Apple Confronts £1.5 Billion Legal Challenge Over Alleged App Store Monopoly Practices in the UK
Apple is embroiled in a significant legal battle in the UK over accusations that it has unlawfully abused its dominant market position in the App Store.
The case, which began with a court hearing on Monday, seeks to recover an estimated £1.5 billion ($1.8 billion) in damages. The legal claim, initially filed in May 2021, argues that Apple has breached UK and European competition laws by creating an unfair market environment through its exclusive control over iOS devices, such as iPhones and iPads, and excluding rival app store platforms.
This lawsuit is being brought on behalf of an estimated 20 million iOS users in the United Kingdom, who allege that Apple’s business practices have led to overcharging on apps purchased through its App Store. Rachael Kent, a lecturer at King’s College London specializing in the digital economy, is acting as the plaintiff. She is represented in the case by Hausfeld & Co., a law firm known for its expertise in handling large-scale class action lawsuits. The heart of the case revolves around the claim that Apple’s exclusive control over the iOS operating system, and its refusal to allow third-party app stores on its devices, has artificially inflated the costs paid by consumers.
At the opening of the trial, the plaintiffs’ lawyer, Mark Hoskins, outlined the case and made clear that Kent is pursuing the action “on behalf of all iOS mobile device users,” emphasizing the scale of the alleged harm caused by Apple’s practices. The claim asserts that Apple has “excluded all competition” through its restrictive terms and conditions, resulting in what the plaintiffs argue is an unfair surcharge on digital purchases. Specifically, Apple imposes a 30% commission on most app transactions made through its App Store. The plaintiffs contend that this commission is an unjustified cost passed on to consumers, ultimately inflating the price of digital goods and services available on the platform.
The plaintiffs have argued that this 30% surcharge is not only a significant financial burden on consumers but also violates both UK and EU competition regulations designed to prevent market monopolies and encourage a competitive environment. The lawsuit highlights that Apple’s exclusionary tactics have hindered the ability of alternative app stores to access the iOS ecosystem, restricting consumer choice and inflating the cost of apps and in-app purchases. Kent, a leading figure in the study of the digital economy, pointed to popular apps like Tinder as examples of services that are impacted by the App Store commission, which applies to most digital content available through Apple’s platform.
However, it is important to note that the surcharge does not apply to apps that offer physical products or services, such as food delivery platforms like Deliveroo and Uber Eats. Kent’s claim asserts that this exclusionary practice has affected all consumers who have purchased applications or subscriptions through the UK App Store since October 1, 2015. According to the legal team, affected consumers are entitled to compensation, which could potentially total £1.5 billion, based on the number of users and the overcharges identified.
Apple, for its part, has dismissed the lawsuit as “meritless.” In statements provided to the media, the company has stressed that it remains committed to consumer protection and innovation. Apple’s defense is grounded in the assertion that its App Store offers users many benefits, including a secure and integrated system designed to prioritize user privacy and data protection. According to Apple, 85% of the apps available on the App Store are free, and the company maintains that the commission structure is in line with industry standards for digital marketplaces. Apple’s representatives have also emphasized that the App Store has contributed significantly to the UK’s tech economy, fostering innovation, and supporting the development of a wide range of digital services.
The trial, which is set to last for approximately seven weeks, is being heard at the Competition Appeal Tribunal in London. This case is the first mass lawsuit under the UK’s emerging class action regime, which has been expanding in recent years to provide consumers with the opportunity to hold corporations accountable for anticompetitive practices. While this is the first case to reach trial, several others are poised to follow, potentially setting a precedent for future challenges to the practices of tech giants like Apple and Google. A similar legal battle, a $1.1 billion lawsuit against Google over its app store fees, is expected to go to trial in 2025, with other cases involving major tech corporations also in the pipeline.
The legal action against Apple has drawn attention not just in the UK but internationally. In recent years, Apple has faced increasing scrutiny from regulators around the world over its App Store practices. The company is currently facing a separate complaint in the UK, valued at £785 million, related to the rates it charges to app developers. In addition, last June, the European Commission accused Apple of breaching digital competition rules by preventing app developers from directing consumers to alternative purchasing platforms outside of the App Store. In response to the ongoing investigations, Apple has taken some steps to adjust its business practices. For instance, in August, the company agreed to relax some of its rules, allowing iPhone and iPad users in the European Union to remove the App Store and use alternative app platforms. This decision was made as part of Apple’s efforts to comply with regulatory pressure from the European Commission, which has been investigating Apple’s market practices in connection with the Digital Markets Act (DMA).
Rachael Kent has expressed her view that Apple is only responding to external pressure rather than making these changes voluntarily. She has emphasized the importance of collective legal actions like this lawsuit, which aim to hold tech giants accountable and provide consumers with the opportunity to seek compensation for practices they believe have harmed them financially. Kent’s argument highlights a broader issue within the tech industry: the growing power of large digital platforms and the need for regulatory measures to ensure that they do not exploit their market dominance to the detriment of consumers and competition.
This lawsuit is not just about seeking damages but is also a broader challenge to the power structures within the tech industry. As the case progresses, it will likely have significant implications for Apple and its business model, as well as for the broader landscape of digital commerce. If the plaintiffs succeed in their case, it could set a powerful precedent for similar actions against other tech companies, leading to increased scrutiny and regulation of the practices that govern the world’s most influential digital platforms.