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As the app store dominance debate continues to heat up globally, a little-known NGO from Jaipur, Rajasthan quietly filed a complaint with the Competition Commission of India (CCI) on August 4 against Apple App Store’s policies of misusing its market dominance.
The NGO, Together We Fight Society, told BusinessLine, that the key concerns being flagged in the complaint includes the 30 per cent in-app purchase fee, which the NGO calls “Apple Tax” impacting start-ups and their end consumers as due to higher commissions, the consumer finally bear the brunt of the tax.
CA Shivani, president, Together We Fight Society said, “Another major issue is the restriction on app developers that they cannot communicate users about alternative purchasing options of the same product from websites where they don’t have to pay 30 per cent Apple Tax. The petition has also highlighted the capricious, whimsical nature of the App Store policy that may lead to either suspension/ removal of the apps from App Store (without applying the same rules on Apple’s own vertical offering i.e., like Apple Maps, Apple Music etc.) In relation to this issue, Apple has been found to be targeting mainly the competing Apps such as Spotify etc.”
She added, “Any suspension from the App Store leads to loss of revenue, reputation for the start-ups. Lastly, we have also highlighted that Apple sets the rules of the game (‘App Store Review Guidelines’), where it is not only the player but also the umpire. Apple is the adjudicator that is whether to suspend/ remove an App from the App Store.”
Growing support
BusinessLine reviewed a copy of the complaint. Indian start-up body, Alliance of Digital India Foundation (ADIF) which represents over 250 start-ups including Paytm, Matrimony.com , MapMyIndia, GoQii Innov8, and Sheroes, came out in support of the complaint.
Sijo Kuruvilla George, Executive Director, ADIF told BusinessLine, “ It’s good the conversation, and this specific challenge, is on antitrust grounds. The issue has always been an antitrust one – of unfair / arbitrary policies and anti-competitive behaviour. Price discovery will happen in a fair and competitive market. More people and organisations coming to the forefront to talk about the issues and challenge these practices is both welcome and heartening.”
He added that in the absence of enabling legislation, any action on the complaint might take long or might even be rendered ineffective, say by legal challenges in court.
Barrier to market entry
Another major concern raised in the complaint has been around the market entry barrier that the 30 per cent commission could add to. The Apple App Store also doesn’t let app developers use any other payment processors like BillDesk, Razorpay, CCAvenue to name a few, stating security reasons.
“Other payment processors charge between 1-5 per cent commission,” Shivani said. “The rationale being that the existence of the 30 per cent commission means that some app developers will never make it to the market because their margins are too slim to sustain such a cut,” She argued.
“Economic incentives being misaligned will force app developers to either open up their apps for free or much rather not even undertake the endeavour in the first place. It will also force developers to increase prices on the iOS store thereby increasing prices to their end customers. Higher prices will impact user acquisition and with reduced prices one will need larger scale to be economically viable in turn creating entry barrier situations,” Kuruvilla said.
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