The highly anticipated "Apple Tax" in China's first antitrust case has the latest developments. Recently, a reporter from 21st Century Business Herald learned that Apple has filed an appeal against the first instance verdict. The appeal request includes: the plaintiff has no right to file a lawsuit against the so-called "apple tax"; The first instance court incorrectly defined the relevant market; The first instance court's determination that "Apple clearly has a dominant position in the market" is incorrect, and that Apple does not have a dominant position in the correctly defined relevant market.
Previously, the plaintiff (Mr. Jin) also filed an appeal.
Overall, whether consumers have the right to file antitrust lawsuits over the Apple tax, the definition of the relevant market, and whether they have a dominant position in the relevant market will still be the focus of the upcoming litigation.
Plaintiffs and defendants appeal one after another
In January 2021, Chinese consumer Jin sued Apple Inc. and Apple Computer Trading (Shanghai) Co., Ltd. in court, accusing Apple of monopolizing the "Apple tax" and payment methods.
Jin previously found that for digital products on the same app, the price of the Apple App Store is generally higher than that of the Android system, including membership services on four apps: iQiyi, Himalaya, NetEase Cloud Music, and Dongqiu Di. Consumers can only purchase App membership services through Apple's "in app purchase" system, and the commonly used third-party payment tool in China is only the payment channel of Apple's IAP system.
Jin believes that Apple has deprived consumers of their freedom of choice and fair trading rights, and is suspected of abusing its dominant market position by implementing tying, refusal to trade, restricted trading, and unfair high prices. By harming consumer interests, Apple has sought huge profits in the Chinese market. Therefore, the core demand is to stop the unfair high price behavior of collecting a 30% "Apple tax", and to stop the bundling behavior of "in app purchases" forcing the use of the Apple payment system.
This case was filed by the Shanghai Intellectual Property Court and is considered the first antitrust lawsuit initiated by consumers in China against the "Apple Tax".
On May 29th of this year, the first instance of the case fell through, and the Shanghai Intellectual Property Court rejected consumer Jin's unfair and high price behavior of stopping the collection of 30% "Apple tax" and his demand to stop the mandatory use of Apple Pay bundling through "in app purchases".
After the case was dropped, Wang Qiongfei, the plaintiff's acting lawyer and founder of Zhejiang Kenting Law Firm, stated that the lawsuit will be brought to the Supreme People's Court next.
Wang Qiongfei said that although he respected the judgment of the court of first instance, he insisted that Apple's practice of collecting the world's highest "Apple tax" in China and not opening third-party payment and third-party download channels was an abuse of market dominance, which violated the choice and fair trading rights of Chinese consumers, increased the operating costs of Chinese enterprises, and damaged the global competitiveness of China's Internet industry.
Today, 21st Century Business Herald reporters learned that the defendant Apple will also file an appeal.
According to the materials obtained by the reporter, the appeal requests of the defendant Apple include: 1. The plaintiff has no right to file a lawsuit, 2. Apple is not a qualified defendant in this case, 3. The first instance court's definition of the relevant market is incorrect, and 4. The first instance judgment's determination that Apple clearly has a market dominant position in the relevant market is incorrect.
The definition of relevant markets and market dominance are still the eye of the storm
After a three-year hiatus, the first instance verdict was received, but the result clearly did not meet the expectations of consumers. It is difficult for consumers alone to shake Apple, the technology's largest "tree" in terms of market value.
However, the industry generally believes that there are two major breakthroughs in the court ruling: one is the definition of the relevant market, and the other is the recognition that Apple has a dominant market position.
In the anti monopoly determination of abusing market dominance, it is necessary to first define the relevant market, determine whether there is market dominance, whether the abuse of market dominance has been carried out, and whether there is any competitive damage caused by the abuse.
In terms of defining the relevant market, according to the first instance judgment, considering that the plaintiff is an ordinary consumer using the iOS system, the court believes that there is no need to divide the market into sub segments based on the APP. It can be determined that the relevant product market is an iOS application trading platform, and Apple's market share is 100%.
In response to this, Apple's appeal claims to request the revocation of the erroneous determination in the first instance judgment that "the relevant commodity market in this case should be defined as a 'smart terminal application trading platform under the iOS system'", and to change the definition of the relevant commodity market in this case to include all application transactions conducted on platforms, but not limited to application transactions on the Chinese Apple App Store.
After resolving the relevant market definition issues, determining market dominance is the second step. The first instance court determined that Apple has a dominant market position, which is also the first judicial precedent in China to determine that Apple has a dominant market position in the relevant market.
However, Apple's appeal this time requests the revocation of the erroneous determination in the first instance judgment that "Apple clearly has a dominant position in the market", and the determination that Apple does not have a dominant position in the correctly defined relevant market.
In the final step, the court did not support the determination of whether to abuse market dominance. The first instance court ultimately rejected consumer Jin's request.