UK Class Action Accuses Apple of Breaking Competition Law by Overcharging for Apps

[MacRumors]

A new legal case filed with the U.K.'s Competition Appeal Tribunal has accused Apple of breaching competition law by overcharging nearly 20 million customers for App Store purchases.

The collective action case alleges Apple's 30% commission on app sales and consumers' forced use of its own payment processing system generates "unlawfully excessive levels of profit," and calls for the company to compensate iPhone and iPad users in the U.K. for years of alleged overcharging, with damages of up to £1.5 billion being sought.

The collective action has been brought by Dr Rachael Kent, an expert in the digital economy and a lecturer at King's College, London, who claims that because the App Store is the only way to get apps on to an iPhone or iPad, it is acting like a monopoly.

"The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included," she said. "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 behavior of a monopolist and is unacceptable."

In opt-out cases such as this, the claim can be brought on behalf of a defined group, and aggregate damages awarded to the group, without the need to identify all the individual claimants and specify their losses. Claimants within a class are automatically included in an action unless they take specific steps to opt-out.

On this basis, anyone in the U.K. who has bought paid apps, paid subscriptions, or other in-app purchases on an iPhone or iPad since October 2015 is included in the claim. The rest of the team behind the case includes law firm Hausfeld and Co and Vannin Capital. However, the collective action needs to be approved by the tribunal before proceeding.

Apple in a statement called the lawsuit "meritless."

"We believe this lawsuit is meritless and welcome 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 said. "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%."

The case echoes similar allegations made in the ongoing legal battle between Apple and Epic Games, in which Epic alleges that the App Store and associated developer commission rates are anti-competitive and monopolistic.

In April, Apple was also charged by the European Commission with abusing its dominant position in the music streaming market with regard to App Store rules on in-app payments. The charges followed a complaint by rival streaming service Spotify.

Article Link: UK Class Action Accuses Apple of Breaking Competition Law by Overcharging for Apps

 

[markfc]

Embarrassed I live in the UK with this one.

 

[_Spinn_]

Class action lawsuits like this one are a total joke and usually just a way to enrich the lawyers.

 

[djcerla]

30% is industry standard, and Apple has a minority share of phones in the UK. Hardly a "monopoly".

These actions will end up ruining the iOS experience for consumers, which is at present far superior compared to the competitor's.

 

[Ubuntu]

30% is industry standard, and Apple has a minority share of phones in the UK. Hardly a "monopoly".

These actions will end up ruining the iOS experience for consumers, which is at present leaps and bounds superior to the competition's.

Nah. The Mac does quite well as it is and that’s not down to the App Store so iOS would survive.

 

[Mr.Blacky]

"The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included," she said. "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 behavior of a monopolist and is unacceptable."

This doesn't make ANY sense. ?

 

[Wanted797]

Apple creates a digital economy giving millions of developers jobs or side jobs and makes millions of dollars in the process.

Governments… “Well we’d like a piece of that.’

 

[architect1337]

"Apple guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified. This is the behavior of a monopolist and is unacceptable."

It may be monopolistic to their own platform, but it's hardly a monopoly. Android based phones are the majority and each vendor can make their own store if they choose to - it just happens that Google got there first with their store - but there are others, like Samsung etc.

fortunately, the UK is not as litigious as other countries so I don't see this going anywhere.

 

[m4mario]

Don't these people realize that iOS allows HTML 5 apps to bypass the App Store? How is App Store a monopoly if developers can completely bypass it to reach customers and not pay Apple anything for it.

 

[_Spinn_]

These actions will end up ruining the iOS experience for consumers, which is at present leaps and bounds superior to the competition's.

Exactly! If efforts like this succeed I think someone should start a class action lawsuit against these people for ruining the ecosystem Apple users paid for. If I wanted Android I would have paid for an Android device. I bought my iPhone knowing full well what I was getting.

 

[Hermes Monster]

As a Brit, this fills me with absolute cringe. It’s nothing more than a cash grab, and I hope it gets shot down in flames

 

[mw360]

I’m puzzled by the reporting here. I’m fairly sure the UK doesn’t have class action lawsuits, and instead has Group Litigation Orders which are opt-in, not opt-out. Perhaps an expert can explain.

Collective redress and Group Litigation Orders

The UK does not have a system of American-style ‘opt out’ class actions, securities claims are generally managed through Group Litigation Orders (“GLOs”)

www.stewartslaw.com

 

[munpip214]

I am quite happy to pay the extra 30% since it means Apple maintains the App Store

 

[Kierkegaarden]

Wow. Is a 30% sales commission really considered an “unlawfully excessive amount of profit” in the UK? What is a lawful amount of profit?

