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Apple hit with antitrust case in India over in-app payments issues: Reuters

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
The Apple Inc. logo is seen hanging at the entrance to the Apple store on 5th Avenue in Manhattan, New York, US, October 16, 2019. (Reuters photo)

Apple Inc. of has been accused in India of abusing its dominant position in the apps market by making developers use its proprietary in-app purchase system, Reuters reports.

Together We Fight Society - a non-profit group - has filed a suit arguing that Apple's fee of up to 30% badly affects competition through raising costs for app developers and customers and acting as a barrier to market entry, according to a source and documents seen by Reuters.

"The existence of the 30% commission means that some app developers will never make it to the market ... This could also result in consumer harm," said the filing, which has been seen by Reuters.

The complainant, which is based in India's western state of Rajasthan, told the news agency in a statement it filed the case in a move to protect Indian consumers and startups.

The case will be reviewed by the Competition Commission of India (CCI) in the coming weeks.

The CCI would either order its investigations arm to carry out a wider probe, or dismiss it altogether should it find no merit in it, a source familiar with the matter told Reuters.

"There are high chances that an investigation can be ordered, also because the EU has been probing this," said the person, on condition of anonymity.

Unlike Indian court cases, filings and details of cases the CCI reviews are not made public. Apple and the CCI did not respond to a request for comment.

In India, although Apple's iOS powered only around 2% of 520 million smartphones by end-2020 - with the rest using Android - Counterpoint Research argues the firm's smartphone base in the country has more than doubled during the past five years.

Last year, after Indian startups publicly expressed concern over a similar in-app payments fee charged by Google, the CCI launched an investigation into it as part of a broader antitrust probe into the company. That investigation is still underway.

The new case alleges that Apple’s restrictions on how developers communicate with users to offer payment solutions are anti-competitive and hurt Indian payment processors who offer services at lower charges in the range of 1-5%.

Apple has harmed competitors by somehow preventing developers from informing users of alternative purchasing possibilities, hence hurting "app developers' relationship with their customers by inserting itself as middleman in every in-app transaction," the filing added.

In recent weeks, Apple has eased some of the restrictions for developers around the world, by allowing them to use communications - such as email - to share information about payment alternatives outside of their iOS app.

However, Gautam Shahi, a competition law partner at Indian law firm Dua Associates, said that even if companies change their behavior after an antitrust case in filed, the CCI still reviews past conduct.

"The CCI will look at recent years to see if the law was violated and if consumers and competition were harmed," said Shahi.

The latest antitrust challenges the US giant tech is facing in India is similar to a case it faces in the European Union, where regulators last year began a probe into Apple's imposition of an in-app fee of 30% for distribution of paid digital content and other restrictions.

Also, South Korea's parliament this week approved a bill that bans major app store operators like Alphabet Inc.'s Google and Apple from forcing software developers to use their payment systems.

Apple and Google assert that their fee covers the security and marketing benefits their app stores provide, however, many companies disagree.

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