Apple Facing $1 Billion UK Antitrust Lawsuit Over App Store Fees

[MacRumors]

Apple has become the target of a £785 million ($1 billion) class action lawsuit on behalf of over 1,500 developers in the UK over its App Store fees, reports TechCrunch.

The suit accuses Apple of abusing a dominant position by charging a 15% to 30% fee on in-app sales in the App Store, a policy that has been criticized by antitrust regulators in other countries.

It also argues UK consumers are missing out because developers are being deprived of money that could be spent on research and development to help drive app innovation.

The lawsuit is being brought by Sean Ennis, a professor at the Centre for Competition Policy at the University of East Anglia, on behalf of app developers.

"Apple's charges to app developers are excessive, and only possible due to its monopoly on the distribution of apps onto iPhones and iPads," said Ennis in a statement. "The charges are unfair in their own right, and constitute abusive pricing. They harm app developers and also app buyers."

The lawsuit is an opt-out class action. In other words, UK-based developers don't have to register to be included in any potential winnings, which would be calculated based on their app business.

Apple has been accused of or investigated for anticompetitive practices in several other countries over the past few years, including France, Germany, the Netherlands, South Korea, Japan, the United States, and more, with many of the complaints related to the App Store. As a result, Apple has been forced to make changes to the App Store in some countries, such as allowing developers to offer alternative payment systems in South Korea.

Apple's App Store terms and conditions are also being probed by the UK's Competition and Markets Authority (CMA), which opened its investigation in March 2021.

In the European Union, Apple is gearing up to accommodate the Digital Markets Act, which will require it to allow apps to be downloaded on the iPhone using sideloading or alternate app stores in iOS 17.

For Apple's part, it says the App Store is not the only way for developers to reach users, since they can also do so over Safari and other web browsers, where Apple rules do not apply. The company also says the majority of developers don't even pay any commission, while of those who do, many benefit from the App Store Small Business Program which requires them to pay only 15% fees.

Apple has also been keen to point out that over the past 15 years it has not raised commission rates or added fees, while twice in the last two years, federal courts have said Apple is entitled to charge a commission for access to its platform and rejected the assertion that the App Store gives the company monopoly power. Apple often also highlights the success of third-party apps on the App Store and their investments in developers' success, as well as the quality and security of the App Store itself.

Article Link: Apple Facing $1 Billion UK Antitrust Lawsuit Over App Store Fees

 

[ashdelacroix]

I understand why the fees were set so high at launch, moving from boxed software (itself subject to large margins imposed by retailers) and into a digital-only model that Apple was not certain would take off, but with large platforms there are economies of scale and it seems ridiculous that Apple should collect 30% of a £2 app or indeed a £200 app. It is increasingly unjustifiable.

Reminds me, in a different context, how AWS was to pass on savings to developers as its own platforms scaled up. Some savings are passed on occasionally, some reductions in the costs of S3 storage for example, but AWS seems to have achieved a kind of giant bait-and-switch in which such savings do not get passed on to developers despite the growth of AWS and those early promises that savings would be passed on.

 

[contacos]

Seems like the tables will be turned soon. Apple will have to PAY developers to invest into Vision Pro

 

[KrisLord]

This is interesting as UK law doesn’t really allow class action suits like the US does and when they are rarely allowed they’re opt in rather than opt out as is stated here.

 

[TheOldChevy]

I am not a fan of side loading. But if this is the only solution to avoid the monopoly, then it will have to exist.

 

[WiiDSmoker]

In before luddites say Apple should leave the EU UK

 

[podycust]

I wonder how many pennies I might make from this lol 😂

 

[Glenny2lappies]

If it weren't for Apple creating the App store in the first place, those developers would never have sold a thing.

 

[WiiDSmoker]

If it weren't for Apple creating the App store in the first place, those developers would never have sold a thing.

If it weren't for Nikola Tesla, Apple wouldn't exist.

LOGIC~!

 

[xDKP]

Still a full payment system and store front doesn’t come free anywhere else - I for one like the IAP because it uses the trusted Apple payment system etc. With a market share of 10-15% it’s hardly a monopoly?

 

[Jay Tee]

The lawsuit is an opt-out class action. In other words, UK-based developers don't have to register to be included in any potential winnings, which would be calculated based on their app business.

You mean after, and not before, lawyers' fees have been paid.

This is what's known in the business as an important detail.

 

[contacos]

If it weren't for Apple creating the App store in the first place, those developers would never have sold a thing.

If developers did no longer bother to develop for Apple, the iPhone wouldn't sell either. In a sense they are really depending on one another but Apple still has the upper hand being a "Monopoly". Devs kind of have no choice but to suck up the fee if they want to stay in business

 

[k1121j]

Yay everybody gets a dollar. That will make it better.

 

[senttoschool]

If developers did no longer bother to develop for Apple, the iPhone wouldn't sell either. In a sense they are really depending on one another but Apple still has the upper hand being a "Monopoly". Devs kind of have no choice but to suck up the fee if they want to stay in business

They do have a choice. They can develop for Windows, Android, Linux, web, Playstation, Xbox, Samsung App Store, Nintendo Switch, etc. The terms were clear when they first signed up to develop for iOS - pay 30% for digital goods. They signed up knowing this term.

