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The first trial stemming from a wave of UK class action antitrust lawsuits against Big Tech is due to start on Monday as Apple faces a £1.5bn legal claim it levies “excessive and unfair” charges on software downloaded from its app store.
Barring a last-minute settlement, the iPhone maker will begin a courtroom showdown in the UK’s Competition Appeal Tribunal over allegations it has abused a dominant market position to charge commissions of as much as 30 per cent on purchases on its App Store marketplace.
The seven-week trial, in which Apple’s newly appointed chief financial officer Kevan Parekh is due to testify, is the latest in a growing list of legal challenges faced by Big Tech companies around the world.
In the US, the Department of Justice has brought a case against Apple arguing its App Store rules have stifled competition. However, Apple largely emerged unscathed from a legal fight over the App Store with Fortnite creator Epic Games that began in 2020 and concluded early last year.
Antitrust lawyers and the litigation funding industry that backs such cases will be scrutinising the CAT proceedings as they try to gauge the prospects of success for several other antitrust lawsuits against tech groups including Alphabet, Microsoft and Meta.
The case against Apple, brought on behalf of millions of UK consumers, comes after big setbacks last month for two other class action claims.
Telecoms operator BT fought off a case that it overcharged landline customers, while Mastercard settled a dispute about card fees for £200mn — a small fraction of the £14bn the claimants had originally sought.
A series of claims have been made, many of them against technology companies, under UK legislation drawn up a decade ago allowing mass legal actions over alleged breaches of competition law.
However, 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 claimants, 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 iPhones and iPads to distribute their apps using the company’s own app store.
They are demanding £1.5bn from Apple, arguing that “excessive and unfair” commissions charged to developers are passed on to consumers who download the software and buy content or digital services inside the apps.
Lawyers for the claimants, led by Mark Hoskins KC and Tim Ward KC, are expected to say that Apple has derived “exorbitant” profits, as the commissions are far greater than they would be if the software were also made available on third-party rivals to the App Store.
While Apple’s iOS faces competition from Google and its mobile operating system Android, the claimants contend it has entrenched market power within its “ecosystem” of devices and software.
Apple has said the lawsuit is “meritless”. “The commission charged by the App Store are very much in the mainstream of those charged by all other digital marketplaces,” it said when the case was first launched in 2022.
Most apps are offered for free, requiring no fee, Apple added, and the “vast majority” of developers qualify for a discounted 15 per cent commission, under rules introduced in 2020 for small businesses whose apps bring in less than $1mn per year.
Apple is expected to argue that the claimants have defined the market too narrowly as only including 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 commission is justified by the broader investments it makes in its platform, including not just payments processing but developer tools, security reviews, marketing and curation.
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