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Class Action Against Apple Commences

With Apple forced to fight legal challenges in jurisdictions including Australia, the EU and the US related to its App store, a fresh class action has commenced against it with claims that it levies “excessive and unfair” charges on software downloaded from its app store.

The latest legal battle has commenced in the UK’s Competition Appeal Tribunal where it is being alleged that Apple is abusing its dominant position in the app market and that its 30% commission fee is in breach of European and UK competition laws.

The A$2.96 billion legal challenge is being brought by Dr Rachael Kent, an academic at King’s College London, on behalf of around 19.6 million iPhone and iPad users in the UK.

Kent claims that the App Store made A$23.7 billion in revenue last year while spending A$197.53 million on operating costs.

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She said: “The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included. But 13 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. 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. This is why I am taking this action.”

The seven-week trial will likely see Apple’s newly appointed chief financial officer Kevan Parekh testify.

Apple meanwhile has contended that the latest legal action is “meritless”. “The commission charged by the App Store are very much in the mainstream of those charged by all other digital marketplaces,” it said.

It noted that around 85% of apps on the App Store were free and developers pay Apple nothing for those. And for the vast majority of developers who do pay Apple a commission, they are eligible for a commission rate of 15% which is applicable for small businesses whose apps bring in less than A$.61 million per year.

 

Apple as well as Google have faced legal action against their app store policies in Australia. Maurice Blackburn Lawyers brought a class action against Apple and the first stage of that trial concluded on July 5, 2024, though a judgement has been reserved.

The first stage of the trial was heard together with a trial in a separate but related legal action that was commenced by Epic Games which broadly addressed similar concerns that Apple was able to impose terms on iOS app developers which restricted their ability to offer other means of iOS app distribution and payment for such apps and in-app digital content purchases from those apps.

It also alleged that Apple was able to charge commission rates on those purchases over and above what it would otherwise have been able to charge in a competitive market.



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