Apple faces collective action lawsuit seeking compensation for 20 million UK users

Apple is facing another lawsuit, and this time it’s a big collective one in the UK.

Filed on behalf of almost 20 million iPhone and iPad users, the case claims that Apple’s 30 percent commission charged on App Store purchases is “excessive and unlawful” and that the company’s practices breach competition law in the UK and Europe.

The case, if approved by the UK Competition Appeal Tribunal (CAT), will seek damages of up to £1.5 billion, and will include around 19.6 million users eligible for compensation in the UK. 

The case is what’s known as a “representative opt-out collective action,” in which a claim is brought forward on behalf of a group of people without them needing to actually choose to opt in to the claim. This means anyone who has made a purchase in the UK version of the App Store since Oct. 1, 2015 — whether they’ve bought an app, subscribed to a service, or made an in-app purchase — will be included, and can opt-out if they choose. These purchases must have been made on iPhone or iPad devices, the claim stipulates, and doesn’t include apps providing “physical goods or services that will be consumed outside of the app,” like Deliveroo and Uber.

The case is being brought to the CAT by Dr Rachael Kent, an expert and lecturer in digital economy at King’s College, University of London. Legal firm Hausfeld & Co LLP is leading litigation.

“Apple guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified,” said Kent in a statement emailed to Mashable. “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 percent 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.”

The claim alleges that Apple breaches competition laws in the UK and Europe — specifically, section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union — by forcing users to use Apple’s own payment processing system, and that “Apple is abusing its dominant position in the app market at the expense of ordinary people.”

The release also notes that customers, not app developers, are at the front of the queue for compensation, though includes the “restrictive terms Apple imposes on app developers” as one of the ways the company allegedly “break[s] competition law.”

Apple referred to the case as “meritless” in a statement emailed to Mashable.

“We believe this lawsuit is meritless and welcome 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,” an Apple spokesperson said. 

“The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84 percent of apps on the App Store are free and developers pay Apple nothing. And for the vast majority of developers who do pay Apple a commission because they are selling a digital good or service, they are eligible for a commission rate of 15 per cent.”

It’s the latest high-profile legal movement against Apple relating to its App Store practices, most notably following antitrust hearings in the U.S. Congress with other Big Tech giants (all of whom were declared in October as enjoying “monopoly power” that needs to be reined in), and its ongoing antitrust battle with Epic Games (the trial is currently underway). 

In the UK, the Competition and Markets Authority launched a probe into Apple in March following complaints that the company’s terms and conditions for app developers are “unfair and anti-competitive.” And in Europe, the European Commission concluded a year-long investigation in April determining that Apple’s App Store rules are unfair. 

“Apple should be held to account for its unlawful anticompetitive conduct,” said Lesley Hannah, Partner at legal firm Hausfeld & Co LLP, in a statement emailed to Mashable. “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.”