Latest representative action targets Apple over App Store

Kent: Unjustified fees

Class action law firm Hausfeld has launched the latest opt-out representative action, a £1.5bn claim against Apple on behalf of nearly 20m UK iPhone and iPad users.

The claim alleges that Apple has abused its dominant position in the way it operates its App Store.

The representative is Dr Rachael Kent, an expert in the digital economy and lecturer at King’s College London.

She is advised by a consultative group made up of former Court of Appeal judge Dame Elizabeth Gloster; James Walker, an adviser to the Scottish government on consumer protection and the founder of Resolver; and Kevin Jenkins, former chief executive of Visa UK.

The claim is funded by Vannin Capital and also has after-the-event insurance from an unnamed provider. Mark Hoskins QC, Jennifer MacLeod and Aaron Khan of Brick Court and Ronit Kreisberger QC of Monckton Chambers have been instructed.

The claim alleges that Apple’s conduct violates section 18 of the UK Competition Act 1998 and article 102 of the Treaty on the Functioning of the European Union by using its dominant position to impose restrictive terms on app developers and stifle efforts by other would-be distributors to offer app purchasers better value for money, reaping excessive profits.

The claim alleges Apple also blocked users’ ability to pay for many app services other than through its own App Store payment system, which typically also includes the 30% commission payment to Apple.

It argues that this practice is monopolistic and unlawful, and that Apple would be unable to charge customers such an excessive mark-up if its devices were open to competitors.

Hausfeld said any users who purchased paid apps, paid subscriptions or made other in-app purchases within the UK version of the App Store on their iPhone and/or iPad devices at any point since 1 October 2015 may be entitled to compensation.

Dr Kent’s research at King’s College focuses on how consumers use apps and digital platforms, and the impact apps have on choice, spending and other aspects of consumers’ everyday lives.

She said: “The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included.

“But, 13 years after its launch, it has become the only gateway for millions of consumers. It guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified.”

The academic pointed to an inquiry by the US Congress last year that estimated Apple’s annual global revenue from the App Store at $15bn, against running costs of $100m.

Hausfeld partner Lesley Hannah said Apple has created and exploited “a captive market” by charging “excessive fees that in no way reflect the actual cost of providing those services and making sure no one else can compete”.

An Apple spokesman said: “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.

“The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84% 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%.”

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