The claim argues that Apple’s policy of forcing developers to use Apple’s payment systems for in-app purchases and taking up to 30% commission is unfair
Apple is facing a billion-pound legal claim after being accused of breaking UK competition law by “overcharging” millions of people for apps on its App Store.
The tech giant has been accused of deliberately shutting out the competition in the store and forcing people to use its own payment processing system, generating “excessive” profits for itself in the process.
The claim, which is being brought on behalf of potentially millions of UK Apple users, has been filed in the Competition Appeal Tribunal and calls for Apple to repay UK customers it says have been overcharged because of the company’s practices, with damages of up to £1.5 billion being sought.
It says as many as 19.6 million UK users could be eligible for compensation.
The claim argues that Apple’s policy of forcing developers to use Apple’s payment systems for in-app purchases and taking up to 30% commission on those transactions is unfair.
The UK 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 thirteen 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 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, she said.
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, Dr Kent said.
Last year’s US Congress inquiry estimated that Apple’s annual global revenue from the App Store is at least 15 billion dollars a year, but the company’s costs for running the platform are just 100 million dollars, she said.
Apple achieves this by slapping unjustified charges on its users. It would not be able to impose these exorbitant charges if competitor platforms and payment systems were allowed to compete on its devices, Dr Kent said. It is a clear abuse by Apple of the law and its own customers.
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 October 1, 2015 could be entitled to compensation over the firm’s “anti-competitive practices”.