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The first trial stemming from a wave of UK antitrust lawsuits against Big Tech will begin on Monday as Apple faces a £1.5bn legal claim that it charges “excessive and unfair” fees for software downloaded from its store of its applications.
Barring a last-minute settlement, the iPhone maker will begin a courtroom battle at the UK’s Competition Appeal Tribunal over allegations it abused a dominant market position to charge up to 30 percent on purchases in its App Store marketplace.
The seven-week trial, in which Apple’s newly appointed chief financial officer Kevan Parekh will testify, is the latest in a growing list of legal challenges facing Big Tech companies around the world.
In the US, the Department of Justice has filed a case against Apple arguing that its App Store rules have stifled competition. However, Apple emerged largely unscathed from a legal battle over the App Store with Fortnite creator of Epic Games that started in 2020 and ended early last year.
Antitrust lawyers and the litigation funding industry that supports such cases will scrutinize 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, follows major setbacks last month for two other class action claims.
Telecoms operator BT fought a case it overcharged landline customers, while Mastercard settled a dispute over card fees for £200m – a fraction of the £14bn the claimants had originally sought.
A number of claims have been made, many of them against technology companies, under UK legislation drawn up a decade ago allowing mass legal action for alleged breaches of competition law.
However, the cases have been blocked by lengthy procedural arguments and the case against Apple is the first in the sector to go to trial.
The petitioners, 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 the store of company applications.
They are seeking £1.5 billion from Apple, arguing that “excessive and unfair” commissions charged to developers are passed on to consumers who download the software and buy digital content or services within the apps.
Lawyers for the claimants, led by Mark Hoskins KC and Tim Ward KC, are expected to say that Apple has made “excessive” profits, as the commissions are far greater than they would be if the software were also made available to rivals. of third parties. in the App Store.
As Apple’s iOS faces competition from Google and its Android mobile operating system, contenders claim it has entrenched market power within its hardware and software “ecosystems.”
Apple has said that the lawsuit is “baseless”. “The commissions charged by the App Store are very much in the mainstream of those charged by all other digital marketplaces,” he said when the case was first launched in 2022.
Most apps are offered for free, asking no fees, Apple added, and the “vast majority” of developers qualify for a discounted 15 percent commission under rules introduced in 2020 for small businesses whose apps bring less than $1 million per year.
Apple is expected to argue that the plaintiffs have defined the market too narrowly by including 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 commission is justified by the broader investments it makes in its platform. including not only payment processing, but developer tools, security. reviews, marketing and curation.
