Apple just lost a major lawsuit in the United Kingdom. The U.K."s Competition Appeal Tribunal (CAT) has ruled that the Cupertino company abused its dominant position by imposing unfair and excessive 30% commission fees on app developers via its App Store. This ruling is part of a class-action lawsuit on behalf of around 20 million iPhone and iPad users in the U.K., and values potential damages at up to £1.5 billion (approximately $2 billion).
The lawsuit, which was spearheaded by British academic Dr. Rachael Kent, argued that Apple holds a “100% monopoly” over app distribution on iPhones and iPads due to its exclusive control over the App Store and restrictive policies on in-app purchases. The CAT found that Apple"s commission practices indeed shut out competition in the app distribution market, resulting in “exorbitant profits” at the expense of developers and consumers. Members of the claimant class were declared entitled to damages, with the exact amount to be determined in a coming hearing.
Many developers have scrutinized Apple"s 30% tax over the years as monopolistic and excessive. Although the company has now modified its commission model, it continues to face legal setbacks in other regions, such as the U.S. and the EU as well.
In response to the lawsuit, Apple"s spokesperson said to Reuters that the company will appeal the ruling, rejecting the tribunal’s findings as a “flawed view of the thriving and competitive app economy.” It highlighted the role of the App Store in providing a secure platform for consumers and developers alike, supporting innovation and privacy protection. Apple also added that 85% of developers pay no commission, relying on alternative arrangements or free apps, and argues that the fees are justified by the extensive services it offers developers.
If ruled against Apple, the lawsuit could set back Apple billions in the U.K. alone, with similar cases pending worldwide, which could potentially pressurize Apple to reexamine its App Store commission model.
Via Reuters