Turkey investigates Apple for blocking third-party payment systems

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Apple, like other large mobile phone brands, frequently faces investigations in various parts of the world. These investigations often involve Apple’s policies, particularly financial ones, which are scrutinized by regulatory bodies and legal authorities. For instance, a¬†British judge has ruled that a $1 billion lawsuit against Apple, filed by 1,500 tech developers, can move forward. The lawsuit claims that Apple’s commissions are “excessive” and stifle competition and innovation. The¬†Turkish Competition Authority has just launched an investigation into Apple’s contracts with application developers. The probe focuses on Apple’s refusal to permit alternative payment systems on the App Store. This probe is part of a broader review of mobile smart devices and related software.

Turkey investigates Apple

Background and Concerns

The investigation aims to examine whether Apple’s policies restrict consumers’ ability to access better options by limiting their awareness of alternative payment channels and the difference between in-app and out-of-app prices. The Turkish Competition Authority has decided to launch an investigation into Apple to determine whether the App Store violates Article 6 of Law No. 4054 on Protection of Competition (alternative payment systems are not allowed and antitrust laws apply) and uses anti-steering clauses against app developers. Additionally, the authority is concerned that Apple’s mandatory use of its payment system for in-app purchases may be taking away app developers’ freedom of choice and preventing other payment systems from entering the Apple ecosystem.

Impact on Consumers

Apple’s App Store terms prohibit developers from informing users of possible, more cost-saving alternatives in the App.¬†The Turkish Competition Authority says that due to the prohibition, consumers were unaware of the existence of alternative payment channels and were not aware of the difference between prices within the app and outside the app, limiting their choices. This lack of transparency and competition can lead to higher prices and reduced consumer welfare.

Global Context

Apple is facing antitrust challenges globally, with ongoing investigations and lawsuits in various countries. In the United States, the Department of Justice and 16 states have taken Apple to court, accusing it of having an illegal monopoly over the smartphone market. In the European Union, Apple has been forced to open up the App Store to rivals and cease anti-steering practices. India’s Competition Commission is also investigating both Apple and Google for alleged unfair business practices.

Apple’s Defense of Its Practices

Apple has consistently defended its practices against allegations of anti-competitive behaviour and monopolization. In response to the Justice Department’s lawsuit, Apple claims that it does not have a monopoly in the smartphone market. Apple says its business model seeks to provide a secure and seamless user experience. The company also claims that its App Store guidelines and developer agreements intend to protect users from malicious apps and ensure the integrity of the platform, rather than stifling competition.

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Apple also highlighted the benefits of its closed ecosystem, including the integration of hardware and software, which allows for more efficient and secure user interactions. The company argued that its policies, such as the requirement for developers to use Apple’s payment system for in-app purchases, are necessary to maintain the security and integrity of the platform.

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In the context of the Turkish Competition Authority’s investigation, Apple has defended its refusal to permit alternative payment systems on the App Store. The company states that 85% of developers do not pay any commission. Apple also claims that all its policies seek to serve and protect its users. The company says if these policies are active, it will safeguard users from malicious apps. This will eventually ensure the integrity of the platform, rather than limiting consumer choice.

Apple obeys the law

The current investigation of Apple in Turkey is not entirely new. At the moment, Apple allows third-party payment in some regions where the law prohibits the company from insisting on its payment platform. In South Korea, Apple has agreed to allow third-party payment systems in iOS apps exclusively available in the South Korean App Store. This move follows a South Korean law passed in 2021 that prohibits companies like Apple and Google from forcing specific payment methods on app developers.

Also, in the Netherlands, Apple allows third-party payment services for dating apps in the Netherlands. This is a limited exception to the general rule that Apple requires developers to use its in-house payment system for in-app purchases and subscription payments. These are some of the countries where Apple has explicitly allowed third-party payment options. In other regions, developers will still have to use Apple’s in-app payment system, which can result in a 30% commission on gross app revenue.

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The Turkish Competition Authority’s investigation into Apple’s payment systems practices is a step in ensuring fair competition in the digital market. By examining Apple’s contracts and policies, the authority aims to determine whether the company is violating antitrust laws and limiting consumer choice. This move is part of a broader effort to promote competition and protect consumers in the digital economy.

Apple’s decision to allow third-party payment options in South Korea and the Netherlands has sparked a wave of scrutiny across the globe. The company’s acceptance of alternative payment platforms in some countries has led to increased pressure on regulatory bodies to ensure fair competition in the digital market. It has also set a precedence and other regions will not want to be left out. It is only a matter of time before even more regions investigate the company for a similar reason. The investigation in Turkey highlights the importance of transparency and compliance in the tech industry, as companies like Apple navigate the complex regulatory landscape.

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