competition commission of india
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Report: India may be next in line to mandate changes to Apple’s in-app payment rules
Summer is still technically in session, but a snowball is slowly developing in the world of apps, and specifically the world of in-app payments. A report in Reuters today says that the Competition Commission of India, the country’s monopoly regulator, will soon be looking at an antitrust suit filed against Apple over how it mandates that app developers use Apple’s own in-app payment system — thereby giving Apple a cut of those payments — when publishers charge users for subscriptions and other items in their apps.
The suit, filed by an Indian nonprofit called “Together We Fight Society”, said in a statement to Reuters that it was representing consumer and startup interests in its complaint.
The move would be the latest in what has become a string of challenges from national regulators against app store operators — specifically Apple but also others like Google and WeChat — over how they wield their positions to enforce market practices that critics have argued are anti-competitive. Other countries that have in recent weeks reached settlements, passed laws or are about to introduce laws include Japan, South Korea, Australia, the U.S. and the European Union.
And in India specifically, the regulator is currently working through a similar investigation as it relates to in-app payments in Android apps, which Google mandates use its proprietary payment system. Google and Android dominate the Indian smartphone market, with the operating system active on 98% of the 520 million devices in use in the country as of the end of 2020.
It will be interesting to watch whether more countries wade in as a result of these developments. Ultimately, it could force app store operators, to avoid further and deeper regulatory scrutiny, to adopt new and more flexible universal policies.
In the meantime, we are seeing changes happen on a country-by-country basis.
Just yesterday, Apple reached a settlement in Japan that will let publishers of “reader” apps (those for using or consuming media like books and news, music, files in the cloud and more) to redirect users to external sites to provide alternatives to Apple’s proprietary in-app payment provision. Although it’s not as seamless as paying within the app, redirecting previously was typically not allowed, and in doing so the publishers can avoid Apple’s cut.
South Korean legislators earlier this week approved a measure that will make it illegal for Apple and Google to make a commission by forcing developers to use their proprietary payment systems.
And last week, Apple also made some movements in the U.S. around allowing alternative forms of payments, but, relatively speaking, the concessions were somewhat indirect: app publishers can refer to alternative, direct payment options in apps now, but not actually offer them. (Not yet at least.)
Some developers and consumers have been arguing for years that Apple’s strict policies should open up more. Apple however has long said in its defense that it mandates certain developer policies to build better overall user experiences, and for reasons of security. But, as app technology has evolved, and consumer habits have changed, critics believe that this position needs to be reconsidered.
One factor in Apple’s defense in India specifically might be the company’s position in the market. Android absolutely dominates India when it comes to smartphones and mobile services, with Apple actually a very small part of the ecosystem.
As of the end of 2020, it accounted for just 2% of the 520 million smartphones in use in the country, according to figures from Counterpoint Research quoted by Reuters. That figure had doubled in the last five years, but it’s a long way from a majority, or even significant minority.
The antitrust filing in India has yet to be filed formally, but Reuters notes that the wording leans on the fact that anti-competitive practices in payments systems make it less viable for many publishers to exist at all, since the economics simply do not add up:
“The existence of the 30% commission means that some app developers will never make it to the market,” Reuters noted from the filing. “This could also result in consumer harm.”
Reuters notes that the CCI will be reviewing the case in the coming weeks before deciding whether it should run a deeper investigation or dismiss it. It typically does not publish filings during this period.
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India’s Android antitrust case against Google may have some holes
India ordered an investigation into Google’s alleged abuse of Android’s dominance in the country to hurt local rivals. A document made public by the local antitrust watchdog has now further revealed the nature of the allegations and identified the people who filed the complaint.
Umar Javeed and Sukarma Thapar, two associates at Competition Commission of India — and Aaqib Javeed, brother of Umar and who interned at the watchdog last year, filed the complaint, the document revealed. The revelation puts an end to months-long interest from industry executives, many of whom wondered if a major corporation was behind it.
The allegations
The case, filed against Google’s global unit and Indian arm on April 16 this year, makes several allegations, including the possibility that Google used Android’s dominant position in India to hurt local companies. The accusation is that Google requires handset and tablet vendors to pre-install its own applications or services if they wish to get the full-blown version of Android . Google’s Android mobile operating system powered more than 98% of smartphones that shipped in the country last year, research firm Counterpoint said.
This accusation is partly true, if at all. To be sure, Google does offer a “bare Android” version, which a smartphone vendor could use and then they wouldn’t need to pre-install Google Mobile Services (GMS). Though by doing so, they will also lose access to Google Play Store, which is the largest app store in the Android ecosystem. Additionally, phone vendors do partner with other companies to pre-install their applications. In India itself, most Android phones sold by Amazon India and Flipkart include a suite of their apps preloaded on the them.
“OEMs can offer Android devices without preinstalling any Google apps. If OEMs choose to preinstall Google mobile apps, the MADA (Mobile Application Distribution Agreement) allows OEMs to preinstall a suite of Google mobile apps and services referred to as Google Mobile Services (GMS),” said Google in response.
The second allegation is that Google is bundling its apps and services in a way that they are able to talk to each other. “This conduct illegally prevented the development and market access of rival applications and services in violation of Section 4 read with Section 32 of the Act,” the trio wrote.
This also does not seem accurate. Very much every Android app is capable of talking to one another through APIs. Additionally, defunct software firm Cyanogen partnered with Microsoft to “deeply integrate” Cortana into its Android phones — replacing Google Assistant as the default virtual voice assistant. So it is unclear what advantage Google has here.
Google’s response: “This preinstallation obligation is limited in scope. It was pointed out that preinstalled Google app icons take up very little screen space. OEMs can and do use the remaining space to preinstall and promote both their own, and third-party apps. It was also submitted that the MADA preinstallation conditions are not exclusive. Nor are they exclusionary. The MADA leaves OEMs free to preinstall rival apps and offer them the same or even superior placement.”
The third accusation is that Google prevents smartphone and tablet manufacturers in India from developing and marketing modified and potentially competing versions of Android on other devices.
This is also arguably incorrect. Micromax, which once held tentpole position among smartphone vendors in India, partnered with Cyanogen in their heyday to launch and market Android smartphones running a customized operating system. Chinese smartphone vendor OnePlus followed the same path briefly.
Google’s response: “Android users have considerable freedom to customise their phones and to install apps that compete with Google’s. Consumers can quickly and easily move or disable preinstalled apps, including Google’s apps. Disabling an app makes it disappear from the device screen, prevents it from running, and frees up device memory – while still allowing the user to restore the app at a later time or to factory reset the device to its original state.”
Additionally, Google says it requires OEMs to “adhere to a minimum baseline compatibility standard” for Android called Compatibility Definition Document (COD) to ensure that apps written for Android run on their phones. Otherwise, this risks creating a “threat to the viability and quality of the platform.”
“If companies make changes to the Android source code that create incompatibilities, apps written for Android will not run on these incompatible variants. As a result, fewer developers will write apps for Android, threatening to make Android less attractive to users and, in turn, even fewer developers will support Android,” the company said.
The antitrust is ongoing, but based on an initial probe of the case, CCI has found that Google has “reduced the ability and incentive of device manufacturers to develop and sell devices” running Android forks, the watchdog said. Google’s condition to include “the entire GMS suite” to devices from OEMs that have opted for full-blown a version of Android, amounts to “imposition of unfair condition on the device manufacturers,” the watchdog added.
The document also reveals that Google has provided CCI with some additional responses that have been kept confidential. A Google spokesperson declined to comment.
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