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Business

EXCLUSIVE Apple hit with antitrust case in India over in-app payments issues

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  • Apple faces case similar to one in European Union
  • Non-profit group says Apple policies anti-competitive in India
  • Apple mandates 30% in-app fee that hurts app developers-filing
  • India watchdog to review case, decide on next steps-source

NEW DELHI, Sept 2 (Reuters) – Apple Inc (AAPL.O) is facing an antitrust challenge in India for allegedly abusing its dominant position in the apps market by forcing developers to use its proprietary in-app purchase system, according to a source and documents seen by Reuters.

The allegations are similar to a case Apple faces in the European Union, where regulators last year started an investigation into Apple’s imposition of an in-app fee of 30% for distribution of paid digital content and other restrictions.

The Indian case was filed by a little-known, non-profit group which argues Apple’s fee of up to 30% hurts competition by raising costs for app developers and customers, while also acting as a barrier to market entry.

“The existence of the 30% commission means that some app developers will never make it to the market … This could also result in consumer harm,” said the filing, which has been seen by Reuters.

Unlike Indian court cases, filings and details of cases reviewed by the Competition Commission of India (CCI) are not made public. Apple and the CCI did not respond to a request for comment.

In the coming weeks, the CCI will review the case and could order its investigations arm to conduct a wider probe, or dismiss it altogether if it finds no merit in it, said a source familiar with the matter.

“There are high chances that an investigation can be ordered, also because the EU has been probing this,” said the person, who declined to be identified as the case details are not public.

The complainant, non-profit “Together We Fight Society” which is based in India’s western state of Rajasthan, told Reuters in a statement it filed the case in the interest of protecting Indian consumers and startups.

In India, though Apple’s iOS powered just about 2% of 520 million smartphones by end-2020 – with the rest using Android – Counterpoint Research says the U.S. firm’s smartphone base in the country has more than doubled in the last five years.

The Apple case in India comes just as South Korea’s parliament this week approved a bill that bans major app store operators like Alphabet Inc’s (GOOGL.O) Google and Apple from forcing software developers to use their payment systems.

A salesperson walks past an advertisement at an Apple reseller store in Mumbai, India September 1, 2021. REUTERS/Francis Mascarenhas

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“MIDDLEMAN IN TRANSACTIONS”

Companies like Apple and Google say their fee covers the security and marketing benefits their app stores provide, but many companies disagree.

Last year, after Indian startups publicly voiced concern over a similar in-app payments fee charged by Google, the CCI ordered an investigation into it as part of a broader antitrust probe into the company. That investigation is ongoing.

The India antitrust case against Apple also alleges that its restrictions on how developers communicate with users to offer payment solutions are anti-competitive, and also hurt the country’s payment processors who offer services at lower charges in the range of 1-5%.

Apple has hurt competitors by restricting developers from informing users of alternative purchasing possibilities, thereby harming “app developers’ relationship with their customers by inserting itself as middleman in every in-app transaction,” the filing added.

In recent weeks, Apple has loosened some of the restrictions for developers globally, like allowing them to use communications – such as email – to share information about payment alternatives outside of their iOS app.

And on Wednesday, it said it would allow some apps to provide customers an in-app link to bypass Apple’s purchase system, though the U.S. firm retained a ban on allowing other forms of payment options inside apps.

Gautam Shahi, a competition law partner at Indian law firm Dua Associates, said that even if companies change their behaviour after an antitrust case in filed, the CCI still looks at past conduct.

“The CCI will look at recent years to see if the law was violated and if consumers and competition were harmed,” said Shahi.

The CCI has plans to speed up all cases involving big technology firms such as Amazon (AMZN.O) and Google by deploying additional officers and working to more stringent internal deadlines, Reuters reported in June.

Reporting by Aditya Kalra in New Delhi; Additional reporting by Stephen Nellis in San Francisco; Editing by Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.

