On December 31, 2021, pursuant to a complaint filed by ‘Together We Fight Society’, the CCI directed an investigation against Apple over allegations concerning abuse of dominant position. ^[1]

The informant alleged that Apple: (i) imposes unreasonable restraints on app developers from reaching users of its mobile devices unless the app developers go through the ‘App Store’ controlled by Apple; (ii) requires app developers selling digital in-app content to their consumers to use a single payment processing option offered by Apple which in turn facilitates a 30% in-app fee. However, contrastingly, app developers can make their products available to users of an Apple personal computer (e.g., Mac or MacBook) in an open market, through a variety of stores or even through direct downloads from a developer’s website, with a variety of payment options and competitive processing fees that averages two to five%. In support of this, the informant alleged the following:

a.     App Store Review Guidelines: These guidelines are determined by Apple unilaterally and are one sided, (‘take it or leave it’ contracts), whose applicability lies at the sole discretion of Apple and these guidelines are applicable in an unpredictable, arbitrary and discriminatory manner;

b.     Excessive Commission: Apple made it mandatory for app developers to use their in-app payment solution i.e., In-App Purchase (‘IAP’) for distribution of paid digital content and pay 30% commission which is unfair and excessive;

c.     Mandating In-app purchases: Mandatory use of Apple’s IAP for paid apps & in-app purchases restrict the choice available to the app developers to select a payment processing system of their choice especially considering when Apple charges a commission of 30% (15% in certain cases) for all app purchases and IAPs. Further, Apple’s marketing restrictions make it difficult for multi-platform apps to inform their users of the ability to make out-of-app purchases, and since Apple has a monopoly over the distribution of iOS apps, app developers have no choice but to assent to this anti-competitive tie-in arrangement; and

d.     Tying the App Store to In-App Purchase in the iOS In-App Payment Processing market: Apple expressly conditions the use of its App Store on the use of its IAP to the exclusion of alternative solutions in a per se unlawful tying arrangement.

In its analysis, the CCI found Apple to be dominant in the relevant market for ‘app stores for iOS in India’. Based on its review of the App Store Review Guidelines, the CCI prima facie agreed with the allegations of the informant. On Apple’s marketing restrictions, the CCI noted that the restriction on the ability of app developers to inform users about other purchasing options through a notification in the app would result in higher price for the users. Further, the CCI noted that the mandatory use of Apple’s IAP for paid apps & in-app purchases restrict the choice available to the app developers to select a payment processing system of their choice, while cheaper alternatives are available. On the commission fee, the CCI noted that the high 30% commission might affect the competitiveness of Apple’s competitors and may disadvantage its competitors in the downstream markets, such as music streaming, video streaming, e-books, etc. The CCI further noted that there is a need to investigate whether Apple would have access to data collected from the users of its downstream competitors which would enable it to improve its own services. Lastly, the CCI noted that third party app stores are not allowed to be listed on Apple’s App Store as the developer guidelines as well as agreement prohibits app developers from offering such services.

Based on the above, the CCI formed a prima facie view that Apple has violated the provisions of Section 4(2)(a), 4(2)(b), 4(2)(c), 4(2)(d) and 4(2)(e) of the Competition Act and thus, directed the Director General, CCI (‘DG’) to conduct an investigation.

[1] Case no. 24 of 2021