EXCLUSIVE Apple faces antitrust case in India over app payment issues

NEW DELHI, Sept. 2 (Reuters) – Apple Inc (AAPL.O) faces antitrust challenge in India for allegedly abusing its dominant position in the app market by forcing developers to use its proprietary in-app purchase system , according to a source and documents seen by Reuters.

The allegations are similar to a case Apple is facing in the European Union, where regulators last year opened an investigation into Apple’s imposition of a 30% built-in fee for the distribution of paid digital content and other restrictions.

The Indian case was filed by a little-known nonprofit group that argues that Apple’s fees of up to 30% hurt competition by increasing costs for app developers and customers, while also acting as a barrier to entry into the market.

“The existence of the 30% commission means that some app developers will never reach the market… It could also hurt consumers,” the file said, which was seen by Reuters.

Unlike Indian court cases, the records and details of cases reviewed by the Indian Competition Commission (ICC) are not made public. Apple and ICC did not respond to a request for comment.

In the coming weeks, the ICC will examine the case and may order its investigative service to conduct a broader investigation, or dismiss it altogether if there is no basis for it, a source familiar with the matter said.

“There is a good chance that an investigation can be ordered, also because the EU has investigated,” said the person, who declined to be identified because details of the case are not public.

The plaintiff, the non-profit organization “Together We Fight Society”, based in the Indian state of Rajasthan, in western India, told Reuters in a statement that it had filed a complaint in the interests of consumer protection and Indian startups.

In India, although Apple’s iOS powers just 2% of the 520 million smartphones by the end of 2020 – the rest using Android – Counterpoint Research says the US company’s smartphone base in the country has more than doubled in the past five years.

The Apple case in India comes as South Korea’s parliament this week approved a bill banning major app store operators like Google and Alphabet Inc’s Apple (GOOGL.O) from forcing developers to software to use their payment systems.

“INTERMEDIATE IN TRANSACTIONS”

Companies like Apple and Google say their fees cover the security and marketing benefits provided by their app stores, but many companies disagree.

Last year, after Indian startups publicly expressed concern over similar embedded payment fees being charged by Google, the ICC ordered an investigation into the matter as part of a larger antitrust investigation into the company. This investigation is ongoing.

The Indian antitrust case against Apple also alleges that its restrictions on how developers communicate with users to offer payment solutions are anti-competitive and also harm the country’s payment processors who offer services at lower fees than the order of 1 to 5%.

Apple has harmed its competitors by preventing developers from informing users of alternative purchasing possibilities, thus harming “application developers’ relationship with their customers by acting as a middleman in every transaction in the application.” , adds the folder.

In recent weeks, Apple has relaxed some of the restrictions on developers around the world, such as allowing them to use communications – such as email – to share information about payment alternatives outside of their iOS app.

And on Wednesday, it said it would allow certain apps to provide customers with an in-app link to bypass Apple’s purchasing system, although the U.S. company has upheld the ban on allowing other forms. payment in the applications.

Gautam Shahi, a competition law partner at Indian law firm Dua Associates, said that even if companies change their behavior after an antitrust case is filed, the ICC is still looking at past behavior.

“The ICC will look over the past few years to see if the law has been broken and if consumers and the competition have been harmed,” Shahi said.

The ICC plans to expedite all cases involving large tech companies such as Amazon (AMZN.O) and Google by deploying additional agents and meeting stricter internal deadlines, Reuters reported in June.

Reporting by Aditya Kalra in New Delhi; Additional reporting by Stephen Nellis in San Francisco; Editing by Kim Coghill

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