Aaron Chen and Julian Lai
According to media reports, the Fair Trade Commission’s (FTC) chairman, Li Mei, points out in her questioning by the Legislative Yuan on November 10 that the FTC has begun its investigation on Apple’s potential violation of the Fair Trade Act (FTA). In addition to the investigation ordered by the Consumer Foundation to investigate Apple’s decision not to include chargers and earphone accessories when selling iPhones, more importantly, FTC’s investigations also include Apple’s transactional fee for software developers on App Store and its exclusive payment policy.
In recent years, the competition law authorities of various countries have conducted many investigations on the restrictive agreements involved in the international digital platform giants, including Apple’s transaction fee and exclusive payment policy in the App Store. For example, the Japan Fair Trade Commission settled with Apple on September 2 this year. In the settlement, Apple agreed to remove its restriction to prohibit music, reading, and video distributing applications from guiding consumers to an alternate payment platform, allowing these developers to opt-out of App Store’s exclusive payment system and avoid up to 30% transaction fees. Japan’s Fair Trade Commission points out that Apple itself also provides corresponding applications in the music, reading, and video distribution categories, and the developers of these applications have to bear high copyright licensing fees, and it is difficult to reduce costs through their own efforts. Therefore, Apple’s transaction fee and exclusive payment policies may violate the Japanese Antimonopoly Law.
Soon after Apple’s settlement with Japan’s Fair Trade Commission, the decision on the Epic Games v. Apple case in the U.S. District Court for the Northern District of California was rendered on September 10. The decision points out that Apple’s transactional fees for application developers and its exclusive payment policy violate California’s Unfair Competition Law. Accordingly, an injunction was issued against Apple, requiring it to (1) not prohibit application developers from guiding consumers to other platforms for payment and (2) not forbid developers from contacting consumers by obtaining contact information provided voluntarily by consumers via the application.
The result of this investigation is worth following, as it will not only reveal FTC’s enforcement position toward digital platforms but may also affect the development of the platform economy its related ecosystems.