Apple is facing a billion-pound class-action lawsuit in the UK over claims it overcharged nearly 20 million iPhone and iPad users for App Store purchases.
The claim, which has been filed in the Competition Appeal Tribunal in London on behalf of 19.6 million iOS users, alleges that Apple deliberately shuts out competitors by forcing customers to use its own payment processing system.
It's alleged that by doing this, the company is generating “illegally excessive” levels of profit, as 30% of the money customers spend in the App Store goes straight to Apple.
Dr Rachael Kent, a digital economy specialist and lecturer at King's College who is leading the collective action, said: “This is the behaviour of a monopolist and is unacceptable. Ordinary people’s use of apps is growing all the time, and the last year, in particular, has increased our dependence on this technology.
“Apple has no right to charge us a 30% rent for so much of what we pay for on our phones – particularly when Apple itself is blocking our access to platforms and developers that are able to offer us much better deals. This is why I am taking this action.”
The claim says any UK user of an iPhone or iPad who purchased paid apps, paid subscriptions, or made any other in-app purchases within the UK version of the App Store since 1 October 2015 could be entitled to compensation, and estimates that Apple could face paying out in excess of £1.5 billion to those affected.
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Apple has described the lawsuit as “meritless”, according to Bloomberg, adding that it “welcomes 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”.
“The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces,” a spokesperson said. “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%.”
There have been growing concerns raised about the App Store’s policies in recent months. In April, the European Commission charged Apple with abusing its dominant position in the music streaming market with App Store rules on in-app payments, following a complaint by Spotify.
Similarly, the UK's Competition and Markets Authority (CMA) in March opened an investigation into whether Apple imposes unfair or anti-competitive terms on its app developers. The regulator is set to scrutinise Apple's 30% "app tax" and assess the company's potential dominance in the app distribution market in the UK.
