Highlights

• India prepares to introduce the Digital Competition Bill modelled on Europe’s DMA.
• The bill aims to prohibit exploitation of non-public user data and mandate third-party app stores.
• Apple may face fines up to 10% of global revenue for violations.
• US lobby group urges Indian government to reconsider the bill’s regulations.

Apple’s ongoing battle against antitrust regulations is about to face a new challenge, this time in India.

The South Asian nation is preparing its own competition law, closely modelled on Europe’s Digital Markets Act (DMA).

According to reports, this new legislation, dubbed the “Digital Competition Bill,” aims to prohibit companies from exploiting non-public user data and promoting their own services over rivals.

It also seeks to abolish restrictions on downloading third-party apps.

Apple Preparing for a Court Showdown

The move comes as no surprise, as India feels some tech behemoths wield “immense control” over the sector, such that government intervention is indeed due.

It’s understood the proposed law would contain requirements similar to the DMA—mandating Apple to allow for third-party App Stores and giving iPhone consumers an active choice of web browser.

In Europe, the DMA slammed various changes on corporations accused of abuse of market dominance.

Apple Inc. is one of the corporations, which the verdict declared the monopoly on the selling of iPhone apps illegal.

The firm was to permit third-party application stores to distribute iPhone applications, but their implementation has been termed as “malicious compliance,” and it is under probe for possible violation

Not Apple’s First Antitrust Rodeo

Similar legislation is being faced by Apple in many different countries, the latest being Japan with its own DMA.

The tech giant is also battling a lawsuit with the US Department of Justice, covering much the same ground—as well as facing a judge who seems highly unimpressed with the company’s response to her ruling in the Epic Games case.

As India readies to unveil its Digital Competition Bill, a US lobby group representing tech giants, including Google, Amazon, and Apple, has asked the Indian government to rethink the law.

The group says the regulations against data use and preferential treatment of partners could raise user costs, according to the letter.

But the Indian government will not budge in its view that the law is needed to clip the wings of a few massive tech companies.

Like the DMA, the Digital Competition Bill will have provisions to fine Apple up to 10% of its global revenue in case of any violation of the law.

The Indian government will study replies from Apple and others to see whether any changes are required before the law is submitted to parliament for approval.

FAQs

What is the Digital Competition Bill in India?

The Digital Competition Bill is a proposed legislation in India modelled on Europe’s Digital Markets Act (DMA), aiming to regulate tech giants’ use of non-public user data and promote fair competition.

How will the Digital Competition Bill impact Apple?

The bill could require Apple to allow third-party app stores and provide consumers with choices of web browsers, similar to the DMA in Europe. Violations could result in fines up to 10% of Apple’s global revenue.

Why is India introducing the Digital Competition Bill?

India believes that tech giants like Apple wield immense control over the market, necessitating government intervention to ensure fair competition and prevent abuse of market dominance.

What other countries are implementing similar legislation?

Apple is facing similar antitrust regulations in countries like Japan, the United States, and Europe, all aiming to promote fair competition and prevent monopolistic practices.

How is the US lobby group responding to India’s proposed bill?

A US lobby group representing tech giants, including Apple, has asked the Indian government to reconsider the bill, arguing that regulations against data use and preferential treatment could raise user costs.

What does antitrust mean?

In many jurisdictions around the world, it is illegal for large companies to get together to form agreements or “trusts” to behave in a particular way .

Laws designed to outlaw this type of behavior are called antitrust legislation.

The term is used more generally to refer to laws designed to prevent companies from engaging in any kind of anti-competitive action – that is, do anything that would tend to artificially distort competition within a market.

One common myth is that antitrust laws only apply to monopolies.

This is not the case: They apply to any company large enough to have a dominant position in any market.

The definition of the word “market” can be crucial to deciding whether antitrust concerns arise.

Why is Apple facing antitrust investigations?

Apple is a very large company, and it’s nit tough for a company of that size to commit antitrust violations, so it is not surprising that any massive corporation would be put under the antitrust microscope.

For apple there are many other concerns based on the company”s market dominance in particular areas.

What are the antitrust concerns with Apple?

There are problems in areas as diverse as ad tracking and Sign In With Apple, but there are three major ones.
-The App Store

Apple says it does not have a dominant position in this market, as it considers the relevant market to be either “smartphones” or “apps.”

The company holds a minority share of the smartphone market in most of the countries in which it operates, it believes it cannot be considered to have a dominant position.

Competition regulators tend to take the view that the relevant market is “iOS apps,” and here Apple has a 100% monopoly on their sale and distribution.

Edge cases aside, there is no way for a developer to bring an iOS app to market without selling it through the App Store.

Companies like Epic Games argue that they should be allowed to sell in-app purchases without Apple taking a cut of their revenue.

The argument here is that Apple harms developers by taking part of their income, and consumers by forcing developers to charge more to make up for Apple’s cut.

Apple, in response, says that it is perfectly normal for a company to take a cut of the sales it facilitates.

Default apps

Some companies blame Apple of anti-competitive behavior by giving its own apps advantages over third-party ones.

One way that Apple does this, they say, is by pre-installing its own apps.

There is overlap here with the App Store concerns.

Relationships with carriers and retailers

Apple has also been found guilty in more than one country of exploiting a dominant position within the smartphone market to place undue demands on carriers and retailers.

Because the popularity of iPhones meant carriers had to sell them, Apple was able to dictate terms.

In South Korea, for example, it was accused of imposing three onerous conditions on local carriers:

Carriers had to buy minimum quantities of each model, dictated by Apple
Carriers had to share the cost of warranty repairs or replacements
Carriers had to pay to run Apple’s own TV ads for the iPhone

Budget-focused carriers might, for example, want to buy only older and cheaper models, as that’s what their customers want, but Apple would force them to buy flagship models, too.
And if a phone proved faulty, Apple wouldn’t just replace it, but would oblige carriers to meet some of the costs.

Finally, although carriers had to pay the full cost of running iPhone ads on TV, they were only allowed to use Apple’s own ads, and the only thing they were permitted to change was adding their own logo to the final frame.

Additional areas of concern range from Apple Pay to a 4K video codec alliance!

What could happen to Apple as a result?

Antitrust outcomes will usually happen on a country-by-country basis, though there are exceptions.

A more likely scenario is a series of smaller changes.

How is Apple responding?

In public, Apple’s stance is an outraged one, arguing that it does not have a dominant position and is doing nothing wrong.

Behind closed doors, the company is aware that it either has to change some of its practices, or be forced to do so by law.

The company has also quietly made a number of other changes in direct response to antitrust concerns, for example, opening up the Find My app to third-party accessories, and allowing people to change their default email app and web browser.

Also Read: EU’s DMA Pushing Apple to Enable App Sideloading on iPhones

Also Read: Apple Announces iOS, Safari, and App Store Changes in EU to Comply with DMA

Also Read: Apple Faces Criticism Over New Third-Party App Store Policy in Europe

Also Read: Apple Adapts to EU Digital Markets Act with Developer Consultations and Q1 Earnings Success