well. Apple’s policies may increase the cost of its competitors, affecting their competitiveness vis-à-vis Apple’s own apps. Such a policy may disadvantage Apple’s competitors in downstream markets like music streaming, video streaming and e-books. Furthermore, Apple may improve its services by accessing data collected from the users of its downstream competitors. However, such competitors may not have access to such data, giving Apple an advantage.

Therefore, the CCI decided that Apple violated Section 4 of the Competition Act, which necessitates a detailed investigation. It ordered the Director-General to conduct an investigation and produce a report within 60 days.

Last week, the Netherlands Authority for Consumers and Markets ordered Apple to change its App Store policies with respect to in-app payments on similar grounds. The commission policies of Apple’s App Store have been a source of contention in other jurisdictions as well, including the European Union, the United States, and South Korea.