Helpway, was an NGO supporting various causes including the legal support, needed by any deprived. Kechar, was an engineering drop out, who was very skilled in developing applications ('app'). He developed an app for the
CS Professional · Resolution of Corporate Disputes, Non-Compliances & Remedies · PYQS · June 2024
Helpway, was an NGO supporting various causes including the legal support, needed by any deprived. Kechar, was an engineering drop out, who was very skilled in developing applications ('app'). He developed an app for the NGO to gather information about poor kids, aged people, etc., who may need help and support, however he was not able to host it on playstore, for downloading by public. The NGO alleged that Hyper Ltd. (a leading brand) is using a barrage of anti-competitive restraints and abuse of dominant practices in markets for distribution of apps to users of smartphones, tablets and processing of consumers' payments for digital content used within mobile apps ('in-app content'). The NGO averred that Hyper Ltd. imposes unreasonable and unlawful restraints on app developers from reaching users of its mobile devices unless they go through the 'App Store' which was stated to be controlled by it. Further, Hyper Ltd requires app developers who wish to sell digital in-app content to their consumers to use its in-app payment solution i.e. In-App Purchase (IAP) which carries a 20 per cent commission which is 10 times higher as compared to open market rates. NGO alleged that such restrictive practice and charge of exorbitant price amounts to abuse of dominant position in the Competition Act. NGO further asserted that, Hyper Ltd. enjoys a dominant position in the market for non-licensable mobile OS for smart mobile devices as well as in the relevant market for app store in India. Hyper Ltd's App Store was the only approved App Store for iOS devices. App developers have no other alternative except Hyper Ltd's App Store through which they could reach users of iOS. Thus, it was stated to have a monopoly in the iOS app distribution market. NGO had alleged that Hyper Ltd prevents iOS users from downloading app stores or apps directly from websites; pre-installs its own App Store on every iOS device it sells; disables iOS users' ability to remove the App Store from their devices; and conditions all app developers' access to iOS on the developers' agreement to distribute their apps solely through the App Store and not to distribute third-party app stores. In the light of judicial pronouncement, comment if the appeal of NGO would be allowed before Competition Commission of India (CCI).
Answer & Explanation:
The facts of the given situation are similar to the matter of Together We Fight Society v. Apple Inc. decided by the Competition Commission of India. In the instant case, the informant (an NGO called 'Together We Fight Society') alleged that Apple uses a barrage of anti-competitive restraints and abuse of dominant practices in markets for distribution of applications ('apps') to users of smartphones, tablets and processing of consumers' payments for digital content used within iOS mobile apps ('in-app content'). The Informant averred that Apple imposes unreasonable and unlawful restraints on app developers from reaching users of its mobile devices (e.g., iPhone and iPad) unless they go through the 'App Store' which was stated to be controlled by Apple. Further, Apple requires app developers who wish to sell digital in-app content to their consumers to use Apple's in-app payment solution i.e. In-App Purchase (IAP) which carries a 30 per cent commission which is 10 times higher than as compared to open market rates. The informant alleged that such restrictive practice and charge of exorbitant price amounts to abuse of dominant position under section 4 of the Act. The Informant further asserted that Apple enjoys a dominant position in the market for non-licensable mobile OS for smart mobile devices as well as in the relevant market for app store for Apple smart mobile OS in India. Apple's App Store was the only approved App store for iOS devices. App developers have no other alternative except Apple's App Store through which they could reach users of iOS. Thus, Apple was stated to have a monopoly in the iOS app distribution market. The informant had alleged that Apple prevents iOS users from downloading app stores or apps directly from websites; pre-installs its own App Store on every iOS device it sells; disables iOS users' ability to remove the App Store from their devices; and conditions all app developers' access to iOS on the developers' agreement to distribute their apps solely through the App Store and not to distribute third-party app stores. The Competition Commission of India observed that in a relevant market i.e., market for app stores for iOS in India, Apple's App Store is only means for developers to distribute their apps to consumers using Apple's smart mobile devices running on Apple's smart mobile operating system iOS, Apple holds a monopoly position in relevant market. The Commission prima facie viewed that Apple has violated the provisions of section 4(2)(a), 4(2)(b), 4(2)(c), 4(2)(d) and 4(2)(e) of the Act, and therefore, it warrants detailed investigation. Accordingly, CCI directed the Director-General to cause an investigation to be made into the matter under the provisions of section 26(1). In view of above, it may be said that the appeal of NGO can be allowed before the Competition Commission of India.
Topics: Competition Law
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