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Business

Tesla’s Musk signals concerns over Nvidia deal for UK chip maker -The Telegraph

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SpaceX founder and Tesla CEO Elon Musk looks on as he visits the construction site of Tesla’s gigafactory in Gruenheide, near Berlin, Germany, May 17, 2021. REUTERS/Michele Tantussi/File Photo

Aug 28 (Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk has signaled competition concerns over Nvidia Corp’s (NVDA.O) planned purchase of British chip designer Arm, the Telegraph reported on Saturday, citing multiple sources.

E-commerce giant Amazon.com Inc (AMZN.O) and smartphone maker Samsung Electronics Co Ltd (005930.KS) have also lodged opposition to the deal with U.S. authorities, the newspaper reported.

Earlier this year, the U.S. Federal Trade Commission opened an in-depth probe into the takeover. read more The probe findings are expected in the coming weeks, according to the newspaper.

Tesla, Amazon, Samsung and Nvidia did not immediately respond to a Reuters request for comment.

Nvidia is likely to seek European Union antitrust approval for the $54 billion purchase of Arm early next month, with regulators expected to launch a full-scale investigation after a preliminary review, people familiar with the matter have said. read more

Reporting by Aishwarya Nair in Bengaluru

Our Standards: The Thomson Reuters Trust Principles.

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Technology

Google Play app store revenue hit $11.2 bln in 2019, lawsuit says

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The logo of Google Play is displayed at Tokyo Game Show 2019 in Chiba, east of Tokyo, Japan, September 12, 2019. REUTERS/Issei Kato/File Photo

OAKLAND, Calif., Aug 28 (Reuters) – Alphabet Inc’s (GOOGL.O) Google generated $11.2 billion in revenue from its mobile app store in 2019, according to a court filing unsealed on Saturday, offering a clear view into the service’s financial results for the first time.

Attorneys general for Utah and 36 other U.S. states or districts suing Google over alleged antitrust violations with the app store also said in the newly unredacted filing that the business in 2019 had $8.5 billion in gross profit and $7 billion in operating income, for an operating margin of over 62%.

The figures include sales of apps, in-app purchase and app store ads. Google told Reuters the data “are being used to mischaracterize our business in a meritless lawsuit.”

The company and its accusers said in a separate filing on Saturday a trial in late 2022 is possible over whether Google abuses its alleged monopoly in app sales for Android devices.

In its quarterly financial disclosures, Google groups Play app revenue with that of other services and accounts for the store’s ad revenue as part of another broader category.

Attorneys general, as well as mobile app developer Epic Games and others separately suing Google, have contended that it generates huge profits through the Play Store by taking 30% of the fee for every digital good sold inside an app. The plaintiffs say Google’s cut is arbitrarily high, siphoning app developers’ profits.

Google argues that alternatives exist to Google’s store and payment systems, though critics say those routes are unfeasible and were sometimes blocked.

Plaintiffs allege Google through anticompetitive deals extended benefits to and imposed restrictions on major developers such as “League of Legends” maker Riot Games to keep them from leaving the Play Store.

A filing by Epic Games unsealed this month said Google, according to internal documents, feared losing $1.1 billion in annual app store profit if the Play Store was successfully bypassed. read more

Reporting by Paresh Dave;
Editing by Marguerita Choy and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

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Technology

S.Korea parliament committee votes to curb Google, Apple commission dominance

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A 3D printed Google logo is placed on the Apple Macbook in this illustration taken April 12, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

SEOUL, Aug 25 (Reuters) – A South Korean parliamentary committee voted early on Wednesday to recommend amending a law, a key step toward banning Google and Apple from forcibly charging software developers commissions on in-app purchases, the first such curb by a major economy.

After the vote from the legislation and judiciary committee to amend the Telecommunications Business Act, dubbed the “Anti-Google law,” the amendment will come to a final vote in parliament.

That vote could come on Wednesday, although South Korean news agency Yonhap reported that parliament would act at a later date. read more

A parliament official told Reuters the office had not yet received an official request not to hold the meeting on Wednesday.

Apple Inc (AAPL.O) and Alphabet Inc’s (GOOGL.O) Google have both faced global criticism because they require software developers using their app stores to use proprietary payment systems that charge commissions of up to 30%.

