‘This is a landmark victory – not only for App Store users, but for anyone who has ever felt powerless against a global tech giant,’ the lead claimant said.
Apple has lost a class-action antitrust lawsuit in the UK for “abusing” its dominant power and charging “excessive and unfair” prices from third-party app developers distributing on iOS.
Now, the company could be forced to pay up to £1.5bn in damages to iPhone and iPad users in the country.
The judgement comes just days after the UK’s Competition and Markets Authority (CMA) designated Apple and Google as having ‘strategic market status’ on their mobile platforms, which covers app distribution, browsers and browser engines. This designation states that both companies have “substantial, entrenched market power and a position of strategic significance”.
The class action allegations were brought by lead claimant Dr Rachael Kent, who said that Apple infringed sections of the UK Competition Act and the Treaty on the Functioning of the EU by charging app developers a 30pc commission for app sales and in-app payments.
These prices, the suit claimed, trickled down to users, causing damages of up to £2.2bn. Kent represented a class of 36m iOS users in the country.
In its ruling yesterday (23 October), the UK Competition and Appeal Tribunal said that Apple has “near absolute market power” in iOS app distribution services and in-app payment services, which has resulted in “very high barriers to entry” to developers.
It said that Apple places restrictions on iOS app developers, including requiring apps to only be distributed through the App Store, and requiring in-app purchases to only use Apple’s payment systems.
“[Apple’s] restrictions cannot sensibly be justified as being necessary or proportionate,” the Tribunal said, adding that the competition without these restrictions would benefit consumers.
“This is a landmark victory – not only for App Store users, but for anyone who has ever felt powerless against a global tech giant,” said Kent.
“Every in-app purchase, subscription and paid download was inflated by Apple’s anticompetitive practices. Those unfair fees have added up to billions for the world’s richest company, and less choice and innovation for everyone else,” she added.
However, Apple said that the ruling “overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments”. The company plans to appeal the ruling.
According to the law firm representing Kent, “Any UK user of an iPhone or iPad who purchased paid-for apps, subscriptions or made in-app purchases of digital content within the UK storefront of the App Store at any point since 1 October 2015 is potentially entitled to compensation from Apple for its anticompetitive practices.”
Although the BBC reports that it is unconfirmed exactly how much eligible individual consumers or businesses may be able to claim.
Earlier this year, Apple was hit with a €500m fine over app steering and trying to stop developers from informing users freely of alternate offers outside the App Store.
The company has had to make several changes to how it offers its services in the region, including making it easier for users to change default settings for several key phone services on iPhones, as well as allowing users to uninstall several pre-installed apps such as Safari.
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