Apple Inc is set to face a probe by the Competition Commission of India (CCI) over allegations that the technology major is violating competition law by mandating the use of its in-app purchase (IAP) system for all payments on its App Store. It is also facing an investigation by the European Commission over its app store payment rules.
Apple charges a commission of up to 30 per cent on all payments made through its in-app purchase system. “The Commission is of the prima facie view that mandatory use of Apple’s IAP for paid apps & in-app purchases restrict the choice available to the app developers to select a payment processing system of their choice especially considering when it charges a commission of up to 30 per cent for app purchases and in-app purchases,” the CCI noted in its order.
Apple contended in submissions to the CCI that the commission charged in the IAP was compensation for providing developers a “built-in user base and significant technical and marketing know-how.” It said it had spent billions of dollars on developing and running the App Store and that the commission charged was “consistent with the value developers can and do receive from Apple.”
Apple added most developers that use the app store pay no commission and most of the developers that do pay 15 per cent commission. Apple’s commission structure charges higher rates for apps that generate larger levels of revenue, with apps generating over $1 million being charged 30 per cent commission for in-app purchases. The CCI directed the Director General to submit an investigation report within 60 days.