China Weighs Antitrust Probe into Apple, Potentially as Leverage in Trade War

The Chinese government is contemplating the initiation of an antitrust investigation concerning Apple’s App Store commissions, akin to actions taken in the US, EU, and other regions.

Nonetheless, it seems probable that the Chinese authorities are merely suggesting this possibility as a strategy for leverage amid the current trade tensions exacerbated by the Trump administration…

Antitrust Scrutiny and Legal Actions Globally

Apple has encountered various antitrust inquiries and legal challenges worldwide, driven by a combination of lawmakers and lawsuits from both consumers and developers. The primary contention revolves around Apple’s monopolistic grip on the iPhone app market, granting it the liberty to dictate commission rates and terms, effectively leaving developers with no alternative but to comply.

The most significant shift occurred in the EU with the Digital Markets Act, mandating that Apple permit the sale of iPhone and iPad applications through third-party app stores. Apple attempted to make this pathway as unappealing as possible for developers, which has been referred to as an act of ‘malicious compliance.’ It is anticipated that Apple will ultimately be compelled to revise its terms.

In the United States, Apple suffered a relatively minor setback when a lawsuit initiated by Epic Games concluded with a directive for the company to allow developers to link to alternative purchasing methods for in-app content. Once again, Apple’s response was designed to protect its commission structure, and the presiding judge has suggested that Apple may well be found in violation of her ruling.

There have also been similar investigations and lawsuits initiated in various other countries, including Australia, India, Korea, and Japan.

China’s Antitrust Investigation Proposition

Previous discussions regarding possible antitrust investigations in China have occurred. An individual lawsuit was filed by an iPhone user in 2021, yet the court dismissed the case, determining that Apple’s commission rates were consistent with those of Android app stores and there was a lack of evidence indicating that consumers faced increased charges.

Nonetheless, Bloomberg reports that the nation’s antitrust regulator is deliberating the commencement of an investigation.

The antitrust authority in China is preparing for a potential inquiry into Apple Inc.’s practices and the fees it imposes on app developers, as part of a larger initiative by Beijing that could become another contentious issue in the trade conflict with the United States.

The State Administration for Market Regulation is scrutinizing Apple’s policies, which include a take of up to 30% on in-app transactions and the prohibition of external payment systems and stores, according to sources close to the matter.

Potential Leverage in the Ongoing Trade Dispute

Although China has previously indicated possible antitrust investigations into Apple and other American corporations, the timing of this recent development appears to be anything but coincidental.

While Trump has yet to act on his promised chip tariffs, he recently instituted a blanket 10% import duty on all goods entering from China. In turn, the Chinese government enacted tariffs on certain US imports and, almost immediately, announced an antitrust investigation into Google. The communication regarding Apple followed closely afterward.

A similar pattern emerged when Trump initiated a trade war against China during his first term, targeting Apple as a significant subject of retaliation.

Given this context, it is reasonable to conclude that China intends to initially maintain the threat of an investigation as a bargaining chip, and if that fails to yield results, it will escalate to an actual inquiry—at which point the potential for an unfavorable ruling against Apple could become a crucial element in the trade negotiations.

Image of Beijing skyline by zhang kaiyv on Unsplash