China court rules in favour of Apple in case involving controversial app store fees

A court in Shanghai rejected a Chinese consumer's claim that Apple was abusing its market dominance with high iOS App Store fees, marking a win for the US technology giant as it faces increased antitrust scrutiny around the world.

While Apple has the dominant market position in terms of iOS app distribution in mainland China, it did not abuse that power and has not charged unfairly high commission fees, according to a judgment made on Wednesday by the Shanghai Intellectual Property Court.

The lawsuit was filed in 2021 by an individual named Jin Xin, who claimed to have had to pay more for some app membership fees on an iPhone than on Android phones because of the 30 per cent commission Apple charges app developers.

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The Shanghai court said that after comparing commission fees on app stores, it did not find Apple's to be "significantly higher" than those on Android platforms, and that there is no evidence suggesting that the fees directly led to higher prices for consumers, according to its yet to be published judgment obtained by the South China Morning Post.

People walk past an Apple store in Shanghai, China September 13, 2023. Photo: Reuters alt=People walk past an Apple store in Shanghai, China September 13, 2023. Photo: Reuters>

Apple's App Store practices have long been the subject of complaints from app makers, and have recently drawn intensified antitrust scrutiny from global regulators.

The European Commission last month fined Apple more than €1.8 billion (US$1.95 billion) for preventing music app developers from informing iOS users of alternative subscription offers available outside their iOS apps, saying that the company had abused its dominant position.

In March, the US Department of Justice sued Apple for a range of practices, including blocking non-iOS apps and barring so-called super apps, accusations that Apple said were "wrong on the facts and the law", and that it would "vigorously defend against it".

The Shanghai court's judgment marks a victory for Apple, which has been facing increasing headwinds in the country amid intense competition from domestic handset makers such as Huawei Technologies. Apple earlier this month offered consumers in mainland China discounts of up to 23 per cent on iPhone 15 models purchased through online retailers to boost sluggish sales.

In a blog post published on social media platform WeChat, a legal representative for the plaintiff Jin in the Shanghai case wrote that they plan to file an appeal to China's Supreme People's Court.

Customers look at the new iPhone 15 Pro at an Apple store in Shanghai, China September 22, 2023. Photo: Reuters alt=Customers look at the new iPhone 15 Pro at an Apple store in Shanghai, China September 22, 2023. Photo: Reuters>

They "firmly believe" that Apple's practices constitute an abuse of market dominance, and infringe upon Chinese consumers' rights to choose and engage in fair transactions, Wang Qiongfei, founding partner of Kinding Law Firm, said in the blog post.

Apple's practices also increased the operating costs for Chinese companies and "damaged the global competitiveness of China's internet industry," Wang wrote.

Apple did not immediately respond to a request for comment on Thursday.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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