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The first trial in a wave of UK antitrust class action lawsuits against Big Tech is set to begin on Monday as Apple faces a £1.5bn legal claim that it charges ‘excessive and unfair’ fees » on software downloaded from its application store.
Barring a last-minute settlement, the iPhone maker will begin a showdown at the UK’s Competition Appeal Tribunal over allegations it abused its dominant market position by charging commissions going up to 30 percent off purchases on its App Store marketplace.
The seven-week trial, during which Apple’s new CFO Kevan Parekh must testify, is the latest in a growing list of legal challenges facing big tech companies around the world.
In the United States, the Department of Justice has brought a case against Apple, arguing that App Store rules have stifled competition. However, Apple has largely emerged unharmed of a legal battle on the App Store with Fortnite creator Epic Games which started in 2020 and ended early last year.
Antitrust lawyers and the litigation finance industry that supports such cases will review CAT’s proceedings as they try to assess the chances of success in several other antitrust suits against technology groups, including Alphabet, Microsoft and Meta.
The lawsuit against Apple, brought on behalf of millions of British consumers, comes after big setbacks last month for two other class action lawsuits.
BT telecom operator fought a case where it overcharged landline customers, while Mastercard ruler a card fee dispute for £200 million – a small fraction of the £14 billion the claimants initially sought.
A series of complaints were brought, mostly against technology companies, under British legislation drawn up a decade ago allowing mass legal actions for alleged competition law violations.
However, the cases have been bogged down by lengthy procedural arguments, 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, claim that Apple has created a monopoly by forcing developers who create software for devices such as iPhones and iPads to distribute their apps using the company’s own app store.
They are seeking £1.5 billion from Apple, arguing that “excessive and unfair” commissions charged to developers are passed on to consumers who download the software and purchase digital content or services within apps.
The plaintiffs’ lawyers, led by Mark Hoskins KC and Tim Ward KC, are expected to argue that Apple has made “exorbitant” profits because the commissions are much higher than they would be if the software was also made available at third-party competitors. to the App Store.
As Apple’s iOS faces competition from Google and its Android mobile operating system, the plaintiffs say it has consolidated market power within its “ecosystem” of devices and software .
Apple said the lawsuit was “meritless.” “The commissions charged by the App Store are completely comparable to those charged by all other digital marketplaces,” he said at the 2022 launch of the deal.
Most apps are offered for free, Apple added, and the “vast majority” of developers are eligible for a reduced 15% commission, under rules introduced in 2020 for small businesses whose apps make less than a million dollars per year.
Apple is expected to argue that the plaintiffs have defined the market too narrowly by including only iOS apps and that it is not dominant in the broader digital transaction and device markets.
As it did when it faced similar complaints about its App Store policies from Epic Games and music app Spotify, Apple will likely say its commission is justified by investments broader aspects that it achieves in its platform, including not only payment processing, but also developer tools, security. reviews, marketing and curation.