And how exactly did Apple overcharge? Doesn’t the developer set the price?

Sounds like a lawyer that just wants publicity, at any cost.

 

[Agit21]

It may be monopolistic to their own platform, but it's hardly a monopoly. Android based phones are the majority and each vendor can make their own store if they choose to - it just happens that Google got there first with their store - but there are others, like Samsung etc.

Why is that a problem?
Since when is it on MacOS where you can sideload any app a problem?

 

[abhibeckert]

Wow. Is a 30% sales commission really considered an “unlawfully excessive amount of profit” in the UK? What is a lawful amount of profit?

Seems to me they should go after app developers - they're making 70% profit!

 

[NightFox]

When I see what is effectively a legal venture capitalist involved in an action, I find myself questioning the motives of that action. I'm not one of the 'Apple can do not wrong' or 'Apple > consumer' brigade and do believe Apple should respect the laws of every jurisdiction in which it operates, but this has all the hallmarks of a US-style moneygrab.

 

[kcslc]

30% is industry standard, and Apple has a minority share of phones in the UK. Hardly a "monopoly".

These actions will end up ruining the iOS experience for consumers, which is at present far superior compared to the competitor's.

If you don’t want to side load apps in an open iOS, you won’t have to. Nobody will force you.

 

[Saturnine]

I’m puzzled by the reporting here. I’m fairly sure the UK doesn’t have class action lawsuits, and instead has Group Litigation Orders which are opt-in, not opt-out. Perhaps an expert can explain.

Collective redress and Group Litigation Orders

The UK does not have a system of American-style ‘opt out’ class actions, securities claims are generally managed through Group Litigation Orders (“GLOs”)

www.stewartslaw.com

I'm not a lawyer but you're right in what you say.

Ultimately this is a lawsuit brought-about by one person - "King's College London digital-economy lecturer" Dr Rachael Kent, on behalf of everybody affected.

It seems quite frivolous to me. Ultimately, 30% is an arbitrary number on which Apple decided. It is not for the courts to decide "how much profit is fair." That is up to the market. If the claim is that Apple has a monopoly, then that also doesn't hold water since nobody is forced to buy Apple devices.

If the claim is that "Apple has a monopoly on selling iPhone apps" then, of course, the statement is true, but is there anything wrong with that? For me, it's a little bit too much like walking into a Tesco supermarket and then complaining then you have to purchase PG Tips at Tesco's prices rather than Aldi's.

 

[CJM]

I don't think they'll win but the Apple apologists (share holders?) are hilarious.

As stated in the article, their costs for running the App Store were £70m but they made £10.6B last year. And this has nothing to do with government, as one commenter replied.

I'm not a lawyer but you're right in what you say.

Ultimately this is a lawsuit brought-about by one person - "King's College London digital-economy lecturer" Dr Rachael Kent, on behalf of everybody affected.

It seems quite frivolous to me. Ultimately, 30% is an arbitrary number on which Apple decided. It is not for the courts to decide "how much profit is fair." That is up to the market. If the claim is that Apple has a monopoly, then that also doesn't hold water since nobody is forced to buy Apple devices.

If the claim is that "Apple has a monopoly on selling iPhone apps" then, of course, the statement is true, but is there anything wrong with that? For me, it's a little bit too much like walking into a Tesco supermarket and then complaining then you have to purchase PG Tips at Tesco's prices rather than Aldi's.

No, it's like buying a Costco membership because you think it looks like a good buy and then being forced to shop there for several years.

 

[LeadingHeat]

If you don’t want to side load apps in an open iOS, you won’t have to. Nobody will force you.

Except for the Spotify’s of the world will pull their apps from the store so they don’t have to pay these “monopolistic fees” to Apple… which means yes I will have to sideload.

 

[ManDark]

Wow. Is a 30% sales commission really considered an “unlawfully excessive amount of profit” in the UK? What is a lawful amount of profit?

Then the "expert" Dr Rachael Kent should parallel go after the Banks, and everyone that makes "unlawfully excessive amount of profit" Google, Sony, Microsoft, a mazbee like everyone who is sucessfull in their business. Oh my.

 

[WickedMessenger]

Embarrassed I live in the UK with this one.

Ditto!

 

[CJM]

Then the "expert" Dr Rachael Kent should parallel go after the Banks, and everyone that makes "unlawfully excessive amount of profit" Google, Sony, Microsoft, a mazbee like everyone who is sucessfull in their business. Oh my.

Ah, whataboutism. Good counter argument. Not.

 

[TracerAnalog]

Nah. The Mac does quite well as it is and that’s not down to the App Store so iOS would survive.

IOS vs. MacOS: entirely different things.