In a statement on Tuesday, Apple said the bill “will put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections”, hurt user trust in App Store purchases and lead to fewer opportunities for South Korean developers.

Wilson White, senior director of public policy at Google, said “the rushed process hasn’t allowed for enough analysis of the negative impact of this legislation on Korean consumers and app developers”.

Legal experts said app store operators could work with developers and other companies to create secure payment methods other than the ones they provide.

“Google and Apple aren’t the only ones that can create a secure payment system,” said Lee Hwang, a Korea University School of Law professor specialising in competition law. “I think it’s a problem to try to inspire excessive fear by talking about safety or security about using different payment methods.”

Based on South Korean parliament records, the amendment bans app store operators with dominant market positions from forcing payment systems on content providers and “inappropriately” delaying the review of, or deleting, mobile contents from app markets.

It also allows the South Korean government to require an app market operator to “prevent damage to users and protect the rights and interests of users”, probe app market operators, and mediate disputes regarding payment, cancellations or refunds in the app market.

This month in the United States, a bipartisan group of senators introduced a bill that would rein in app stores of companies that they said exert too much market control, including Apple and Google. read more

Reporting by Heekyong Yang and Joyce Lee. Editing by Gerry Doyle

Our Standards: The Thomson Reuters Trust Principles.

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Technology

S.Korea set to curb Google, Apple commission dominance

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SEOUL, Aug 24 (Reuters) – South Korea is likely to bar Google and Apple from requiring software developers to use their payment systems, effectively stopping them from charging commissions on in-app purchases, the first such curbs on the tech giants by a major economy.

The parliament’s legislation and judiciary committee is expected on Tuesday to approve the amendment of the Telecommunications Business Act, dubbed the “Anti-Google law,” that takes aim at app store operators with dominant market positions.

If the bill gets the committee’s approval, it will be put to a final vote on Wednesday. Lawmakers in South Korea have pushed the issue of the commission structure since mid last year.

Alphabet Inc’s (GOOGL.O) Google and Apple Inc (AAPL.O) were not immediately available for comment.

Both companies have faced global criticism because they require software developers using their app stores to use proprietary in-app payment systems that charge commissions of up to 30% on in-app purchases.

“For gaming apps, Google has been forcing app developers to use its own payment system … and it wants to expand its policy to other apps like music or webtoon,” said Kwon Se-hwa, a general manager at the Korea Internet Corporations Association, a nonprofit group representing Korean IT firms.

“If the new bill becomes the law, developers will have options to use other independent payment systems,” Kwon said.

The European Union last year proposed the Digital Markets Act, taking aim at app store commissions. The rules are designed to affect large companies, but some European lawmakers are in favour of tightening them to specifically target American technology giants, Reuters reported in June. read more

Earlier this month in the United States, a bipartisan trio of senators introduced a bill that would rein in app stores of companies that they said exert too much market control, including Apple and Google. read more

In South Korea, the home market of Android phone maker Samsung Electronics Co Ltd (005930.KS), Google Play Store earned revenue of nearly 6 trillion won ($5.29 billion) in 2019, according to a government report published last year.

Earlier this year, Google said it will lower the service fee it charges developers on its app store from 30% to 15% on the first $1 million they earn in revenue in a year. Apple has made similar moves. read more

For Apple too, commissions from in-app purchases are a key part of its $53.8 billion services business, and are a major expense for some app developers.

In May, an antitrust lawsuit filed by the maker of the popular game “Fortnite” against Apple revealed that the game maker paid $100 million in commissions to Apple over two years. read more

Reporting by Heekyong Yang in Seoul, Additional reporting by Stephen Nellis in San Francisco
Editing by Shri Navaratnam

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Business

U.S. calls on OPEC and its allies to pump more oil

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Aug 11 (Reuters) – U.S. President Joe Biden’s top aides are pressuring OPEC and its allies to boost oil output to tackle rising gasoline prices that they see as a threat to global economic recovery.

Biden’s national security adviser Jake Sullivan criticized the world’s major oil producers, including Saudi Arabia, for what he said were insufficient crude production levels in the aftermath of the global COVID-19 pandemic.

