UK tribunal: App Store class action seeking up to $1.8b can continue

Stop us if you've heard this before: Apple facing charges of anti-competitive behavior in the App Store

A UK tribunal has agreed that a Collective Proceedings Order (CPO) potentially involving 19.6 million consumers in the country can go ahead in a case that could cost Apple up to £1.5 billion ($1.8 billion).

A CPO is a group litigation order roughly akin to a class-action procedure in the US.

At issue are Apple's App Store restrictions, which the vendor says are necessary for safety and quality control purposes but which the filing alleges are anticompetitive.

The application was brought by Dr Rachael Kent, a lecturer in Digital Economy and Society Education at King's College, London, who has worked in private sector consulting and for the NHS, and as the judgement notes has "conducted research on the interaction of users with digital platforms and apps."

The tribunal's judgment [PDF], handed down last week, said: "In essence, the PCR [Dr Rachel Kent – the Proposed Class Representative"] alleges that Apple has foreclosed all competition from potential or actual rivals through its restrictive terms and conditions, and other restraints, imposed in the iOS, so that it is dominant (or indeed holds a monopoly position) in app distribution and payment services."

In other words, things are locked down so tight that developers are forced to follow Apple's line, and the Cupertino-based outfit is alleged to be overcharging iOS device users for that reason.

Apple, as one would expect, fervently disagrees with all of this "and has applied to strike out or alternatively for summary judgment in relation to the excessive pricing aspect of the claim."

The figures are significant. Dr Kent is seeking to bring the proceeding on an opt-out basis on behalf of all iOS users in the UK – approximately 19.6 million of them. And the amounts involved? According to Dr Kent's economics expert, anywhere from £500 million to £1.5 billion (c $600,000-$1.8 billion).

The initial filing was made on May 11, 2021 and the strike-out and summary judgement applications were heard together on May 4 and 5, 2022.

Unfair pricing is a tricky thing to prove. The case hinges on proving that Apple's commission is both excessive (with evidence from Dr Kent including complaints from developers as well as the costs incurred by the company versus App Store net revenues), and unfair (evidence given here by Kent's economics expert includes the company's increasing profit margin and comparisons with other products and services.)

While the tribunal was careful not to take sides, it has, however, granted the application for a Collective Proceedings Order and dismissed Apple's applications for strike-out and for reverse summary on Dr Kent's Unfair Pricing Abuse claim.

The stage is therefore set for a full trial in the UK over the alleged overcharging and anticompetitive tendencies of Apple.

The Register contacted Apple to get its take on the case and while it had no comment on the judgment, it did repeat the statement it made last year when the action was initiated:

"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 commissions charged by the App Store are 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."

Apple softened its App Store policy in late 2020, halving the commission it charges small developers that turn over up to $1 million on paid apps and in-app purchases transacted via the App Store. The commission had been a flat 30 percent.

This came amid a courtroom showdown with Epic Games, the maker of Fortnite, that centered on accusations that Apple operates a monopoly through its digital stores and refuses to allow alternative payment methods. Epic lost the battle in the US.

However the protracted legal case continues elsewhere in the world. ®