Apple accused of breaking UK competition law by overcharging for apps
Almost 20 million users could be eligible for compensation, with £1.5bn damages sought
Apple is facing a demand for billions of pounds of consumer compensation in a British lawsuit that accuses the company of overcharging users by up to 30% on its App Store.
The claim 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, it seeks to represent the almost 20 million people in the UK who have spent money on the App Store, and seeks damages of up to £1.5bn.
Apple has dismissed the action as “meritless”.
Leading the suit is Dr Rachael Kent, an expert in the digital economy and lecturer at King’s College, University of London, who said: “The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included. 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.”
Use of apps is growing, and the last year in particular has increased dependence on smartphones. Kent said Apple had no right to charge a 30% 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 accusation that Apple is abusing a monopoly on iPhones to charge excessive fees is not a new one. In the US, a lawsuit from Epic Games, the makers of Fortnite, argues that the company must open up its App Store to allow developers to use their own payment systems, or even to allow users to install games and apps from other sources entirely.
The European Commission last month charged Apple with abusing its dominant position in the music streaming market with App Store rules on in-app payments, after a complaint by Spotify. The regulator argued that Apple was privileging its own Apple Music streaming service by imposing fees on the competition.
In a statement, Apple 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”.
Apple added: “The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84% 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%.”
Collective actions are comparatively rare in UK law, but an upcoming supreme court ruling could change that. That case seeks compensation from Google over the search engine’s decision to ignore privacy settings from users which requested the company not track their activity across the web. Google’s lawyers have argued that a collective case should not be allowed, since some users may have experienced no harm from the privacy violation.
By Alex Hern , UK Technology Editor, 11 May 2021