An exclusive Indian antitrust investigation has found that Apple abused its position in the app market.

By Aditya Kalra

NEW DELHI (Reuters) – An investigation by India’s antitrust watchdog has found that Apple abused its dominant position in the app store market for its iOS operating system by engaging in “abusive practices,” a confidential report seen by Reuters showed.

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 denies the allegations, saying it is a minor player in India, where the market for phones running Google’s Android operating system is dominated.

The CCI’s investigative unit, in its 142-page report, which is not public but has been seen by Reuters, found that Apple exerts a “significant influence” on how digital products and services reach consumers, particularly through its iOS platform and App Store.

“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 a 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 on the India 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, a move that could result in a hefty fine for the iPhone maker. The company also faces 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 of Apple’s own App Store.

The CCI report is a key step in India’s investigation and will now be reviewed by the regulator’s most senior officials.

Apple and others will have an opportunity to respond to the allegations before a final decision is made. That decision could include monetary penalties and guidance to change business practices.

APPLE VS GOOGLE IN INDIA

The case in India was first brought by a little-known non-profit called Together We Fight Society, which argued that Apple’s app fee of up to 30% hurts competition by raising costs for app developers and customers.

Later, a group of Indian startups, Alliance of Digital India Foundation, and Match, owner of Tinder, filed similar cases against Apple in the CCI, which were heard together.

The CCI investigation team stated in its report that no third-party payment processor received permission from Apple to provide in-app purchase services.

He added that in most cases, apps are not allowed to contain any external links that direct customers to other shopping mechanisms, which is a violation of Indian competition law.

Apple’s iOS powered about 3.5% of India’s 690 million smartphones as of mid-2024, according to Counterpoint Research, with the rest running Android, although the company added that Apple’s smartphone base in the country had grown five-fold in the past five years.

In its submissions to the CCI, Apple argued that its market share in India was a “negligible” 0-5%, while Google had a share of 90-100%. The company also argued that the in-app payment system allowed it to maintain and develop the security of its App Store.

However, the CCI stated that “app stores are operating system specific and Apple’s App Store is the only app store available to iOS users.”

“Apple’s payment policies negatively impact app developers, users, and other payment processors,” the release reads.

The CCI report found that comments from a number of companies, including Microsoft, Uber and Amazon, were taken into account during the investigation into Apple.

Google has also faced criticism from the CCI for its in-app payments 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.

(Reporting by Aditya Kalra; Editing by Hugh Lawson)