Apple faces UK class action for App Store overcharging

Apple's 30 per cent fee is "excessive" and "unlawful" the claimants said. PHOTO: REUTERS

LONDON (BLOOMBERG) - Apple is facing a London lawsuit over claims it overcharged nearly 20 million United Kingdom customers for App Store purchases, yet another legal headache for the tech giant fighting lawsuits across the world.

Apple's 30 per cent fee is "excessive" and "unlawful" the claimants said in a press statement Tuesday (May 11).

The claim, filed at London's Competition Appeal Tribunal on Monday, calls for the United States firm to compensate UK iPhone and iPad users for years of alleged overcharging. They estimate that Apple could face paying out in excess of £1.5 billion (S$2.8 billion).

"Apple is abusing its dominance in the app store market, which in turn impacts UK consumers," Ms Rachael Kent, the lead claimant in the case and a professor at King's College London. She teaches the ways in which consumers interact and depend upon digital platforms.

The suit, described by Apple as "meritless", was filed a week into a US trial over Epic Games' claims that Apple is running its marketplace like a monopoly, cheating developers and consumers. The separate UK claim is focused on the alleged harm caused to customers rather than developers.

Earlier this year, Apple lowered its App Store fee to 15 per cent from 30 per cent for developers who produce as much as US$1 million (S$1.3 million) in annual revenue from their apps and those who are new to the store.

The legal challenges come as Apple faces a backlash - with billions of dollars in revenue on the line - from global regulators and some developers who say its fees and other policies are unjust and self-serving. Last month, the European Commission sent a statement of objections to the firm, laying out how it thinks Apple abused its power as the "gatekeeper" for music-streaming apps on its store.

"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," Apple said in an e-mailed statement.

"The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces," Apple said.

"In fact, 84 per cent 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."

The suit alleges that Apple deliberately shuts out potential competition and forces ordinary users to use its own payment processing system, generating unlawfully excessive levels of profit for the company.

The claimants say any UK user of an iPhone or iPad who purchased paid apps, subscriptions or made other in-app purchases since October 2015 is entitled to compensation.

"This is the behaviour of a monopolist and is unacceptable," Ms Kent said.

"Ordinary people's use of apps is growing all the time, and the last year in particular has increased our dependence on this technology."

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