Apple £1.5bn class action lawsuit begins in UK courts
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The first trial to emerge from a wave of antitrust lawsuits against Big Tech in the UK is set to begin on Monday, as Apple faces a £1.5bn legal claim for charging “excessive and unfair” fees from its app Store downloaded software charges.
Unless a last-minute agreement is reached, the iPhone maker will begin a legal battle before Britain’s Competition Appeal Tribunal over allegations that it abused a dominant market position to charge commissions of up to 30 percent on purchases on its app store -Marketplace to demand.
The seven-week trial in which Apple’s newly appointed chief financial officer Kevan Parekh is set to testify is the latest in a growing list of legal challenges facing Big Tech companies around the world.
In the US, the Justice Department has done this brought a case against Apple on the grounds that the App Store rules stifled competition. However, Apple has largely emerged intact from a legal dispute over the App Store Fortnite Creator Epic Games, which began in 2020 and ended early last year.
Antitrust lawyers and the litigation funding industry that supports such cases will be scrutinizing the CAT proceedings as they try to assess the chances of success of several other antitrust lawsuits against technology giants such as Alphabet, Microsoft and Meta.
The lawsuit against Apple, filed on behalf of millions of British consumers, follows major setbacks last month over two other class action lawsuits.
Telecommunications operator BT repelled a case that it overcharged landline customers while Mastercard completed a dispute over card fees worth £200m – a small fraction of the £14bn the plaintiffs had originally claimed.
A series of claims Lawsuits have been filed, many against technology companies, under a British law passed a decade ago that allows mass lawsuits over alleged violations of competition law.
However, the cases have stalled due to protracted procedural disputes, and the case against Apple is the first in the industry to go to trial.
The plaintiffs, led by “class representative” Rachael Kent, a lecturer at King’s College London, say Apple has created a monopoly by forcing developers who make software for devices like iPhones and iPads to publish their apps through the company’s own app Store to sell.
They are demanding £1.5 billion from Apple, arguing that “excessive and unfair” commissions charged to developers are passed on to consumers who download the software and buy content or digital services within the apps.
Plaintiffs’ lawyers, led by Mark Hoskins KC and Tim Ward KC, are expected to say that Apple has made “exorbitant” profits because the commissions are far higher than if the software were also made available on third-party competitors to the App Store.
As Apple’s iOS faces competition from Google and its Android mobile operating system, the plaintiffs claim the company has built strong market power in its “ecosystem” of devices and software.
Apple said the lawsuit was “meritless.” “The commissions charged by the App Store correspond to those of all other digital marketplaces,” it said when the lawsuit was first filed in 2022.
Most apps are offered for free and require no fee, Apple added, and the “vast majority” of developers are eligible for a reduced commission of 15 percent, under rules introduced in 2020 for small businesses whose apps are less than 1 million bring in US dollars per year.
Apple is expected to argue that the plaintiffs have defined the market too narrowly to include only iOS apps and that it is not dominant in the broader digital transaction and device markets.
As it did when Apple faced similar complaints about its App Store policies from Epic Games and music app Spotify, Apple is likely to say its commission is justified by the broader investments it is making in its platform, including not only payment processing, but also developer tools and security reviews, marketing and curation.
