London (AFP) – Apple lost a UK lawsuit Thursday which accuses the US tech giant of abusing the dominant position of its App Store, with claimants seeking more than £1.5 billion ($2 billion) in damages. The Competition Appeal Tribunal found that Apple had shut out competition in the app distribution market and charged app developers “excessive and unfair” commissions. Apple said it “strongly disagrees” with the ruling and intended to appeal. This is the second setback in two days for Apple.
On Wednesday, the UK’s competition watchdog said it had “strategic market status” in smartphones and tablets alongside Google, due to the two firms’ dominant positions. The Competition and Markets Authority said Apple and Google would face tougher regulation of services on their mobile platforms, which it said risked “limiting innovation and competition”. The new measures are similar to a tech competition law from the European Union, the Digital Markets Act, which carries the potential for hefty financial penalties — and could force the tech giants to open up their platforms.
The app store case was brought by King’s College London academic Rachael Kent and the law firm Hausfeld & Co on behalf of millions of UK iPhone and iPad users. Under UK law, in this type of class action, all potentially affected persons are included in the procedure by default and may benefit from possible compensation, unless they voluntarily opt out.
At the hearings, which opened in January, claimants argued that Apple users were overcharged by the company “due to its ban on rival app store platforms.” A 30-percent surcharge that the company “imposes” on apps purchased through Apple’s App Store leads to consumers “paying more”, they said. At the heart of the claimants’ case was that Apple used the App Store to exclude competitors, forcing users to use its system and boosting profits in the process.
Apple’s “restrictions cannot sensibly be justified as being necessary or proportionate to deliver the benefits which Apple puts forward as flowing from its objective of an integrated and centralised system,” the Tribunal found. It ruled that in cases where Apple overcharged app developers and passed on the extra costs to consumers, users were entitled to a refund with interest. Law firm Hausfeld hailed the judgement as a “great outcome for UK consumers and businesses”. It “highlights the importance of the collective actions regime for UK consumers and businesses,” the firm said in a statement, adding that the refund could apply to popular apps like Candy Crush and YouTube.
Apple, which had denounced the trial as “baseless”, maintained that its App Store “faces vigorous competition from many other platforms” and insisted that 85% of apps on the App Store were free. Regulators around the world have increased scrutiny and investigations of Apple’s practices in recent years, particularly regarding its app store. The American giant is facing another £785 million lawsuit in the United Kingdom over the fees charged to developers. In April, Apple was also fined €500 million (£436 million) in the EU for preventing developers from steering customers outside its App Store to access cheaper deals, in violation of the bloc’s rules. Apple has appealed the fine.
© 2024 AFP
