Report: India could be the next to change Apple's in-app payments rules
Although summer is technically still in session, a snowball is developing in the worlds of apps and in-app payments. According to Reuters, India's Competition Commission will soon examine an antitrust case against Apple. The suit concerns Apple's mandate that app developers use Apples in-app payment system. This gives Apple a cut of subscription fees.
A non-profit organization in India called Together We Fight Society filed the suit. It stated in a statement to Reuters it represented startup and consumer interests in its complaint.
This would be the latest challenge from national regulators to app store operators, including Apple and others like Google and WeChat. They are challenging how they use their positions to enforce anti-competitive market practices. Japan, South Korea and Australia are just a few of the other countries that have reached agreements, passed laws or are about to implement laws in recent weeks.
In India, the regulator is currently conducting a similar investigation in relation to in-app payments for Android apps. Google requires that Indian users use its own payment system. Google and Android dominate India's smartphone market. The operating system is active on 98% (520 million) of the devices that were in use as of the end 2020.
It will be interesting for countries to see if they are drawn in by these developments. It could eventually force app store operators to adopt more flexible, universal policies to avoid additional regulatory scrutiny.
We are witnessing changes country-by-country.
Apple reached a deal in Japan yesterday that allows publishers of reader apps (those used for reading or consuming media such as books, news, music and files in the cloud) to redirect users to other sites in order to offer alternatives to Apple's in-app payments provision. While it is not as seamless as using the app to pay, redirecting users to external sites can be avoided by Apples cut.
South Korean legislators approved earlier this week a measure making it illegal for Apple or Google to make a payment to developers.
Apple made some moves in the U.S. last week to allow alternative forms of payment, but the concessions were indirect. App publishers can now refer to direct alternative payment options in their apps, but they cannot actually offer them. (Not at all.)
Apple's restrictive policies have been the subject of long-standing debate by developers and consumers. Apple has always maintained that its policies are required for developers to create better user experiences and protect users. Critics believe this position should be reconsidered as app technology evolves and consumer habits change.
The company's market position could be a key factor in Apples success in India. India is dominated by Android when it comes smartphones and mobile services. Apple is a small part of that ecosystem.
According to Counterpoint Research figures, only 2% of the 520,000,000 smartphones used in the country as of 2020, which was cited by Reuters. This figure has doubled over the past five years but it is still far from the majority or significant minority.
Although the Indian antitrust filing has not been filed formally yet, Reuters noted that the phrase refers to the fact that anticompetitive payments systems make it less feasible for many publishers to exist. The economics simply don't add up.
Reuters stated in the filing that the 30% commission means some app developers won't make it to market. Consumer harm could also be a result.
