Dr Rachael Kent, Lecturer in the Digital Economy, has launched a collective legal action against Apple, aiming to force the tech giant to cut its controversial 30% commission on App Store purchases and to compensate 20 million UK iPhone and iPad users for years of alleged overcharging.
Dr Kent, of the Digital Humanities department, is the class representative for all those affected, and the class action seeks estimated damages of up to £1.5 billion for UK users of the App Store.
The legal case, being put forward by Hausfeld & Co LLP, alleges Apple’s 30% surcharge is in breach of European and UK competition laws and that Apple is abusing its dominant position in the app market at the expense of ordinary people.
“The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included. But thirteen 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.”
“Last year’s US Congress inquiry estimated that Apple’s annual global revenue from the App Store is at least $15 billion a year, but the company’s costs for running the platform are just $100m. Apple achieves this by slapping unjustified charges on its users. It would not be able to impose these exorbitant charges if competitor platforms and payment systems were allowed to compete on its devices. It is a clear abuse by Apple of the law and its own customers.”– Dr Rachael Kent
The claim has been filed in the Competition Appeal Tribunal in London on behalf of around 19.6 million eligible UK iPhone and iPad users. It alleges that Apple deliberately shuts out potential competition and forces ordinary users to use Apple’s own payment processing system, generating illegally excessive levels of profit for the company. Typically, 30% of the money app purchasers spend in the App Store goes straight to Apple.
Lesley Hannah, Partner at legal firm Hausfeld & Co LLP, who is leading the litigation, said:
“Apple has created a captive market where people who own Apple devices are reliant on it for the provision of both apps and payment processing services for digital purchases. It has been exploiting that market for years, by charging excessive fees that in no way reflect the actual cost of providing those services and making sure no one else can compete. App purchasers have been paying the price. This action seeks fair redress for those purchasers.
“Apple should be held to account for its unlawful anticompetitive conduct. Competition laws are there to protect everyone. Every company – especially one as popular and powerful as Apple - needs to obey the law. Millions of people use the App Store to buy apps and make digital purchases within apps, so it is more essential than ever that those purchasers are treated fairly.”