A new legal action is claiming Apple breached competition laws by taking commission on app sales, which could see millions of UK customers compensated.
According to the claim, the tech giant overcharged consumers by taking a 30% commission on money made through its App Store, which constitutes an abuse of its dominant market position in breach of UK and European competition law.
In addition, the group behind the action says that Apple deliberately shuts out potential competition and forces users to use the company’s own payment-processing system.
This means that the company generates “unlawfully excessive levels of profit,” the group alleges.
Led by King’s College London digital-economy lecturer Dr Rachael Kent, the group said that the fees Apple charges are unjustified.
“The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included. But thirteen years after its launch, it has become the only gateway for millions of consumers. Apple guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified,” she said.
“This is the behaviour of a monopolist and is unacceptable. Ordinary people’s use of apps is growing all the time, and the last year in particular has increased our dependence on this technology. Apple has no right to charge us a 30% rent for so much of what we pay for on our phones – particularly when Apple itself is blocking our access to platforms and developers that are able to offer us much better deals. This is why I am taking this action.”
The case was filed with the UK Competition Appeal Tribunal (CAT). The CAT allows lawsuits that cover all affected people should they chose not to actively exclude themselves from the case. As such, the lawsuit could potentially include anyone who has bought apps, made in-app purchases, or paid a subscription on an iPhone or iPad since October 2015.
The organisers behind it hope that the collective action will contain around 19.6 million users in the UK. This could see Apple having to pay up to £1.5 billion in damages. The suit also seeks to force Apple to cut the commission that it takes.
However, the CAT will need to approve the collective action before it can proceed.
“Last year’s US Congress inquiry estimated that Apple’s annual global revenue from the App Store is at least $15 billion a year, but the company’s costs for running the platform are just $100 million. Apple achieves this by slapping unjustified charges on its users. It would not be able to impose these exorbitant charges if competitor platforms and payment systems were allowed to compete on its devices. It is a clear abuse by Apple of the law and its own customers,” Dr Kent added.
- DIGIT Leader 2021 Virtual Summit | Just two weeks to go!
- Video gaming is a lifeline for players during Covid lockdowns
- EIE21 revamps investor pitch process ahead of event in June
Apple responded to the claim, stating: “We believe this lawsuit is meritless and welcome the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the App Store has delivered to the UK’s innovation economy.”
At the start of this year, Apple cut the commission it took on a range of apps. The App Store Small Business Program meant the company would take a 15% for any developers that made under $1 million from their apps.
However, Apple has still come under fire for how it uses its App Store. The CMA launched a probe into the platform in March this year to investigate whether Apple’s policies are inhibiting app developers.