Apple's Privacy Update: An Indian Antitrust Perspective

• Published date: 10 June 2021
• Subject Matter: Anti-trust/Competition Law, Privacy, Antitrust, EU Competition , Privacy Protection
• Law Firm: S&R Associates
• Author: Mr Akshat Kulshresth and Samali Verma

Apple recently launched a new software update, iOS 14.5, which includes certain new privacy features for its users (the "Privacy Update"). News reports indicate that the Privacy Update has become a point of conflict between Apple and some application developers, including big tech companies such as Facebook and Google (collectively referred to as "App Developers").

In a series of newspaper advertisements running in the New York Times, Wall Street Journal, and Washington Post, Facebook said that Apple's forced software update will limit businesses' ability to run personalized ads and reach their customers effectively. It is also being estimated that Google stands to lose billions in revenue if it is not able to provide personalized ads to users based on their history, interests, and activity as they could in the past. Some reports also suggest that Facebook is considering filing an antitrust complaint against the Privacy Update in the U.S.

In this article, we analyse the implications of the Privacy Update under the Competition Act, 2002 (the "Competition Act").

I. What is Apple's Privacy Update?

Apple devices (such as, iPhones, iPads and Apple TV) have a unique identification code known as Identification for Advertisers software tracker ("IDFA").

IDFA allows the App Developers to track a user's activity across apps and the web which enables them to send users targeted advertisements. Some App Developers also piece together the data collected through IDFA, aggregate and then monetise the data as advertising opportunities, fuelling an industry which is valued at USD 227 billion per year.

The Privacy Update now require that the apps take permission from the user before tracking their activity across apps and the web, affecting the revenue model of the App Developers. Based on early reports from the U.S., it is estimated that around 96% of the users have chosen to not allow the apps to track their activity.

II. Relevant Provisions of Indian Competition Law

The provisions of the Competition Act relating to abusive conduct and anti-competitive vertical agreements which could be relevant to the Privacy Update are summarised below.

A. Abuse of dominance (Section 4 of the Competition Act)

The Competition Act prohibits the 'abuse' of dominance by enterprises (and not mere dominance of an enterprise). Examining any abusive conduct requires delineation of the relevant market by the Competition Commission of India (the "CCI"). It is only once an enterprise is found to be dominant in the relevant market...