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Apple appeals China ruling to reverse antitrust ruling

Posted on by darion

Apple has appealed to China’s Supreme Court to strike the phrase “dominant position” from an antitrust court ruling, which would protect it from further investigation.

Conclusions:

  • Apple wants to weaken regulatory controls, so it asked China’s Supreme Court to remove the phrase “dominant position” from its ruling.
  • The petition highlights Apple’s precarious position in China, which is the company’s main production base and largest overseas market.
  • Positive market reaction: The Hang Seng Tech Index rose as traders predicted that a ruling in Apple’s favor could boost sales of the company’s phones in China.

Apple demands change of court ruling

Apple Inc. has he filed a petition with China’s Supreme People’s Court to change specific language in a lower court ruling it won. The iPhone maker is seeking to remove references to its “dominant position” and language suggesting that “unfair pricing can hurt consumers.”

The move is seen as an attempt to ease potential regulatory scrutiny in China, where Apple competes closely with Huawei Technologies Co. and other high-end smartphone makers. A lower court dismissed the lawsuit in May due to insufficient evidence, but Apple is concerned that language used in the ruling could be cited in future legal or regulatory challenges.

The issue is the fees Apple and its competitors charge developers to host their apps on their platforms. In China, these fees can be as high as 50% for popular Android mobile games, compared to a general 30% elsewhere in the world.

Apple’s petition highlights the company’s delicate position in China, its largest international market and main manufacturing base. The company also faces challenges from a resurgent Huawei and uncertainty over a ban on foreign devices at many state-owned companies and agencies.

Global App Store Fee Disputes

Apple has defended its App Store fees on multiple fronts, including lawsuits in the United States and challenges in Europe, South Korea and Japan. The company says its fees are justified by the security and peace of mind the App Store provides users, as well as the global exposure it offers developers.

In May, a Shanghai court dismissed a lawsuit that accused Apple of abusing its market power by charging a 30% commission on in-app purchases and restricting payment methods. A plaintiff surnamed Jin filed a separate appeal, arguing that Apple’s fees in China are higher than in Europe and the U.S. and that the company restricts transactions through its policies.

The ruling aligns with efforts by major Chinese developers and store operators to change the dynamics of the country’s app ecosystem. Tencent Holdings Ltd., for example, recently pulled its popular game DnF Mobile from Android app stores operated by Chinese smartphone makers including Huawei and Oppo, citing unspecified “adjustments” in their partnerships.

Tencent executives have expressed frustration over the up to 50% cut that these app platforms take from in-game purchases. Meanwhile, Huawei is considering imposing a fee for in-app purchases on its Harmony mobile operating system for the first time as its smartphones gain market share from Apple.

Market reaction

News of Apple’s petition had a positive impact on Chinese tech stocks. The Hang Seng Tech Index rose following the report as investors speculated that a favorable ruling could boost Apple’s phone sales in China.

This, in turn, would benefit Apple’s suppliers and boost investor sentiment across the region overall. The market reaction underscores the interconnected nature of global technology ecosystems and the significant influence that major players like Apple have on regional markets.