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Apple Seeks Revisions in Chinese Court Ruling Following Legal Victory
In an unexpected legal maneuver, Apple Inc. has requested alterations to a written ruling from a Chinese court victory, highlighting the delicacy of its position in the world's largest smartphone market. The tech giant has petitioned the Supreme People’s Court to amend select sentences in a decision that resolved a dispute over its cut of app revenue from most developers. This filing seeks to remove references to Apple's "dominant position," established by a lower court that dismissed the lawsuit in May due to insufficient evidence. Additionally, Apple contests a phrase suggesting "unfair pricing may hurt consumers."
The company appears to be aiming to downplay its market status in China, where it frequently vies with Huawei Technologies Co. and other premium smartphone manufacturers at the top of the quarterly shipment rankings. The presence of such characterizations in official court documents could have future implications in global regulatory discussions scrutinizing technology giants.
The core issue revolves around the commission fees Apple and its competitors charge developers for hosting their apps on the store. This fee can be as high as 50% for popular Android mobile games in China, compared to around 30% in many other parts of the world.
Apple's Delicate Position in China
Apple's unusual request to alter a favorable ruling's language underscores its sensitive standing in China, which serves as both its largest international market and major production hub. The company is navigating challenges, including competition from a resurgent Huawei and potential bans on foreign devices within many state firms and agencies.
Global Regulatory Scrutiny
Worldwide, Apple and Google—operator of the Android app store—are under regulatory examination over app store policies in regions such as Europe and the United States. Apple is defending its app store commission fees on multiple fronts, asserting that these fees are justified by the security and exposure the app store offers to developers. Recent legal battles have taken place in the United States and across Europe, South Korea, and Japan.
In May, a Shanghai court ruled against a lawsuit challenging Apple's store practices, citing a lack of evidence for market abuse. The plaintiffs accused Apple of leveraging its market position to enforce a 30% commission on in-app purchases and restricting payment methods. Apple did not comment on these developments, but the plaintiff—known only by their surname Jin—has argued in a separate appeal that Apple charges higher fees in China compared to Europe and the United States, thereby stifling transactions.
Shifts in the Chinese App Ecosystem
The ruling coincides with significant moves by major Chinese developers and app store operators attempting to reshape the domestic app ecosystem. In a notable example, Tencent Holdings Ltd. withdrew its hit game DnF Mobile from Android app stores run by Chinese smartphone manufacturers, citing "adjustments" in their collaborations. Tencent has previously criticized the up-to-50% cut taken by these platforms.
Simultaneously, Huawei is exploring a new policy to levy fees on in-app purchases within its Harmony mobile operating system, a step that could impact Apple's market share. These developments indicate ongoing tension and shifts within the highly competitive Chinese smartphone and app market.
