More than 1,500 app developers in the UK have filed a £785 million ($1 billion) class action lawsuit against tech giant Apple over its App Store fees. The lawsuit was filed with the Competition Appeal Tribunal, with the developers claiming that Apple’s 30% charge on in-app sales discourages competition.
“The charges are unfair in their own right, and constitute abusive pricing. They harm app developers and also app buyers,” said Sean Ennis, a professor at the University of East Anglia and a former economist at the OECD, who brought the lawsuit on behalf of the developers.
Apple has refuted the accusations, stating that its App Store fees are reasonable and contribute to a high-quality user experience. The company argues that its charges are necessary due to its monopoly on the distribution of apps onto iPhones and iPads. Apple insists that it abides by all the relevant legislation.
However, the company’s practices have attracted the attention of antitrust regulators in several countries. In 2021, the European Commission fined Apple €13 billion ($14.9 billion), plus interest, over anti-competitive behavior on its App Store. The US Department of Justice is also suing the tech firm, alleging that it has exploited its position of power in the smartphone market.
Apple charges app developers commissions ranging from 15% to 30% for the use of in-app payment systems. This revenue stream has contributed to the tech behemoth’s significant growth in its service business, with approximately $20 billion in revenue per quarter in recent years.
The class action lawsuit in the UK highlights the ongoing concerns regarding Apple’s App Store fees and their impact on competition within the app development industry. The developers argue that the charges imposed by Apple significantly reduce their potential profits and create barriers to entry for new entrants.
Furthermore, the developers claim that Apple’s monopoly on the distribution of apps onto iPhones and iPads enables the company to impose excessive charges without facing significant competition. They argue that these charges ultimately harm both app developers and app buyers, as they result in higher prices for consumers and limit the ability of developers to invest in improving their apps.
The outcome of this lawsuit could have significant implications for Apple’s App Store policies and fees not only in the UK but also globally. If the court sides with the developers, it may prompt other app developers around the world to challenge Apple’s fees, potentially leading to similar class action lawsuits in other jurisdictions.
The ongoing scrutiny by antitrust regulators further adds to the pressure faced by Apple to reconsider its App Store fees and practices. With multiple investigations and legal actions against the company, it is likely that Apple will face increased regulatory scrutiny and potential restrictions on its business practices in the coming years.
As the case progresses, it will be important to monitor the court’s decision and the potential impact it may have on the broader app development industry. App developers are hopeful that this lawsuit will bring about changes in Apple’s fee structure, leading to a more competitive and fair environment for app distribution.