A £1.5 billion class action trial which alleges that Apple is charging developers ‘excessive’ fees and harming consumers by stifling competition begins in the UK today.
The class action was brought by law firm Hausfeld – led by Dr Rachael Kent, a lecturer at King’s College London – on behalf of nearly 20m Apple users.
Seeking total damages of up to £1.5bn, it alleges that Apple deliberately shuts out competition by forcing consumers to use its own payment processing system.
The trial, held at the Competition Appeal Tribunal in London, is estimated to last around seven weeks with Apple’s newly appointed CFO Kevan Parekh set to testify.
The mobile ecosystem is dominated by Apple and Google. Both take 30% of the revenues generated from third-party apps which are downloaded from their Apple and Play Stores, respectively, while taking a further fee from developers for in-app purchases.
Describing the case as “meritless”, Apple says that the “vast majority” of developers qualify for a discounted 15% commission under rules introduced in 2020 for small businesses earning less than $1 million per year.
It added that it “welcomes the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the App Store has delivered to the UK’s innovation economy”.
The case is the first of several class action cases against Big Tech companies, with a £14bn claim against Google and £2.2bn claim against Meta to follow.
It follows the introduction of the Digital Markets, Competition and Consumers Act this year, which Competition and Markets Authority chief executive Sarah Cardell says could “ensure a level playing field for the many startups and scaleups across the UK tech sector” while also promoting investment and innovation from Big Tech.
Under the new rules, the CMA may designate firms with ‘Strategic Market Status’ in relation to a particular digital activity and impose conduct requirements upon them or introduce pro-competition interventions.