Apple Sued Over Excessive App Store Charges

Apple is being sued for £1.5bn in a landmark class action lawsuit in the UK, over the fees it charges on its App Store.

The lawsuit has been filed on behalf of around 19.6 million UK iPhone and iPad users with the UK Competition Appeal Tribunal (CAT), the Guardian newspaper reported.

Collective lawsuits such as this are rare in the UK, but it comes as Apple is also facing off against Epic Games in a US courtroom over the fees it charges for its App Store.

British lawsuit

And earlier this month the European Commission charged Apple with violating antitrust rules over its App Store rules for music streaming services, following a complaint by Spotify in 2019.

This British lawsuit however concerns the App Store itself and the charges it levies.

It is being led by Dr Rachael Kent, an expert in the digital economy and lecturer at King’s College, University of London.

The claim essentially argues that Apple’s restrictive policies, which limit app developers to using its own payment systems, are generating “excessive” profits for the company and leading to consumers paying more than they otherwise would.

As a collective action, the lawsuit is seeking damages of up to £1.5bn.

Apple has dismissed the action as “meritless”, the Guardian reported.

“The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included,” Dr Rachael Kent was quoted as saying. “But 13 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.”

“This is the behaviour of a monopolist and is unacceptable,” Dr Kent added.

Dr Kent reportedly said Apple had no right to charge a 30 percent rent for transactions on phones – particularly when Apple itself was, she claimed, blocking our access to platforms and developers offering better deals.

If the legal action is successful in the Competition Appeal, the pot would be split between every UK user of an iPhone or iPad who purchased paid apps, paid subscriptions, or other in-app purchases in the UK App Store at any point since 2015, the Guardian reported.

Apple response

In a statement, Apple reportedly said it “welcomes 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”.

“The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces,” Apple reportedly added. “In fact, 84 percent of apps on the App Store are free and developers pay Apple nothing. And for the vast majority of developers who do pay Apple a commission because they are selling a digital good or service, they are eligible for a commission rate of 15 percent.”

Apple has previously defended its commission charge of between 15-30 percent for apps that use its in-app payment system. It also imposes strict rules that apps must comply with to appear in its App Store, which is the only venue where iPhone and iPad can download apps for their devices.

But in November Apple announced that the new App Store commission will fall from 30 percent down to 15 percent for small developers and businesses earning up to $1 million per year.