Background and Context
Apple App Store Abuse of Dominance: CCI 31.12.2021 Prima Facie Order in Together We Fight Society vs Apple Holds Mandatory IAP & 30% Commission Violates Section 4
The Competition Commission of India in Together We Fight Society vs Apple Inc held that Apple prima facie abused its dominant position in the market for app stores for iOS in India through mandatory use of Apple In-App Purchase System, charging of 30 percent commission, anti-steering provisions and prohibition on third party app stores. The Commission on 31.12.2021 directed Director General investigation under Section 26(1). Practically, what we have seen is that app developers of digital content like Spotify, Netflix, Tinder, gaming apps are forced to pay 30% to Apple for payments that cost 2% outside. CCI said substance matters, not Apple justification of security. If App Store is sole distribution channel, then mandatory IAP is tying. This blog explains Together We Fight Society vs Apple on app store abuse, mandatory IAP, and why anti-steering violates Section 4.
Facts: Together We Fight Society Alleges Apple App Store is Sole Distribution Channel For iOS With Mandatory IAP and 30% Commission
Informant Together We Fight Society filed information under Section 19(1)(a) on 31.12.2021. Allegation: Apple App Store is sole distribution channel for iOS apps because Apple technically and contractually prohibits sideloading and third party app stores on iPhone and iPad through code signing and App Store Review Guidelines. Apple imposes mandatory use of Apple In-App Purchase System IAP for all paid apps and in-app purchases of digital content and charges 30% commission for first year and 15% after one year, while prohibiting cheaper third party payment processors like Razorpay, PayU, UPI which charge only 2-3%.
Office Guidelines Clause 3.1.1 and 3.1.3 specifically stated: Apps offering digital goods must use IAP only and must not include button, external link, call to action directing users to purchasing mechanisms other than IAP. Informant also alleged anti-steering where Apple prohibits developers from informing users inside app that they can purchase subscription cheaper outside app via website, and ban on third party app stores unlike Android which allows APK sideloading and alternative stores like Amazon Appstore, Samsung Galaxy Store.
CCI in Together We Fight Society vs Apple para 14-18: App Store is sole channel for iOS apps, Apple holds 100% share in relevant market. Facts show Apple IAP mandatory and 30% commission charged.
Relevant Market and Dominance: Market For App Stores For iOS in India is Relevant Market Under Section 4
CCI defined relevant market as Market for App Stores for iOS in India under Section 2(r) and 19(5). CCI rejected Apple argument that market should be entire smartphone ecosystem or market for app stores including Android.
The Commission in Together We Fight Society vs Apple para 16: From the perspective of app developers, iOS and Android are not substitutable because app developers need to be present on both to reach entire user base, iOS users are high value premium users with higher spending capacity and developers cannot afford to ignore iOS even if commission high. From user perspective, once user purchases iPhone, App Store is only channel to get apps due to Apple technical restrictions.
CCI held Apple is 100% dominant in market for distribution of apps through iOS App Store with high entry barriers due to Apple closed ecosystem, network effects, high switching cost, and Apple control over iOS. Under Section 4 Explanation, dominance means position of strength. Apple with 100% share clearly dominant.
Section 4(2)(a)(d)(e): Mandatory IAP With 30% Commission is Tying, Unfair Condition and Excessive PricingSection 4(2)(a)(i) prohibits unfair condition, Section 4(2)(a)(ii) prohibits unfair price including excessive pricing, Section 4(2)(d) prohibits tying, Section 4(2)(e) prohibits leveraging.
The Commission in Together We Fight Society vs Apple para 19-22: Mandatory IAP with 30% commission amounts to tying where Apple ties app store distribution service which is dominant product with payment processing service which is separate product and developers have no choice but to accept tied product, violating Section 4(2)(d) and Section 4(2)(a)(i). Commission 30% is disproportionate to cost, comparison shows payment gateways charge 2%, cost passed to consumers increasing price. Spotify premium Rs 119 on website vs Rs 199 on iOS due to commission.
Consequently, anti-steering violates Section 4(2)(c) denial of market access and Section 4(2)(a)(i). CCI in Together We Fight Society para 23: Anti-steering prohibits developers from including button, external link informing user cheaper purchase available outside, denies market access to alternative payment processors. Ban on third party app stores violates Section 4(2)(c) as it denies market access to potential app store competitors. Leveraging into Apple Music violates Section 4(2)(e) where Apple uses dominance in app store to strengthen position in music streaming market because Apple Music does not pay 30% commission.
Conclusion
Together We Fight Society vs Apple establishes that apple app store abuse dominance CCI 2021 jurisprudence protects app developers and consumers. CCI 31.12.2021 held Apple prima facie dominant with 100% share in iOS app store market and mandatory IAP with 30% commission, anti-steering prohibiting communication about cheaper alternatives outside app, and ban on third party app stores prima facie abuse under Section 4(2)(a)(c)(d)(e). CCI directed DG investigation. As the law stands, final order is likely to impose behavioural remedies similar to EU DMA like allowing third party payment processors, allowing developers to communicate alternative offers and include external links, allowing third party app stores and sideloading with safeguards. The Commission’s ruling prevents misuse of app store monopoly and is foundation for app store neutrality.
