As Apple battles the Digital Markets Act in the EU and a burgeoning antitrust lawsuit in the U.S., India has become the latest country to scrutinize Apple’s iOS business model, paving the way for significant changes.
The Competition Commission of India (CCI) has ruled that Apple is engaged in “abusive conduct and practices” regarding its iOS App Store business model, particularly the mandatory use of Apple’s proprietary billing and payment system for app developers. This ruling echoes the European Commission’s conclusions and could signal an opening up of the iPhone ecosystem in India similar to the EU.
India represents a growing market for Apple, with annual sales surging 33% to $8 billion in the year up to March 2024. Despite this growth, Apple holds only a 3.5% share of India’s 690 million-strong smartphone market. The CCI’s investigation, triggered by complaints from developers and non-profit groups, found that Apple’s control over the iOS App Store gives them significant influence over how digital products and services reach users. Developers have no choice but to comply with Apple’s terms, which the CCI considers unfair.
The crux of the issue lies in Apple’s mandatory use of its proprietary in-app purchase system, which charges up to 30% commission on transactions. This practice, according to the CCI, stifles competition and inflates costs for both developers and consumers. The report suggests that Apple’s App Store is an unavoidable trading partner for app developers, making the iOS ecosystem indispensable from their perspective.
Apple maintains that its market share in India is small compared to Android and that its in-app purchase system is necessary to ensure App Store security. However, the growing number of iPhone users in India indicates a rapidly increasing user base. The investigation is ongoing, and Apple, along with other parties, will be able to respond before a final decision is made. This decision could include hefty fines and may force Apple to change its App Store business practices in India.
Interestingly, Google’s similar practices in India resulted in a $113 million fine and a mandate to allow third-party billing options. While India’s smartphone market is largely Android-driven, Apple’s growing user base and the CCI’s findings could force Apple to adapt its App Store policies in the Indian market.
This scrutiny of Apple’s App Store practices is not unique to India. In March, the European Commission fined Apple €1.84 billion for violating EU antitrust rules by abusing its dominant position in the app store market. Apple denied the allegations and plans to appeal. Earlier this year, Apple also opposed the introduction of ex-ante regulations in India within the proposed Digital Competition Bill framework, preferring a regulatory framework that fosters innovation rather than imposing stringent pre-emptive measures.
(via Reuters)
