Apple faces antitrust heat in India over App Store dominance

An investigation by India’s antitrust watchdog has found that Apple abused its dominant position in app stores for its iOS operating system by engaging in “abusive practices,” according to a confidential report seen by Reuters.

The Competition Commission of India (CCI) has been investigating Apple Inc. since 2021 for possibly abusing its dominant position in the app market by forcing developers to use its proprietary in-app purchase system. Apple has denied wrongdoing, saying it was a small player in India, where phones using Google’s Android operating system are dominant.

The CCI’s investigative unit, in its 142-page report, which is not public but was seen by Reuters, found that Apple has a “significant influence” on how digital products and services reach consumers, especially through the iOS platform and the App Store. “The Apple App Store is an unavoidable trading partner for app developers, and as a result, app developers have no choice but to comply with Apple’s unfair terms and conditions, including the mandatory use of Apple’s proprietary billing and payment system,” the CCI unit said in the June 24 report.

“From an app developer perspective, the Apple iOS ecosystem is irreplaceable.” Apple and CCI did not respond to requests for comment.

The report of the Indian investigation comes as Apple faces increased antitrust scrutiny in other regions. In June, European Union antitrust regulators said Apple had violated the bloc’s technology rules, which could result in a hefty fine for the iPhone maker. The company is also facing an investigation into new fees imposed on app developers.

In January, in response to a new EU law called the Digital Markets Act, Apple unveiled plans to allow software developers to distribute their apps to users in the European Union outside Apple’s own App Store. The CCI report is the most critical stage of the Indian investigation and will now be reviewed by senior officials at the watchdog.

Apple and other parties will have an opportunity to respond before a final decision is made, which could include monetary penalties as well as directives to change business practices. APPLE VS GOOGLE IN INDIA

The Indian case was first filed by a little-known nonprofit group called Together We Fight Society, which argued that Apple’s per-app fee of up to 30% harmed competition by raising costs for app developers and customers. Later, a group of Indian startups, the Alliance of Digital India Foundation, and Tinder owner Match filed similar cases with the CCI against Apple, which were heard together.

The CCI investigation team said in its report that no third-party payment processor has been granted permission by Apple to provide in-app purchase services. It added that in most cases, apps are also not allowed to contain any external links that direct customers to other purchasing mechanisms, violating Indian competition law.

Apple’s iOS powered about 3.5% of India’s 690 million smartphones in mid-2024, according to Counterpoint Research, with the rest running Android, though it adds that Apple’s smartphone base in the country has become five times larger in the past five years. In its filings with the CCI, Apple argued that its market share in India is a “negligible” 0-5%, while Google’s is 90-100%. The company also argued that its in-app payments system allowed it to maintain and develop the security of its App Store.

But the CCI said that “app stores are operating system (OS) specific and the Apple app store is the only app store available to iOS users.”“Apple’s payment policies adversely affect app developers, users and other payment processors,” it said.

The CCI report found that the investigation into Apple took into account comments from a number of companies, including Microsoft, Uber and Amazon. Google has also faced criticism from the CCI for its in-app payment mechanism.

In October 2022, the CCI fined Google $113 million and said it must allow the use of third-party billing and stop forcing developers to use its in-app payment system. Google challenged the decision.

(Disclaimer: Based on information obtained from the agency.)