UK court loss could cost Apple £1.5bn

Apple could be forced to pay up to £1.5bn in damages after losing a collective legal action court case brought on behalf of 36 million UK iPhone and iPad users, both consumers and businesses.

The Competition Appeals Tribunal found that Apple had abused its dominant position by charging “excessive and unfair” prices in the form of the 30% commission, which it usually levies both on app sales and in-app payments.

The claimants argued that this meant that consumers had been overcharged for apps, subscriptions to apps, and when buying digital content in apps.

Apple said it strongly disagreed with the ruling and would appeal.

The case was pursued by academic Dr Rachael Kent.

Her lawyers argue it is the first such claim brought under the UK’s collective action regime to have succeeded.

Dr Kent called the decision a “landmark victory, not only for App Store users, but for anyone who has ever felt powerless against a global tech giant”.

“Today’s ruling sends a clear message: no company, however wealthy or powerful, is above the law.”

The tribunal’s decision comes a day after the Competition and Markets Authority (CMA) designated both Apple and Google as having “strategic market status” – effectively saying they have a lot of power over mobile platforms.

It means the competition watchdog could force Apple to allow rivals to operate their own app stores on iPhones in the UK.

This would be a significant change to Apple’s “closed system”, where apps can only be downloaded from its own App Store.

Apple maintains that because commission is only charged on the sale of paid apps and on in-app purchases, 85% of apps on the App Store do not pay any commission at all.

And it points to its introduction of a programme for small businesses where the usual 30% rate of commission is halved.

In a statement sent to the BBC, Apple wrote that it strongly disagreed with the ruling, which took a flawed view of the “thriving and competitive app economy”.

The App Store had benefited businesses and consumers across the UK, it said, and had created a dynamic marketplace where developers compete and users could choose from millions of innovative apps.

“This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments,” Apple said.

Adding: “The App Store faces vigorous competition from many other platforms — often with far fewer privacy and security protections”.

Apple said it intended to appeal.

According to lawyers Hausfeld & Co. LLP, who represented Dr Kent, “any UK user of an iPhone or iPad who purchased paid-for apps, subscriptions or made in-app purchases of digital content within the UK storefront of the App Store at any point since 1 October 2015 is potentially entitled to compensation from Apple”.

The purchases must have been made on iPhone and/or iPad devices, they add.

But it has it has yet to be established exactly how much eligible individual consumers or businesses may be able to claim, the BBC has been told.