“At a critical moment in the global recovery, this is simply not enough,” he said in a statement.

The unusual statement ratcheted up international pressure and comes as the administration tries to contain a range of rising prices and supply bottlenecks across the economy that have fueled inflation concerns.

Biden has made recovering from the economic recession triggered by the pandemic a key priority for his administration.

The message also underscored the new dynamic between Washington and OPEC since Biden’s predecessor, Donald Trump, broke with prior practice in demanding specific policy changes to lower prices. Trump had threatened to withdraw military support from OPEC’s leader Saudi Arabia.

The Biden administration’s push for lower fuel prices comes even as it seeks global leadership in the fight against climate change by encouraging a broad transition away from fossil fuels toward cleaner energy sources and electric vehicles.

Biden’s administration is pressing countries within OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other big producers, “on the importance of competitive markets in setting prices,” Sullivan said. “Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,” he added. “OPEC+ must do more to support the recovery.”

U.S. retail gasoline prices are running at about $3.18 a gallon at the pumps, up more than a dollar from last year at this time, according to the American Automobile Association.

International benchmark Brent crude was trading at just under $70 a barrel on Wednesday, down 1%.

That is lower than the prices above $77 in early July, but still represents an increase of nearly a third from the beginning of the year.

OPEC+ has been gradually easing a record output cut of 10 million barrels per day, about 10% of world demand, made in 2020 as oil use and prices recover from the pandemic-induced slump. As of July, the cut had been eased to about 5.8 million bpd.

At a meeting held in July, OPEC+ agreed to boost output by 400,000 bpd a month starting in August until the rest of the 5.8 million bpd cut is phased out. OPEC+ is scheduled to hold another meeting on Sept. 1 to review the situation.

The White House on Wednesday also directed the Federal Trade Commission (FTC), which polices anti-competitive behavior in domestic U.S. markets, to investigate whether illegal practices were contributing to higher U.S. gasoline prices.

“During this summer driving season, there have been divergences between oil prices and the cost of gasoline at the pump,” Biden’s top economic aide, Brian Deese, wrote in a letter to FTC chair Lina Khan.

He encouraged the FTC to “consider using all of its available tools to monitor the U.S. gasoline market and address any illegal conduct.”

Reporting by Trevor Hunnicutt; Additional reporting by Susan Heavey and Aakriti Bhalla; Editing by David Evans and Alexander Smith

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Business

Walmart’s Flipkart says Indian probe shouldn’t treat it the same as Amazon

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A mobile phone showing an image of Indian online retailer Flipkart is seen in front of a Walmart Inc logo displayed in this illustration picture taken July 14, 2021. REUTERS/Florence Lo/Illustration

NEW DELHI, July 18 (Reuters) – Walmart’s (WMT.N) Flipkart should not be treated the same as rival Amazon (AMZN.O) in an Indian antitrust probe as the evidence against the two firms was “qualitatively different”, Flipkart argued in a court filing seen by Reuters.

Both Amazon and Flipkart have challenged the Competition Commission of India (CCI) in court as they seek revocation of an Indian court’s June decision to allow an antitrust probe against them to continue. The companies deny any wrongdoing. read more

India’s government has called the U.S. firms arrogant and accused them of using legal routes to stall the investigation.

In final submissions made to a court in southern India’s Karnataka state, the Walmart unit argued that CCI and the court “confuse the facts” between the case of Amazon and Flipkart, and overlooked that they were “fierce competitors”.

To back its arguments, it said that a business agreement examined by the CCI before ordering its probe was only between Amazon and its sellers, and there was no such evidence against the Walmart unit.

“The allegations and the evidence before the CCI against the Appellant were qualitatively different from those relating to Amazon … The CCI should have independently examined the case against each of the two platforms,” Flipkart said in its 46-page submission, which was not public.

The Indian court is likely to pass a written order on the appeals in coming days.

Flipkart and Amazon did not immediately respond to a request for comment. The CCI didn’t respond outside regular business hours on Sunday.

For years, Amazon and Flipkart have denied allegations from brick-and-mortar retailers about circumventing Indian law by creating complex business structures.

