CCI directs inquiry into Apple Over Alleged Abuse of App Market

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Apple Inc is about to witness an inquiry by the Competition Commission of India (CCI) over allegations that the technology major is violating competition law by mandating the use of its in-app purchase (IAP) system for all payments on its App Store. It is also facing an investigation by the European Commission over its app store payment rules.

Apple charges a commission of up to 30 percent on all payments made through its in-app purchase system. “The Commission is of the prima facie view that 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 it charges a commission of up to 30 percent for app purchases and in-app purchases,” the CCI noted in its order.

"Further, 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... These restrictions imposed by Apple foreclose the market for app stores for iOS for potential app distributors," the order said.

According to the CCI, this prima facie results in denial of market access for the potential app distributors/app store developers in violation of competition norms.

Further, such practises prima facie results in limiting/restricting the technical or scientific development of the services related to app store for iOS, due to reduced pressure on Apple to continuously innovate and improve its own app store, which is also in violation of competition rules, the order said.

Citing these factors, the regulator has ordered a detailed probe by its Director General (DG).

Apple did not respond to Reuters' requests for comment. The company denied the allegations in a filing to the CCI last month, seen by Reuters, and asked the regulator to throw out the case, stressing that its market share in India was an "insignificant" 0-5%.

CCI however said in the order that Apple's argument on its market share was "completely misdirected" as the allegations were about anti-competitive restrictions on app developers and not end-users.

The allegations are similar to a case Apple faces in the European Union, where regulators last year started an investigation into the US tech giant.

The CCI ordered its investigations unit to complete the investigation and submit a report within 60 days of the order. Typically such investigations go on for several months.

In a 20-page order, the watchdog said that Apple's App Store is the only channel for app developers to distribute their apps to iOS consumers, and that iOS is pre-installed on every iPhone and iPad.