Report: Apple antitrust investigation uncovers abuse to gain market dominance

NEW DELHI (Reuters/Aditya Kalra) – An investigation by India’s antitrust regulator has found that Apple exploited its dominant position in the app store market for its iOS operating system and was guilty of “abusive conduct and practices,” according to a confidential report seen by Reuters.

The Competition Commission of India (CCI) has been investigating Apple Inc. since 2021 for possible abuse of its dominant position in the app market by forcing developers to use its proprietary in-app purchasing system.

Apple has denied any wrongdoing and said it is a small player in India, where phones running Google’s Android system predominate.

The CCI’s investigative unit said in its 142-page report, which is not public but was shared with Reuters, that Apple had “significant influence” over how digital products and services reached consumers, particularly through its iOS platform and App Store.

“Apple App Store is an inevitable trading partner for app developers and consequently, 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 department said in the June 24 report.

“From an app developer’s perspective, the Apple iOS ecosystem is indispensable.”

Apple and the CCI did not respond to requests for comment.

The Indian investigation report comes at a time when Apple is facing increased antitrust scrutiny in other regions as well.

In June, the European Union’s antitrust authorities accused Apple of violating the Union’s technology rules. The iPhone maker could face a hefty fine as a result. The company is also under investigation over new fees imposed on app developers.

In January, Apple outlined plans to allow software developers to distribute their apps to users in the European Union outside of Apple’s own App Store in response to a new EU law called the Digital Markets Act.

The CCI report represents the most critical phase of the Indian investigation and is now being examined by the regulator’s senior officials.

Apple and other parties will be given an opportunity to respond before a final decision is made, which could include fines and orders to change business practices.

Apple vs. Google in India

The Indian lawsuit was first filed by a little-known nonprofit group called Together We Fight Society, which argued that Apple’s in-app fee of up to 30 percent hurts competition by increasing costs for app developers and customers.

Later, a group of Indian startups, the Alliance of Digital India Foundation and Tinder owner Match filed similar lawsuits against Apple with the CCI, all of which were heard jointly.

The CCI investigation team stated in its report that Apple has not granted permission to any third-party payment processor to provide the in-app purchase services.

In addition, in most cases, the apps are prohibited from integrating external links to other purchasing mechanisms, which constitutes a violation of Indian competition law.

According to Counterpoint Research, about 3.5% of the 690 million smartphones in India were running Apple’s iOS by mid-2024, with the rest using Android. However, the firm adds that Apple’s smartphone base in the country has grown five times in the last five years.

In its submissions to the CCI, Apple argued that its market share in India is a “negligible” 0-5%, while Google has 90-100%. The company also argued that the in-app payment system enables it to maintain and enhance the security of its app store.

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

“Apple’s payment policy has a detrimental impact on app developers, users and other payment processors,” it said.

The CCI report showed that Apple’s investigation took into account comments from many companies, including Microsoft, Uber and Amazon.

Google has also come under criticism from the CCI because of its in-app payment mechanism.

In October 2022, the CCI imposed a fine of $113 million on Google and ordered the company to allow the use of third-party billing and stop forcing developers to use its in-app payment system. Google has appealed the decision.

(Reporting by Aditya Kalra; Editing by Hugh Lawson)