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How Apple Avoided an iPhone Ban in India

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Dec. 10 2018, Updated 10:30 a.m. ET

Apple allows DND app in the App Store

Apple (AAPL) has accepted an Indian government–sponsored anti-spam app into the App Store after a long negotiation, thereby avoiding an iPhone ban in the country. For a few years, there’s been a standoff between India’s telecommunications industry regulator and Apple over an app that’s designed to shield Indian consumers from unwanted calls and text messages.

Apple had a problem with the so-called DND (Do Not Disturb) app because it felt it didn’t align well with its privacy requirements. As such, while the DND app was released on Google’s (GOOGL) app store in India in 2016, Apple continued to negotiate. But the Telecom Regulatory Authority of India threatened to ban iPhones from India’s mobile network if the company failed to allow DND into the App Store by January 2019.

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Samsung and Xiaomi dominate India’s smartphone market

India is a coveted mobile market in which Apple is still struggling to gain ground. Samsung (SSNLF) and Xiaomi currently dominate India’s smartphone market with 22% and 27% market shares, respectively, according to Counterpoint.

Apple’s share of the Indian smartphone market is below 3.0%. In this situation, having its iPhones banned from India’s mobile network would significantly undermine Apple’s efforts to gain a foothold in the country.

Beyond handset sales

For Apple, India is more than just a handset market. The company also sells digital music subscriptions in the country. Consulting company Deloitte predicts that there will be more than 270 million online music subscribers in India by 2020 compared to less than 30 million in 2015.

Amazon (AMZN) and Tencent (TCEHY) are competing with Apple for music revenue in India. Amazon launched its music streaming service in India earlier this year, while Tencent backs online Indian music provider Gaana.

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