India's antitrust body has concluded an investigation revealing that Apple has leveraged its dominant position in the market for app stores on its iOS operating system, engaging in "abusive conduct and practices", according to a confidential report obtained by Reuters.
The Competition Commission of India (CCI) has been scrutinizing Apple Inc since 2021, suspecting it of abusing its market dominance in the apps sector by compelling developers to utilize its exclusive in-app purchase system. Apple has refuted these allegations, claiming to be a minor player in India, where Google's Android system dominates the smartphone market.
The CCI's investigative unit, in a 142-page report not publicly available but accessed by Reuters, stated that Apple exerts substantial control over the distribution of digital products and services to consumers, particularly through its iOS platform and App Store. The report, dated June 24, highlighted that the Apple App Store is an inescapable partner for app developers, who are thus forced to comply with Apple's unfavorable terms, including the obligatory use of its proprietary billing and payment system.
The report from the CCI marks a critical juncture in the Indian investigation, which will now be assessed by the watchdog's senior officials. Apple and other involved parties will have the opportunity to respond before a final verdict is issued, which may entail financial penalties and directives to alter business practices.
This investigation coincides with heightened antitrust scrutiny of Apple in other regions. In June, EU antitrust regulators accused Apple of violating the bloc's tech regulations, potentially leading to substantial fines. Additionally, Apple is under investigation for new fees imposed on app developers.
The Indian case was initiated by a lesser-known non-profit organization, "Together We Fight Society", which contended that Apple's in-app fee of up to 30% hampers competition by increasing costs for developers and consumers. Subsequently, a coalition of Indian startups and Tinder-owner Match filed analogous complaints against Apple with the CCI.
The CCI investigative team's report noted that Apple does not permit third-party payment processors to service in-app purchases and often disallows apps from including external links directing customers to alternative purchasing methods, thereby contravening Indian competition laws.
Apple's iOS accounted for approximately 3.5% of the 690 million smartphones in India as of mid-2024, with the majority running on Android, according to Counterpoint Research. Despite this, Apple's smartphone base in India has quintupled over the past five years.
In its defense to the CCI, Apple claimed a negligible market share of 0-5% in India, compared to Google's 90-100%. Apple also argued that its in-app payment system is essential for maintaining and enhancing the security of its App Store. However, the CCI asserted that "App stores are OS specific and Apple's App store is the sole App store available for reaching iOS users." The CCI further stated that Apple's payment policy negatively impacts app developers, users, and other payment processors.
During its investigation, the CCI considered feedback from numerous companies, including Microsoft, Uber, and Amazon. Google has also been under the CCI's scrutiny for its in-app payment mechanisms. In October 2022, the CCI fined Google $113 million and mandated it to permit the use of third-party billing and cease forcing developers to use its in-app payment system. Google has contested this ruling.
