A London tribunal on Thursday ruled that Apple abused its dominant position by charging unfair commissions to developers, in a landmark ruling that could see the iPhone maker pay hundreds of millions of pounds in penalties.
According to a Reuters article, the Competition Appeal Tribunal (CAT) ruled against the US tech giant after a mass lawsuit which was brought forward on behalf of iPhone and iPad users in the UK. The case has been valued at an estimated £1.5 billion or $2 billion by the plaintiffs.
Apple abused its dominance for five years to shut out competition
The Tribunal concluded that Apple abused its dominance from October until the end of 2020 as it shut out competition in the app distribution market and levied “excessive and unfair prices,” as commission from developers.
Apple has faced severe regulatory pressure in the US and Europe over its fees and has indicated it will appeal the ruling. It said the ruling “takes a flawed view of the thriving and competitive app economy”.
The lawsuit was led by British academic Dr Rachael Kent, who said that Apple made “exorbitant profits” by excluding all competition for app distribution and in-app purchases. Her lawyers maintained that during the January trial Apple’s “100% monopoly position” allowed it to impose excessive commissions.
Dr 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”. In a statement, Dr Kent said that the ruling shows that Britain’s collective action regime is working.
“Today’s ruling sends a clear message: no company, however wealthy or powerful, is above the law.”
Dr Kent.
The CAT’s ruling specified that developers were overcharged by the difference between a 17.5% commission and the commission that the tech giant actually charged, which, according to Dr Kent’s lawyers was typically 30%. The tribunal also concluded that developers passed on the 50% of this overcharge to consumers.
Apple wants to appeal
Apple said it strongly disagreed and indicated it would appeal.
“This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments,” an Apple spokesperson said.
“The App Store faces vigorous competition from many other platforms — often with far fewer privacy and security protections,” added the spokesperson.
According to reports, a hearing is now scheduled for next month to define how the damages will be calculated and to hear Apple’s application for permission to appeal.
This case represents a significant victory for the UK’s “class action” style legal regime. It also marks the first mass lawsuit against a major tech company to go to trial under the system, which has reached its 10th anniversary this year. It has seen multi-billion-pound cases certified for trial but limited success for consumers so far.
According to Reuters, there are many other cases waiting in the wings, including one against Google over the commission it charges app developers for access to its Play Store. This case is expected to begin in October next year and will be heard alongside a similar claim by Epic Games, which is engaged in parallel litigation with Apple in the US.
Other tech giants including Amazon and Microsoft are also facing sizeable claims at the CAT.
The ruling also comes at a time after Apple was hit with a complaint to European antitrust regulators over the terms and conditions of its App Store under rules aimed at reining in Big Tech.
If you're reading this, you’re already ahead. Stay there with our newsletter.
