UK court begins hearing $1.83 billion lawsuit against Apple over App Store fees

Lawyers representing Apple Inc. will be in court Monday in the U.K. to face a class action lawsuit that alleges that the iPhone maker runs its App Store as an illegal monopoly.

The lawsuit, filed back in 2021, alleges that Apple’s 30% commission on app sales is an abuse of dominance and unlawful. The lawsuit seeks damages of up to £1.5 billion ($1.83 billion) for up to nearly 20 million U.K. Apple users.

The Financial Times reported that barring a last-minute settlement, the case will be heard at the U.K.’s Competition Appeal Tribunal and will hear allegations that Apple abused its dominant market position to charge commissions of as much as 30%.

The claimants in the case, led by Rachel Kent, a lecturer at King’s College London, claim that Apple has created a monopoly by forcing developers who make software for devices such as iPhones and iPads to distribute their apps using the company’s own app store. The £1.5bn sought from Apple is being done on the basis that Apple imposed “excessive and unfair” commissions on developers that are then passed on to consumers who download the software and buy content or digital services inside the apps.

Lawyers for the claimants are expected to claim that Apple derived “exorbitant” profits, as the commissions are far greater than they would be if the software were also made available on third-party rivals to the App Store. Addressing competition from the likes of Google LLC, the claimant argues that Apple has entrenched market power through its ecosystem of devices and software.

Not surprisingly, Apple is claiming that the lawsuit is meritless. “The commission charged by the App Store are very much in the mainstream of those charged by all other digital marketplaces,” Apple previously argued in 2022 before adding that most apps are free and that develops qualify for discounted commission rates where apps bring in under $1 million per year.

The class action lawsuit trial is expected to last around seven weeks, but it’s not the only class action lawsuit Apple is facing in the U.K.

In December, Apple failed in its attempt to block another class action lawsuit over its App Store commissions and practices from proceeding. The lawsuit, led by Sean Ennis, a competition law professor and economist, on behalf of more than 1,500 app developers, is seeking £785 million ($995 million) in damages on the basis that Apple charged third-party developers unfair commissions of up to 30% on purchases of apps or other content.

Apple tried to argue that developers cannot have a claim in the U.K. unless they were charged on purchases made through the U.K. App Store. The judge disagreed, writing in his ruling that Ennis’ lawyers had a realistic prospect of establishing that “Apple’s overcharging of commission to app developers based in the U.K. in relation to commerce transacted on non-U.K. storefronts did amount to conduct implemented in the U.K.”

Image: SiliconANGLE/Flux-1

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