Apple’s Business Model In trouble In India? [Under Competition Commission of India Scanner]

Since its launch, Apple’s iPhone has always been available tied to a network operator, or locked to a network operator. Sure as technology enthusiasts would know how to workaround this problem, the average consumer is still relatively unsure about these methods. There is no doubt that India is a huge untapped market for Apple as its revolutionary products are available late and often at high prices.

Apple has been pulled up by the CCI ( Competition Commission of India) for allegedly using its strong position in the market to limit the choices that consumers have.

“A customer has filed a complaint before the Commission under Section 4 of the Competition Act 2002 that Apple is curbing the customer’s choice by limiting the availability of iPhones and iPads in India to a limited number of service providers, besides its signature stores”. The complainant has also alleged that a user can only download software from the i-store and the others are not recognised by the device [source].

A whole lot of confusion, right? Let’s take a look at the model that Apple uses to distribute its iPhone and what the complain actually mean.

Apple’s iPhone was a stellar piece of hardware even in its first generation and its user experience meant that the user would definitely turn into a major consumer for network operators that provide internet services. This meant that it was inevitable that the device OEM and network operator strike a deal where the phone would be available through the network operator at a subsidised price.

This makes perfect sense for both companies to collaborate to help each other and in the process help themselves. This same model has been used by many different OEMs with different network operators, both driving consumers to their services by promising exciting offerings.

Apple’s App Store approach to app distribution meant that they could keep a check on the availability of apps according to region and such. Both parties even made their services available without partnerships, meaning you could go buy yourself an unlocked iPhone that would be compatible with any network operator out of the box and you don’t have to have an iPhone if you want to use a particular network operator.
The iPhone now in its fifth generation is out in India and is being offered by network operators Airtel and Aircel, but it has run into a problem with the Competition Commission of India.

apple india launch
apple india launch

The complainant alleges that the users can download software only from its official Apple App Store and other app stores are not recognized Well we already know this as a feature from Apple’s walled garden approach to product development (isn’t this true for other app stores as well?).

It assures the user a good experience but at the same time reduces choices that other app stores may be offering. Jailbroken or unlocked devices can install alternate app stores to download apps but that’s a different story. Another allegation that the complainant makes is that Apple hardware can only be serviced at Apple stores and that they are expensive, this may be true but can you really tell a company what they should charge for their products?

What we here would like to focus on is how companies make their business model based on simple logic and profit motives and the governing regulatory authority tries to level the playing field for all players. If we take a business point of view to the situation, Apple’s business model works as we can see worldwide the success of the iPhone and iPad devices is unmatched.
If you look at the consumer’s point of view, you can say that Apple is forcing consumers to move network services to others by using its dominant position in the market.

But then again its the way of the world of business, both parties have brought something to the table in this deal and both deserve to benefit from it. Is there any weight to the complaint filed by the consumer or just a complaint that should be trashed? What’s your take?

[Image credit:Brajeshwar/Flickr]

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