Press Release

Apple Appeals China Ruling To Adjust Antitrust Verdict

Apple has appealed to China’s Supreme Court to strike out the phrase “dominant position” from the antitrust verdict in order to shield it from further investigation.

TakeAway Points:

  • Apple wants to lessen regulatory scrutiny, so it seeks China’s Supreme People’s Court to strike the phrase “dominant position” from a verdict.
  • The petition draws attention to Apple’s precarious position in China, its main production base and largest overseas market.
  • Positive response from the market: The Hang Seng Tech indicator increased as traders predicted that a verdict in favour of Apple might increase the company’s phone sales in China.

Apple seeks Court Ruling Adjustment

Apple Inc. has filed a petition with the Supreme People’s Court in China to amend specific language in a ruling from a lower court that it won. The iPhone maker is requesting the removal of references to its “dominant position” and a phrase suggesting that “unfair pricing may hurt consumers.” 

This move is seen as an attempt to mitigate potential regulatory scrutiny in China, where Apple competes closely with Huawei Technologies Co. and other high-end smartphone manufacturers. The lower court had dismissed a lawsuit in May due to insufficient evidence, but Apple is concerned that the language used in the ruling could be cited in future legal or regulatory challenges.

The issue at hand involves the fees that Apple and its competitors charge developers for hosting their apps on their platforms. In China, these fees can be as high as 50% for popular Android mobile games, compared to a general 30% in other parts of the world. 

Apple’s petition underscores its delicate position in China, which is both its largest international market and its primary production base. The company is also facing challenges from a resurgent Huawei and the uncertainty surrounding a ban on foreign devices in many state firms and agencies.

Disputes over Global App Store Fee 

Apple is defending its app store fees on multiple fronts, including lawsuits in the United States and challenges in Europe, South Korea, and Japan. The company argues that its commissions are justified by the security and peace of mind that the app store provides to users, as well as the global showcase it offers to developers. 

In May, a Shanghai court dismissed a lawsuit that accused Apple of abusing its market position with a 30% commission on in-app purchases and by restricting payment methods. The plaintiff, surnamed Jin, has submitted a separate appeal, arguing that Apple’s fees in China are higher than those in Europe and the US, and that the company is suppressing transactions through its policies.

The ruling coincides with efforts by major Chinese developers and store operators to change the dynamics of the domestic app ecosystem. For instance, Tencent Holdings Ltd. recently pulled its hit game DnF Mobile from Android app stores operated by Chinese smartphone makers, including Huawei and Oppo, citing unspecified “adjustments” in their collaborations. 

Tencent executives have expressed frustration over the up-to-50% cut that these app platforms take from in-game purchases. Meanwhile, Huawei is considering levying a fee for in-app purchases on its Harmony mobile operating system for the first time as its smartphones gain market share from Apple.

Market Reaction

The news of Apple’s petition has had a positive impact on Chinese tech stocks. The Hang Seng Tech gauge climbed following the report, as investors speculated that a favorable ruling could boost Apple’s phone sales in China. 

This, in turn, would be beneficial for Apple’s suppliers and generally improve investor sentiment across the region. The market’s reaction highlights the interconnected nature of global tech ecosystems and the significant influence that major players like Apple have on regional markets.

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