UK Developers Sue Apple for Over $1 Billion in App Store Antitrust Damages
Apple Faces £800 Million Class-Action Lawsuit from U.K. Developers Over App Store Fees
chandni
Apple is being targeted by a class-action damages claim brought on behalf of U.K.-based developers. The lawsuit seeks compensation payouts that could exceed £800 million (over $1 billion) and accuses the tech giant of abusing its dominant position by imposing a 30% fee on in-app sales made by app makers on the iOS App Store. The developers argue that this "anticompetitive" fee deprives them of funds that could be used for research and development, hindering app innovation and harming U.K. consumers.
The class action is spearheaded by Sean Ennis, a professor of competition policy at the University of East Anglia and former employee of the OECD, U.S. Department of Justice, and European Commission. Ennis, motivated by the belief that Apple's behavior is deeply problematic, is leading the case funded by U.K. litigation funder Harbour.
The lawsuit is an opt-out class action, meaning U.K.-based developers do not have to register to be part of the case. If the litigants succeed against Apple, the damages owed to each developer will be calculated based on their iOS app business, potentially resulting in varying payouts, some reaching millions of pounds.
The main argument put forth by the litigants is a familiar one, echoing complaints from companies like Spotify and Epic. They claim that Apple's 30% fee is unfair due to its non-uniform application, impacting certain types of apps more than others. Despite Apple's assertion that the fee is necessary for providing a premium experience and maintaining security and privacy controls, developers continue to argue its unfairness.
The law firm supporting Sean Ennis in the case is Geradin Partners. They plan to highlight two key elements: the non-uniform application of Apple's fee and the various monetization routes the company employs, such as the annual program fee and the need to pay for search ads to boost app visibility.
Apple's App Store terms and conditions have been under scrutiny by various competition regulators, including the U.K.'s Competition and Markets Authority (CMA), which launched an investigation in March 2021. While some enforcement actions have taken place in other markets, the 30% fee has yet to face major regulatory consequences.
While damages lawsuits like this one may prompt change, it could take considerable time for a verdict to be reached and for developers to potentially receive compensation. The litigants hope to join their suit with an existing App Store suit focused on consumer damages, filed by Dr. Rachael Kent in 2021, seeking £1.5 billion in damages on behalf of U.K. consumers. They believe there is enough existing evidence of harm, including from the CMA's mobile ecosystem market study, to support their case. Economic analysis commissioned by the litigants further suggests that Apple's market dominance has led to excessive profits at the expense of app developers' value.
