Apple Inc. may face fines of up to $38 billion in the antitrust case in India

Media reported on Wednesday that a document submitted to the Delhi High Court shows that Apple Inc. is challenging a new antitrust fine law in India. Under this law, Apple could face fines of up to $38 billion. This challenge marks the first lawsuit against India's antitrust fine law. Since last year, this law allows the Competition Commission of India (CCI) to use global revenue, rather than just revenue within India, when calculating fines for companies abusing market dominance. Since 2022, Tinder's parent company Match and local Indian startups have been in antitrust disputes with Apple at the CCI. A report released by investigators last year stated that Apple engaged in "abusive behavior" in its app market for the iPhone operating system iOS. Apple denies all wrongdoing, and the CCI has not yet made a final decision on the case, including whether to impose fines. In a 545-page, unpublished court document, Apple requests the judge to rule that the law allowing the CCI to use global revenue in 2024 is "illegal." According to the document, based on the average global revenue of all Apple services over the past three fiscal years (ending in 2024), if the maximum fine rate of 10% is applied, Apple's "maximum fine exposure amount" could be approximately $38 billion. This fine based on global revenue is "clearly arbitrary, unconstitutional, severely disproportionate, and unjust." In the European Union, companies could also face fines of up to 10% of their global revenue for violating antitrust laws. Retroactive Applicability Issue Apple cites that the CCI first applied this new rule in an unrelated case on November 10 and retroactively applied it to violations by penalized companies from ten years ago. Apple believes that to avoid future retroactive penalties, it "has no choice but to mount a constitutional challenge." Apple has consistently emphasized that compared to Google Android, which dominates the Indian market, it is merely a small player in India. However, according to Counterpoint Research data, Apple's user base in India has quadrupled over the past five years. Apple Uses the Analogy of a Stationery Store and a Toy Store Last year, the CCI determined that Apple did not allow any third-party payment processors to provide services for in-app purchases, with commissions as high as 30%. In a document submitted to the CCI reported by the media in October, Apple's competitor Match argued that fines based on global revenue could "significantly deter repeat violations." In its court documents, Apple argues that India should only penalize based on the specific revenue of the violating business in India. It gives the example of a toy seller who also operates a stationery business: If the violation only occurs in the toy business with an annual revenue of 100 rupees, but fines the overall revenue of the stationery business with an annual revenue of 20,000 rupees, this is arbitrary and disproportionate. Apple's petition will be heard on December 3 Gautam Shahi, a competition law partner at the Indian law firm Dua Associates, stated: "The amended law is very clear: the CCI can consider global turnover. It will be very difficult to persuade the court to intervene in a legislative policy that has been explicitly stated."