Apple Accused of Anticompetitive Practices in India Over iPhone

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Apple in IndiaApple Inc. has been accused of engaging in anticompetitive practices in India and is under investigation by the Competition Commission of India (CCI). The investigation comes in response to a complaint lodged with the CCI that accuses Apple of limiting access to the iPhone by only selling it through limited carriers and by only offering the iPad through its own stores. Apple also stands accused of only allowing apps from its “iStore,” the CCI’s new branding for Apple’s App Store.

The issues are manyfold: Firstly, customers can only buy iPhones from its authorized resellers and from carriers Aircel and Bharti airtel. Relating to this, while customer can buy unlocked iPhones from these same outlets, the price of a locked phone is similar to that of an unlocked phone. The complaint appears to allege that carriers are taking advantage of their unusual (for India’s market) exclusivity to charge unreasonable prices for Apple’s iPhones.

What isn’t clear, however, is if carrier plans include the extra expenses that go into subsidizing mobile handsets in the U.S. — in India, as in China and other emerging markets, carrier subsidies are not the way mobile devices are usually sold.

In addition, Apple only allows its iPhones to be serviced through third party retail stores licensed by Apple India for that country’s retail market (many “Apple Premium Resellers” have stores modeled on Apple’s own Apple Stores), and those stores are accused of charging “high rates” for said service.

Furthermore, Apple limits the iPad to its own online Apple Store and possibly to Apple Premium Resellers. Coverage from India on the story has varied from referring to “Apple Stores,” which Apple does not yet have in India, to “Apple Centres,” which also do not appear to exist by that name, but both likely refer to the Apple Premium Resellers mentioned above.

lastly, we have our favorite aspect of the complaint, coming to us from a “senior CCI official, who was quoted widely, including by IBNLive. He said, “The complainant has also alleged that a user can only download software from the iStore and the others are not recognised by the device.”

In other words, Apple stands accused of doing business in India the way it does in every other market, by controlling its product line, retailers that sell its goods, and the customer experience, practices which could possibly run afoul of Indian regulations, specifically section 4 of the Competition Act 2002.

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Comments

barryotoole

Welcome to India, world’s largest democracy!

Just like anyone in the US can file a frivolous lawsuit with little or no money spent, anyone in India can file a complaint which even if it is total nonsense.

Further, Apple’s tight control over the AppStore and inability to side-load an app on an iOS device are being questioned and resented by a lot of people even in the rich, first-world countries of the West.

So why is this blog sensationalizing the issue?

Tiger

With that many complaints, and the likelihood that Apple will lose in such a hostile environment, it’s time to abandon India altogether. Yes, it’s a REALLY big market, but the headaches to be encountered are NOT worth the potential. This is just the first salvo. Apple’s model will be at odds with virtually every regulatory agency there.

Lee Dronick

Baksheesh?

wab95

“Ahh, Apple! Welcome to the Sub-Continent. Now, let us get down to bakshish bribes business!”

Welcome, indeed.

Barry, being a resident of this region, I can tell you that this is suit, though frivolous, does not represent exactly the same thing as those suits in N America.

This is about who is getting how much if Apple enter the Indian market, on the one hand, and if Apple have the effect on the Indian smartphone market that they have had on others, then how to be dealt a winning hand, on the other.

In short, it’s not about ‘anticompetitive’ behaviour, nor even loss of earnings and marketshare per se. It is about ensuring a cut of the spoils.

If this ploy fails, expect other approaches (e.g. security, location services, etc).

Tiger, it is a difficult market, but India is committed to solid economic growth and being a regional economic superpower. With Apple and other companies setting up beach heads in China, to whom they are currently losing in economic growth rate and GDP, India has real incentive to be an attractive market.

Let me add: There is a rapidly emerging private sector in India that want nothing to do with the long-standing culture of corruption. They are worth supporting with investments.

Shashank

@barrytoole, the complaint isn’t total nonsense! We Indians are not idiots to buy ‘controlled’ products like iPhones. We like to enjoy our freedom. If the USA were idiots to let Apple set it’s own rules, it’s not our problem. Such things are not easily happening in India

Bosco (Brad Hutchings)

@barrytoole, the complaint isn?t total nonsense! We Indians are not idiots to buy ?controlled? products like iPhones. We like to enjoy our freedom. If the USA were idiots to let Apple set it?s own rules, it?s not our problem. Such things are not easily happening in India

Exactly. As Horatio Caine might say, “These Indians… are off the reservation. YEEEEEAAAAAAAAAAHHHHHHH!”

But seriously, if you want to understand the reaction many (self included) have to the new Apple “deal”, spend an hour listening to this podcats on “Euvoluntary transactions”. We look at Apple’s self-imposed rules and they strike us as genuinely unfair. While I’m happiest to see individuals reject the bargain, I can certainly see why state agencies involve themselves, given that Apple’s ability to implement and enforce its arrangements come from extraordinary license granted to it by the state. e.g. patents, shrink-wrap contracts, etc.

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