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The first trial stemming from a wave of UK competition class actions against Big Tech is set to begin on Monday as Apple faces a £1.5bn legal claim for charging “excessive and unfair” fees for software taken from its application stores.
Apart from the last-minute settlement, the iPhone maker will begin a courtroom trial at the UK’s competition appeals court over allegations it abused its dominant market position to charge commissions of as much as 30 percent on purchases on its App Store.
The seven-week trial in which Apple’s newly appointed chief financial officer Kevan Parekh to witness, is the latest in a growing list of legal challenges facing major tech companies around the world.
In the US, the Department of Justice has brought the case against Apple claiming that its App Store rules stifled competition. However, Apple mostly showed up unharmed from the legal battle over the App Store with Fortnite creator of Epic Games which started in 2020 and ended at the beginning of last year.
Antitrust lawyers and the litigation finance industry that supports such cases will be scrutinizing the CAT proceedings as they try to gauge the chances of success in several other antitrust suits against tech groups including Alphabet, Microsoft and Meta.
The case against Apple, brought on behalf of millions of UK consumers, comes after major setbacks last month for two other class actions.
Telecom operator BT he refused the case that he overcharged landline users, while Mastercard satisfied a dispute over £200m in card fees — a fraction of the £14bn originally sought by prosecutors.
AND a series of claims have been brought, many of them against technology companies, under UK legislation drawn up a decade ago that allows mass legal actions for alleged breaches of competition law.
However, the cases have been bogged down by lengthy procedural arguments, and the case against Apple is the first in the sector to go to trial.
The plaintiffs, led by “class representative” Rachael Kent, a lecturer at King’s College London, say Apple has created a monopoly by forcing developers who make software for devices such as the iPhone and iPad to distribute their apps using its own app store.
They are seeking £1.5 billion from Apple, claiming that “excessive and unfair” commissions paid to developers are passed on to consumers who download software and buy content or digital services within apps.
The plaintiffs’ lawyers, led by Mark Hoskins KC and Tim Ward KC, are expected to say that Apple made “excessive” profits, as the commissions are far higher than they would have been if the software had also been available to third-party competitors in the App Store.
As Apple’s iOS faces competition from Google and its Android mobile operating system, prosecutors argue it has consolidated market power within its “ecosystem” of devices and software.
Apple said the lawsuit was “without merit.” “The commissions charged by the App Store are vastly superior to those charged by all other digital marketplaces,” it said when the case was first filed in 2022.
Most apps are offered free of charge, Apple added, and the “vast majority” of developers qualify for a reduced 15 percent commission, under rules introduced in 2020 for small businesses whose apps bring in less than $1 million a year.
Apple is expected to argue that the plaintiffs have defined the market too narrowly to include only iOS apps and that it is not dominant in the broader markets for digital transactions and devices.
As it did when it faced similar complaints about its App Store policies from Epic Games and music app Spotify, Apple is likely to say its fee is justified by broader investments in its platform, including not only payment processing but also development tools. review security, marketing and curation.