It's like suing Walmart, America's largest retailer, because you don't want to continue to pay the fee to have your products in Walmart stores. If you don't like Walmart's fees, then put your products into Kroger, Albertson, Target, Amazon, etc.

 

[Sammy in SoCal]

Someone explain to me how android-based phones which is like 80% of the global smart phone market doesn’t have developers catering to the app stores on there? If Apples fees are too much why aren’t they making apps for Android phones the first priority?

EDIT: looks like the previous post beat me to the punch first by 2 minutes (senttoschool)

 

[RickDEGH]

Well, the last time I checked Apple charges 99€/$/£ per year for developers. Apple then charges 15-30% fee on what the app developers charge the consumer. All pricing is on the developer. If a develop chooses not to charge for their app, Apple doesn’t get anything. I agree, it sucks when Microsoft adds the Apple fee on top of their normal price for their products and services when accessed through iPhone/iPad apps, but Apple is not charging me as a consumer to use those services, the developer does!

 

[nikusak]

So, the developers want AppStore and all the nice stuff (payment processing, family sharing, parental controls, gift cards, visibility, whatnot), but they want 100% of the sales? Or would they rather have side loading and handle everything on their own?

On Android one can distribute apps outside Play. Do we have success stories of developers actually doing that?

What about Sony, Microsoft and Nintendo who take a cut of not just digital sales, but physical sales too?

I do agree that 30% is too much and it shouldn’t be anything like that for stuff like streaming where Apple itself competes. Although very few people have ever paid via AppStore for something like Spotify. The book service app I use just throws me to an in app web browser where I can manage the subscription.

 

[6787872]

fantastic news. time to play hardball.

 

[senttoschool]

Good time to repost this: https://www.macrumors.com/2020/07/22/apple-app-store-fee-study/

 

[Harvey Zoltan]

Would the ability to side load apps make this kind of thing go away? Would side loading apps, for those who chose to do so be 30% cheaper than Apple's App Store? Also if the majority of smart phone users aren't using an iPhone where is the monopoly.

 

[nikusak]

So, the developers want AppStore and all the nice stuff (payment processing, family sharing, parental controls, gift cards, visibility, whatnot), but they want 100% of the sales? Or would they rather have side loading and handle everything on their own?

I’m actually interested in seeing in how this all plays out.

Somebody will set up alternative store(s) and will soon find out that app reviews, customer support, managing payments and refunds, software / infra development etc. all costs money and the commission rates will not end up being much different. Also, you will not find emulators in these stores either because Nintendo etc. will sue immediately.

According to the legal documents, Epic Store (12% cut I think) operates at a loss. Let’s hope EU makes it illegal to operate a store at loss by using profits from your other products (Fortnite).

AppStore has been truly fantastic for normal consumers (99,999% of people) and you all know it.

On Android truly harmful malware apps are a reailty - thanks to sideloading (that nobody except a handful of nerds need) and way too open and extremely badly thought out programming interfaces.

 

[SoldOnApple]

What about the Sony/Microsoft duopoly on hardcore console gaming. They charge 30% too. I wouldn't mind seeing third party games being 30% cheaper on my Playstation tbh.

 

[SoldOnApple]

Would the ability to side load apps make this kind of thing go away? Would side loading apps, for those who chose to do so be 30% cheaper than Apple's App Store? Also if the majority of smart phone users aren't using an iPhone where is the monopoly.

If side loading became mainstream then I think a lot of people would be introduced to the idea of premium apps being 100% cheaper.

 

[Motorola68000]

No wonder the students in the UK feel they are getting a raw deal. What utter hypocrisy from some professors in universities that thinks nothing about charging thousands of pounds for a course.

UAE missed its targets for admissions last year by 8p.c. and 21pc the year before and it still made a loss of £13.9m! so just perhaps professors in universities should spend more time teaching, let alone economics where their own university doesn't seem to be able to balance its books.

I wonder if his sense of inequality runs to advising UK government? Hope not as that doesn't seem to have benefited much.

George Bernard Shaw is attributed with the lines ‘Those who can, do; those who can’t, teach’ from Shaw’s 1905 stage play Man and Superman.

 

[sw1tcher]

If it weren't for Apple creating the App store in the first place, those developers would never have sold a thing.

It could also be said that if it weren't for 3rd party app developers, the iPhone might not have become the success that it is today.

Remember that Steve Jobs didn't think 3rd party apps were right for Apple and the iPhone.

Steve Jobs resisted third-party apps on iPhone, biography reveals

Stuart Dredge: CEO was initially reluctant to allow non-Apple apps but was swayed by lobbying from execs and board members

www.theguardian.com

Walter Isaacson's authorised biography of former Apple CEO Steve Jobs explains that Jobs was initially unconvinced that apps would benefit Apple or its iOS platform.

"When it first came out in early 2007, there were no apps you could buy from outside developers, and Jobs initially resisted allowing them," writes Isaacson. "He didn't want outsiders to create applications for the iPhone that could mess it up, infect it with viruses, or pollute its integrity."

Hence no external apps for the first iPhone. However, the book explains that behind the scenes, Apple board member Art Levinson and SVP of worldwide product marketing Phil Schiller were pressing Jobs to change his mind.

"I called him a half dozen times to lobby for the potential of the apps," says Levinson, while Schiller adds that "I couldn't imagine that we would create something as powerful as the iPhone and not empower developers to make lots of apps. I knew customers would love them."