A class action lawsuit against Apple has begun in the UK, accusing the US tech giant of abusing its dominant market position by charging app developers an unfair 30% commission on the App Store, ultimately costing consumers.
Image Source: Apple
According to a claim brought to the UK Competition Appeal Tribunal (CAT) on behalf of around 20 million iPhone and iPad users in the United Kingdom, UK consumers were overpaid by £1.5 billion due to overcharging for app purchases.
In response, Apple says the lawsuit has no merit and ignores the benefits to consumers of its iOS operating system’s comprehensive approach, which prioritizes security and privacy.
As Reuters noted, the claim against Apple is the first class action against a tech giant in the UK under the UK’s evolving class action regime, with many claims pending against other tech companies. In addition, a £785 million class action lawsuit has been filed against Apple on behalf of more than 1,500 UK app developers over “unfair commissions on the purchase of apps and other content.”
British academic Rachael Kent, the initiator of the class action lawsuit that began Monday, argues that “Apple makes exorbitant profits” by eliminating any competition for app distribution and in-app purchases. Lawyers representing it say Apple’s dominant market position allows it to impose restrictive conditions on app developers and charge excessive fees that are ultimately passed on to consumers.
In turn, Apple, which has also faced pressure from regulators in the US and Europe over the fees it charges third-party developers, claims that 85% of developers pay no fees at all. Apple lawyer Marie Demetriou said in court papers that the fee reflects the “tremendous benefits that Apple’s innovations bring to the iOS ecosystem as a whole.” She said Kent’s lawsuit simply ignores Apple’s intellectual property rights, and her claim that Apple should allow developers to use its technology as they see fit could be seen as “expropriation of property rights disguised as competition.”
Apple CFO Kevan Parekh will reportedly hear testimony in the case later this week.