Apple loses UK lawsuit over app store commissions

The Competition Appeal Tribunal (CAT) ruled against Apple after a trial of the lawsuit, which was brought on behalf of millions of iPhone and iPad users in the UK

Apple abused its dominant position by charging app developers unfair commissions, a London tribunal ruled on Thursday, in a blow which could leave the US tech company on the hook for hundreds of millions of pounds in damages.

The Competition Appeal Tribunal (CAT) ruled against Apple after a trial of the lawsuit, which was brought on behalf of millions of iPhone and iPad users in the UK.

The CAT ruled that Apple had abused its dominant position from October 2015 until the end of 2020 by shutting out competition in the app distribution market and by “charging excessive and unfair prices” as commission to developers.

Apple – which has faced mounting pressure from regulators in Europe over the fees it charges developers – said it would appeal against the ruling, which it said “takes a flawed view of the thriving and competitive app economy”.

The case had been valued at around £1.5 billion ($2 billion) by those who brought it. A hearing next month will decide how damages are calculated and Apple’s application for permission to appeal.

Thursday’s ruling comes 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.

Rachael Kent, the British academic who brought the case, argued Apple had made “exorbitant profits” by excluding all competition for the distribution of apps and in-app purchases.

Her lawyers argued at the start of the trial in January that Apple’s “100% monopoly position” allowed it to impose restrictive terms and excessive commissions on app developers, which Apple denied.

The CAT said in its ruling that developers were overcharged by the difference between a 17.5% commission for app purchases and the commission Apple charged, which Kent’s lawyers said was usually 30%. The CAT also ruled that app developers passed on 50% of the overcharge to consumers.

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.