Trade minister Piyush Goyal last month lashed out on U.S. e-commerce giants for filing legal challenges and failing to comply with the CCI’s probe, saying “if they have nothing to hide … why don’t they respond to the CCI?”

In February, a Reuters investigation based on internal Amazon documents showed the U.S. firm for years had helped a small number of sellers prosper on its platform in India, using them to bypass foreign investment laws. Amazon also has indirect equity stakes in two of its big online sellers, Cloudtail and Appario, which get “subsidized fees”, Reuters reported.

The Walmart unit argued in its submission that “unlike in the case of Amazon”, there were no structural links of any kind between Flipkart and its sellers.

Flipkart “ought to have been treated differently from Amazon,” it said.

Amazon and Flipkart are leading players in an e-retail market India forecasts will be worth $200 billion by 2026.

Reporting by Aditya Kalra in New Delhi and Abhirup Roy in Mumbai;

Our Standards: The Thomson Reuters Trust Principles.

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Business

EU fines Volkswagen, BMW $1 bln for emissions cartel

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  • Sets precedent by applying antitrust law to technical talks
  • Daimler gets off fine after blowing whistle on cartel
  • VW considering taking legal action
  • BMW says cleared of suspicion of emissions cheating

BRUSSELS, July 8 (Reuters) – The European Commission fined German carmakers Volkswagen and BMW a total of 875 million euros ($1 billion) on Thursday for colluding to curb the use of emissions cleaning technology they had developed.

The case, separate to the so-called ‘Dieselgate’ scandal over software designed to cheat on vehicle emissions tests, sets a precedent by extending the application of European competition law to technical-level talks between industry players.

In this case, talks held a decade ago centred on design standards for AdBlue, an additive used to cleanse nitrogen oxide from the exhaust gases produced by diesel-powered cars.

“This is a first,” European Union antitrust chief Margrethe Vestager told a news conference in Brussels. “We have never had a cartel whose purpose was to restrict the use of novel technology.”

Under a settlement, Volkswagen (VOWG_p.DE) will pay a fine of 502 million euros and BMW (BMWG.DE) 373 million euros. Daimler, also part of the cartel, was not fined after revealing its existence.

Vestager said the German carmakers, which included VW units Audi (AUDVF.PK) and Porsche (PSHG_p.DE), had possessed the technology to reduce harmful emissions more than required under EU law but avoided competing to do so.

“So today’s decision is about how legitimate technical cooperation went wrong. And we do not tolerate it when companies collude,” said Vestager.

The EU had narrowed the original scope of its investigation to ensure its charges stuck.

IS TECHNICAL COLLUSION POSSIBLE?

Vestager said that all of the parties had agreed to settle the case and “have acknowledged their role in this cartel”.

Volkswagen, however, said it was considering whether to take legal action, saying the penalty over technical talks about emissions technology set a questionable precedent. read more

“The Commission is entering new judicial territory, because it is treating technical cooperation for the first time as an antitrust violation,” Volkswagen said, adding that the fines had been set even though no customers had suffered any harm.

The nub of the carmakers’ complaints boil down to whether setting common technical standards amounts to anti-competitive behaviour – or whether indeed it makes it easier for an industry as a whole to embrace new technology.

The Commission said in its 2019 charge sheet that the German carmakers had colluded to restrict the size of AdBlue tanks between 2006 and 2014, thus making the urea-based additive less convenient to use.

BMW noted in its defence that it had been cleared of suspicion of using illegal ‘defeat devices’ to cheat emissions tests. read more

“This underlines that there has never been any allegation of unlawful manipulation of emission control systems by the BMW Group,” BMW said in a statement.

In the Dieselgate scandal, VW admitted to using such defeat devices, leading to more than 32 billion euros ($38 billion) in vehicle refits, fines and legal costs for the Wolfsburg-based carmaker.

($1 = 0.8460 euros)

Editing by John Chalmers, Douglas Busvine, Maria Sheahan, Elaine Hardcastle

Our Standards: The Thomson Reuters Trust Principles.

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