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Apple opposes ex-ante regulations, similar to Digital Markets Act, in India

Ex-ante regulations aim to prevent anti-competitive conduct from occurring, as opposed to the current ex-post framework under the Competition Act, 2002.

Apple, in its suggestions to the Committee on Digital Competition Law (CDCL), has said it is opposed to ex-ante regulations in India modelled after the Digital Markets Act (DMA), the EU’s new competition law. The company said it instead favours a light-touch regime that promotes innovation.

A report by the CDCL on the matter of ex-ante regulation in India, along with the draft Digital Competition Bill, 2024, was released by the Government on March 12.

The draft bill prohibits large digital platforms, identified as Systemically Significant Digital Enterprises, from engaging in self-preferencing, restricting third-party apps, imposing anti-steering policies, misusing the data of business users, and bundling products and services. The draft is open for public feedback until April 15. 

Ex-ante regulations aim to prevent anti-competitive conduct from occurring, as opposed to the current ex-post framework under the Competition Act, 2002, wherein the Competition Commission of India (CCI) intervenes after the occurrence of anti-competitive conduct.

What else did Apple say in its submission to CDCL

  • Digital Markets Unit sufficient: Apple submitted that the Digital Markets Unit set up by the Competition Commission of India (CCI) in 2023, should be adequate to address any capacity constraints faced in regulation.
  • Open a CCI office in Bangalore: Additionally, Apple suggested that CCI open a regional office in Bengaluru to get easy access to the technology ecosystem of the country.

Apple and the EU DMA

Apple’s dislike for ex-ante regulations is not unexpected given its battle with the EU’s Digital Markets Act, which it repeatedly opposed.

The DMA, which went into effect on March 7, has designated several Big Tech companies, including Apple, as “gatekeepers” for their various platforms and prescribed obligations for them aimed at preventing anti-competitive conduct. 

In compliance with the DMA, Apple has had to make major changes to its iOS, App Store, and browser policies. For example, Apple is, for the first time, allowing the use of alternative app marketplaces (third-party app stores) and payment systems on iOS devices in the EU. This would give users and developers wider options in app stores and payment systems. In India, the Digital Competition Bill, if enacted, would mandate the same.

However, Apple’s compliance has been called into question by app developers because the company still charges multiple fees to apps that are distributed through alternative app stores or use alternative payment systems, thus disincentivizing developers from actually using these options. The European Commission is looking into these complaints. 

Apple also continues to contest its gatekeeper status legally.

Apple’s antitrust troubles with India’s Competition Commission

Apple has also been under investigation by the Competition Commission of India (CCI) since December 2021 based on a complaint filed by Indian startups. The startups alleged that Apple is abusing its dominance in the market for app distribution through its App Store policies.

Some of the allegations levied against Apple concerned:

  • Bundling the app distribution service and payment processing service, thereby making the use of Apple’s in-app purchase (IAP) mandatory
  • Prohibiting app developers from informing users about the ability to purchase on the web
  • Charging high commissions to app developers
  • Restricting third-party app stores 
  • Apple being an intermediary between the app developer and app user would allow Apple to enter or protect its downstream market

Apple App Store in the US

  • The Apple vs Epic antitrust lawsuit: Apple largely won the lawsuit filed by Epic Games in the US, but was forced to make one significant change: allow US app developers to direct users to external websites for payment purchases rather than require them to pay through the in-app purchase system.  However, Apple has put in place various restrictions including showing a warning screen to users and charging developers a commission even when users pay outside the app, because of which Epic CEO Tim Sweeney has criticised the company and filed a challenge to Apple’s compliance.
  • Proposed Open Markets Act: In 2021, the US proposed a bipartisan bill titled the Open Markets Act to curb anti-competitive practices. It would require app stores like Apple’s to allow third-party app stores and alternative payment systems. In addition to this, the bill mandates that app stores cannot self-reference and cannot force developers to use payment systems they own. Lawmakers made specific mention of Apple’s App Store along with Google’s Play Store while proposing the bill. This bill is still stuck in the legislative process.

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