Apple has lost a UK lawsuit that accused it of abusing the dominant position of its App Store, with claimants seeking more than £1.5 billion (€1.72 billion).
The US tech giant abused its dominant position by charging app developers unfair commissions, a London tribunal ruled yesterday, AFP reported.
The Competition Appeal Tribunal (CAT) ruled against Apple in the lawsuit, which was brought on behalf of 36 million iPhone and iPad users, both consumers and businesses, in the UK, according to Reuters.
The CAT ruled Apple had abused its dominant position from October 2015 until the end of 2020 by shutting out competition in the app distribution market, the BBC reported.
The Tribunal decided the Cupertino, California-based firm had charged “excessive and unfair” prices in the form of the 30 per cent commission, which it usually levies both on app sales and in-app payments.
The claimants argued that meant consumers had been overcharged for apps, subscriptions to apps and when buying digital content in apps.
The case was brought by King’s College London academic Dr Rachael Kent and the law firm Hausfeld & Co, Yahoo News reported.
Her lawyers argued it was the first such claim brought under the UK’s collective action regime to have succeeded.
Kent called the decision a “landmark victory, not only for App Store users but for anyone who has ever felt powerless against a global tech giant”.
“Today’s ruling sends a clear message: No company, however wealthy or powerful, is above the law,” she added.
In its ruling, the Tribunal called Apple’s restrictions on the App Store unjustifiable.
“On the contrary, the competition which would exist absent the restrictions is in our view much more likely to deliver the benefits that consumers want,” said the ruling, “in the form and at the price point they want them”, according to the BBC.
The Tribunal’s decision comes a day after the Competition and Markets Authority (CMA) designated both Apple and Google as having “strategic market status” – effectively saying they have a lot of power over mobile platforms.
Apple previously called the claims “meritless”.
“The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces,” said Apple in a statement during the case.
“In fact, 84 per cent of apps on the App Store are free, and developers pay Apple nothing,” it added, according to AppleInsider.
Apple made it clear what its present stance is: “We thank the Tribunal for its consideration but strongly disagree with this ruling.”
According to Hausfeld & Co, whose lawyers represented Kent, “any UK user of an iPhone or iPad who purchased paid-for apps, subscriptions or made in-app purchases of digital content within the UK storefront of the App Store at any point since 1 October 1, 2015 is potentially entitled to compensation from Apple”.
The purchases must have been made on iPhone and/or iPad devices, they added.
But it has it has yet to be established exactly how much eligible individual consumers or businesses may be able to claim, the BBC has been told.
Apple – which has faced mounting pressure from regulators in the US and Europe over the fees it charges developers – said the ruling “takes a flawed view of the thriving and competitive app economy”.
The App Store had benefited businesses and consumers across the UK, it said, and had created a dynamic marketplace where developers compete and users could choose from millions of innovative apps.
“This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments,” Apple said.
“The App Store faces vigorous competition from many other platforms — often with far fewer privacy and security protections,” the firm added.
Apple said it strongly disagreed with the ruling and would appeal.
