Apple owes Brit iOS app devs millions from excessively high commission, lawsuit claims

Lawyers look to scale the walled garden

Apple is facing a legal challenge over the "creator tax," or the commission it charges developers who write the apps that populate its digital walled garden.

Sean Ennis, professor of competition policy who has worked as an economist at the OECD, US Department of Justice and the European Commission, claims Apple has engineered "contractual and technical conditions" that make the App Store the sole location where app developers can market or sell apps for iOS.

"The fact [is] that users and developers are completely locked into the iOS system and the App Store gives Apple monopoly power, which Apple leverages to charge excessive fees on app developers," he said in a statement.

Ennis, who is currently CCP director and professor of competition policy at the University of East Anglia, added: "The UK industry is being forced to pay an unjustified 30 percent premium on the price of their app as well as in-app purchases – money that could be reinvested in the UK's digital economy."

The proposed class action is being filed with the UK's Competition Appeal Tribunal, and the opt-out collective proceedings suit is being brought on behalf of the 1,566 app developers in the UK by law firm Geradin Partners.

"This case is about Apple's exploiting App Store monopoly," said Damien Geradin, founding partner at the law firm. "The wealthiest company in the world is sucking the blood out of UK-based developers, imposing a sky-high fee that bears no relationship with the cost of running to App Store. This creator tax is pure profit for Apple. This is money that could be better spent on R&D."

"Apps contribute significantly to the value of iOS devices," he added. "Without them, customers would not be willing to pay as much for them, or would not buy them at all. The commission is set at a level that does not recognise or reflect that significant contribution. It merely reflects Apple's bottleneck power."

British software engineers operating in the iOS ecosystem are entitled to £785 million in compensation for being overcharged for their work, according to Ennis and co.

Apple is estimated, according to a 2022 report by the US House Judiciary Committee's Subcommittee on Antitrust, Commercial and Administrative Law, to have generated $15 billion in revenue from the App Store in 2018 and $18.8 billion in 2022. And a former director at Apple told the committee it cost about $100 million a year for Apple to maintain the store.

If all this sounds familiar, that's because King's College academic Dr Rachel Kent is also trying to take Apple to the Competition Appeal Tribunal over the 30 percent App Store commission but on behalf of users. The claim was raised in 2021 and was given the go ahead to proceed in 2022.

Britain's competition watchdog last year embarked on a market investigation into cloud gaming in November after a study highlighted that Apple and Google run a duopoly which controls the mobile phone market. Yet the Competition and Markets Authority missed a key filing deadline and was forced to abandon its probe of Apple.

Apple's tight control over the App Store was highlighted in the case Epic Games brought after its Fortnite title was suspended when it tried to take payments directly from users instead of via Apple's digital store.

Epic Games lost that case earlier this year but during the spat Apple halved the commission it charges developers that turn over $1 million or less on its platform, moving to a 15 percent fee instead of the flat 30 percent.

We've asked Apple to comment. ®

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